Europe and other regions drive the global EV sales recovery, while battery demand growth continues to outpace vehicle sales

Overview

This report is Bernstein's monthly global EV tracker, covering global passenger xEV sales in May 2026, regional mix, major OEM sales, power battery demand, battery chemistries, India EV trends, Japanese automakers' xEV transition, and the implications for European autos and components. The core conclusion is that global EV demand is showing signs of recovery after slowing in the first quarter, with Europe and RoW leading, while battery demand continues to grow faster than vehicle sales due to a higher BEV mix and larger battery capacity per vehicle.

Core views

The report believes that the long-term trend of rising global EV penetration remains intact, but growth in 2026 is uneven. Europe and RoW demand are strong, and India is also seeing a structural increase in adoption; China is experiencing year-over-year sales declines due to subsidy rollbacks and a high base, but long-term penetration remains high; the U.S. continues to be weak after the withdrawal of CVC incentives. On the battery side, CATL continues to lead in both share and growth, while LFP keeps expanding in markets outside China. In auto coverage, the report favors leaders with electrification, cost, or supply chain advantages, while remaining cautious on some Korean battery makers and pressure on Chinese domestic demand.

Analysis framework

The report uses a monthly tracking framework, combining global passenger xEV registration and sales data, broken down by region, powertrain type, OEM, model, battery demand, and battery chemistry, and further maps these to investment implications for energy storage, batteries, auto OEMs, auto parts, and tire companies.

Methodology notes

• Monthly industry trackingEVTRACKER

  Track the global EV cycle through monthly sales, penetration, regional mix, and OEM share.

  The data comes from registration and sales data from multiple sources; the database is updated monthly and lags by about one month; the China figures reflect retail vehicle registrations and exclude overseas exports.

• Demand breakdownxEV type breakdown

  Split passenger xEV into BEV and PHEV to assess growth quality.

  In May 2026, BEV grew 14% year over year, while PHEV fell 14% year over year, indicating that this month's growth was mainly driven by pure EVs.

• Battery demand estimationLiB GWh demand tracking

  Observe passenger EV lithium battery demand on a GWh basis.

  The report includes only lithium-based battery chemistries and compares the growth rates of vehicle sales and battery demand to reflect changes in battery size, BEV mix, and chemistry.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• CATL-A

  Leading power battery and energy storage company

  Strengths

  Market share leader, with May battery sales up 28% year over year; the report believes its margins and returns are industry-leading.

  Weaknesses

  Valuation and industry expectations may already reflect part of its long-term advantages.

  Comparison

  Versus other battery makers, CATL's market share is about 39.2% to 40%, with a clearly leading position.

  Risks

  EV demand below expectations, price competition, raw material volatility, and policy changes.

• BYD

  Global EV OEM and battery supplier

  Strengths

  Still the world's number one monthly xEV seller, with about 248,000 units sold in May.

  Weaknesses

  Down 22% year over year, pressured by subsidy rollbacks and a high base in the China market.

  Comparison

  Sales lead Tesla and Geely, but share came under pressure this month.

  Risks

  Intensifying domestic competition, subsidy rollbacks, and export uncertainty.

• Tesla

  Global BEV leading model supplier

  Strengths

  May sales were about 142,000 units, up 12% year over year, with European registrations rebounding from the trough.

  Weaknesses

  Europe performance in 2025 was weak, and the Model Y refresh cannot fully explain the earlier decline.

  Comparison

  Model Y and Model 3 remain core global BEV models, but competition in Europe is intensifying.

  Risks

  European autonomous driving regulation, brand competition, and demand volatility.

• European OEMs

  Asset group affected by European BEV growth and emissions rules

  Strengths

  European BEV sales are strong, with some BMW and Mercedes models performing well.

  Weaknesses

  Reduced flexibility in emissions targets raises short-term BEV pressure, while some brands are affected by base effects and price competition.

  Comparison

  BMW, Renault, and Ferrari are rated Outperform; VW, Mercedes, Stellantis, Porsche AG, and Aston Martin are rated Market-Perform; Volvo Car is rated Underperform.

  Risks

  Policy changes, wider discounting, and model cycles falling short of expectations.

