Global EV Sales Decline as Incentives Wane

Global electric vehicle (EV) sales experienced a setback in February 2026, falling by 11%—the largest drop since the onset of the COVID-19 pandemic in early 2020. This decline is largely attributed to the phasing out of government incentive programs in key markets, particularly in China and the United States.

China Leads the Downturn

China, the world’s largest EV market, saw a significant 32% decrease in electric and plug-in hybrid car registrations in February 2026 compared to the previous year. This downturn coincides with the end of China’s car trade-in program and the expiration of tax exemptions on EV purchases at the end of 2025. Overall car sales in China also decreased by 34% during the same period, according to the China Association of Automobile Manufacturers.

North America Follows Suit

The North American market also experienced a substantial contraction, with EV sales shrinking by 35% to under 90,000 units. This marks the fifth consecutive month of declining sales in North America, following the termination of the electric vehicle tax credit scheme in the United States last September and proposals to reduce CO2 emissions standards.

Price Sensitivity and Market Trends

Analysts at Benchmark Mineral Intelligence (BMI) attribute the sales decline to consumer price sensitivity. “Consumers are very price sensitive,” stated Charles Lester, a data manager at BMI [1]. With incentives removed, the cost of EVs has become a more significant barrier for many potential buyers.

Globally, approximately 1.05 million electric vehicles were sold in February, representing the lowest sales figure in the past two years.

Rare Earth Supply Concerns

While not directly related to the sales decline, the EV industry’s reliance on rare earth minerals, particularly from China, remains a critical concern. According to Benchmark Mineral Intelligence, the West will still depend on China for 91% of its heavy rare earths needs by 2030, a slight decrease from 99% in 2024 [3]. Lynas Rare Earths recently signed a $96 million agreement with the U.S. Department of War (DoW) to supply light and heavy rare earth oxides over a four-year period, signaling efforts to diversify the supply chain [Article].

Looking Ahead

The recent decline in EV sales highlights the importance of sustained government support and affordability in driving the transition to electric vehicles. The industry will need to address consumer price sensitivity and secure diversified supply chains for critical minerals to ensure continued growth in the long term.