1.2 million EVs were sold globally in January – but the market shrank. Global EV sales fell 3% year-over-year and 44% in January 2026 from December to 1.2 million units, according to Benchmark Mineral Intelligence. The slowdown was largely driven by China, where sales dropped after new taxes and weaker incentives kicked in.
China cools after tax and subsidy changes
China, the world’s largest EV market, sold around 600,000 EVs in January. That’s down 20% year-over-year and 55% compared to December. Given China’s outsized role in the global market, that drop is the main reason worldwide sales were down.
Two policy changes kicked in at the start of 2026: EVs are now subject to a purchase tax for the first time since 2014, and the country’s trade-in scheme is less generous than it was in 2025.
While EVs in China aren’t yet facing the full 10% purchase tax that applies to gas cars, most are now subject to a 5% purchase tax. At the same time, the trade-in subsidy shifted from a flat-rate payment to a proportional system, meaning average incentives are lower, especially for smaller, lower-priced EVs. After more than a decade of tax exemptions and aggressive subsidies, 2026 is shaping up to be a more market-driven year for China’s EV sector.
Europe props up the global market
Europe was the bright spot.
The region sold more than 320,000 EVs in January, up 24% year-over-year, even though sales were down 33% from December. Europe was the fastest-growing major region in 2025, and it’s continuing that momentum into 2026.
Automakers are still under pressure to meet EU tailpipe emissions targets. While those targets were softened in 2025, EV sales still need to keep climbing if manufacturers want to avoid fines.
Subsidies are also back in several key markets. The UK, Germany, and France have all reintroduced EV incentives, and they saw year-over-year growth of 14%, 25%, and 41%, respectively.
Not every country had a strong January. Norway’s EV market plunged 71% year-over-year and 92% month-over-month after buyers rushed to purchase vehicles before tighter VAT exemptions kicked in on January 1, 2026. The Netherlands also saw a sharp drop – down 28% year-over-year and 64% month-over-month – after a similar pre-buying surge ahead of higher taxes on company cars.
North America’s EV slowdown deepens
North America had a rough start to 2026.
The region sold about 90,000 EVs in January, down 33% year-over-year and 27% compared to December. The US drove most of that decline, with January 2026 marking the country’s lowest monthly EV sales since early 2022.
The market is still adjusting after the Trump administration killed federal EV tax credits on September 30, 2025. The rollback of CAFE fines and protectionist policies aimed at localizing vehicle production and supply chains has also reshaped automakers’ plans. Ford, GM, and Stellantis have all taken multi-billion-dollar write-downs as they pivot parts of their North American strategies away from EVs.
Canada is trying to stabilize its market after ending its national EV subsidy in January 2025. In January 2026, Canada and China reached an agreement allowing up to 49,000 Chinese-made EVs into Canada at the most-favored-nation tariff rate of 6.1%. That’s the first time since October 1, 2024, that Chinese EVs have been allowed in at a tariff rate below 100%.
Rest of world surges
Outside the three major regions, EV sales nearly doubled year-over-year.
The rest of the world sold about 190,000 EVs in January, up 92% from a year earlier. South Korea, Brazil, and Thailand led the gains.
Thailand had a record month, with EV sales more than tripling year-over-year to over 44,000 units. Automakers were granted an extension to register vehicles under Thailand’s EV3 scheme through January 2026. Alongside consumer subsidies, the EV3 and EV3.5 programs offer reduced import duties on fully built-up EVs, provided those imports are offset by local EV production. Thailand also cut excise taxes on EVs starting January 1, 2026.
Electrek’s Take
January is always a strange month for auto sales, especially in China, where year-end incentive changes can create massive pre-buying waves. A 44% drop from December looks dramatic, but seasonality matters.
Still, the bigger story here is policy.
China is dialing back incentives. The US has already eliminated federal tax credits and softened fuel economy penalties. Canada ended its subsidy and now has a new trade deal with China. Europe, meanwhile, is reintroducing subsidies and tightening emissions rules.
If 2025 was about explosive growth, 2026 looks more like a stress test. Markets that still have strong policy support are growing. Markets that pulled it back are seeing sales cool, at least for now.
The global EV transition isn’t going to reverse; it will keep growing. It’s just becoming more uneven and more political.
Read more: Tesla pushed EV prices lower in January, but sales kept sliding
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