• Japanese autos and components

  Assets tied to HEV advantages and long-term BEV transition

  Strengths

  Toyota is competitive across multiple powertrain paths, Suzuki benefits from the India market, and Toyota Tsusho covers the upstream, midstream, and downstream supply chain.

  Weaknesses

  Japanese automakers are still in the early stages of BEV expansion, and the long-term xEV transition remains an industry challenge.

  Comparison

  Toyota and Suzuki are rated Outperform, Honda is rated Market-Perform, and Nissan, Mazda, and Subaru are rated Underperform.

  Risks

  Lagging BEV transition speed, global competition, and supply chain and cost pressures.

• Premium tire makers

  Beneficiaries of tire specification and replacement demand from rising EV penetration

  Strengths

  EVs are heavier and have higher torque, driving demand for larger and more technical premium tires; replacement market demand is released with a 2- to 3-year lag.

  Weaknesses

  The slowdown in EVs in North America and China is a mild headwind.

  Comparison

  Michelin, Bridgestone, and Pirelli are rated Outperform, while Continental is rated Market-Perform.

  Risks

  A decline in EV penetration, raw material costs, and delayed replacement demand.

Key data

• Global passenger xEV sales1.73 million unitsMay 2026, up 4% year over year and 7% month over month.
• Global xEV sales year-to-date 20267.40 million unitsUp 2% year over year, below the report's full-year 2026 growth forecast of 14%.
• Global BEV sales1.22 million unitsUp 14% year over year in May 2026, accounting for the main incremental growth.
• Global PHEV salesabout 509,000 unitsDown 14% year over year in May 2026.
• China EV sales960,000 unitsDown 7% year over year in May 2026, accounting for 55% of global sales, excluding exports.
• Europe EV sales417,000 unitsUp 25% year over year in May 2026, accounting for about 24% to 25% of global sales.
• North America EV sales115,000 unitsDown 26% year over year in May 2026, accounting for about 7% globally.
• RoW EV sales242,000 unitsUp 71% year over year in May 2026, making it one of the fastest-growing regions.
• Passenger EV lithium battery demand95GWhUp 14% year over year and 7% month over month in May 2026.
• Battery demand year-to-date 2026about 404GWhUp 11% year over year, close to the report's full-year target of 15%.
• CATL May power battery sales37.2GWhUp 28% year over year, with a market share of about 39.2%.
• Global LFP installation mix51%Up from 47% last year, while LFP share outside China rose to about 27%.

Impact & implications

In terms of investment implications, the report favors companies benefiting from continued global electrification, recovery in Europe and RoW, LFP expansion, ESS demand, and battery scale advantages; however, it remains cautious on Chinese domestic demand, U.S. EV demand, and capacity utilization at some Korean battery makers. The renewed acceleration in European BEV growth benefits European OEMs with new model cycles and premium tire suppliers, while the more structural EV penetration curve in India supports local two-wheeler and passenger vehicle electrification opportunities.

Risks

• China's subsidy rollbacks and the halving of purchase tax incentives may continue to suppress domestic EV demand.
• After the withdrawal of U.S. CVC incentives, sales declined year over year, and full-year demand may be flat or negative.
• Korean battery companies may continue to face short-term operating loss pressure due to insufficient utilization of U.S. EV battery capacity.
• If EV and battery demand fail to accelerate as expected, there is downside risk to full-year 2026 growth targets.
• Raw material cost inflation may compress profit margins in China's auto industry.
• Changes in European emissions regulation and ICE policies may alter the pace of OEM electrification.

What to watch

• Whether European BEV sales can maintain growth of more than 25%, especially the follow-up performance of Germany, BMW, Mercedes, VW, and Tesla.
• Whether China EV sales bottom out after subsidy rollbacks, and whether domestic EV penetration can remain around 61%.
• The bottoming level of North American EV demand and inventory conditions after the withdrawal of policy incentives.
• The GWh sales, market share, and capacity utilization of battery makers such as CATL, BYD, LGES, and Samsung SDI.
• Whether LFP penetration in markets outside China continues to rise.
• Whether EV penetration in India's two-wheeler and passenger vehicle markets shifts from pulse-like growth to a sustained curve.
• Whether Japanese automakers' HEV advantages can support near- to medium-term growth and gradually transition into BEV and FCEV deployment.