Plug-in vehicle sales continued to expand globally in 2025, reaching a remarkable 20.7 million units sold, which is approximately 20% more than in 2024. However, this growth was not mirrored in North America, where sales saw a combined decline. According to a report from Benchmark Mineral Intelligence, the U.S. and Canada experienced a significant slowdown in electric vehicle (EV) sales following the expiration of federal tax incentives that had previously bolstered consumer interest.
The report indicates that while the global market thrived, North America faced challenges, with plug-in vehicle sales dipping by 4% compared to the previous year. Most notably, the U.S. saw a 49% drop in Q4 2025 sales compared to Q3, a direct result of the elimination of the $7,500 federal tax credit. Conversely, Mexico experienced a 29% increase in plug-in sales, benefiting from imports, largely from China.
In Canada, the situation was similar, with a staggering 41% decrease in plug-in sales attributed to the depletion of their federal rebate program early in the year. Although the Canadian government has signaled intentions to reinstate these incentives, the lack of immediate support has contributed to a predictive decline of 29% in U.S. sales for 2026, as outlined by Benchmark. Factors such as limited consumer incentives and reduced regulatory pressures have led manufacturers to shift focus back toward internal combustion engine production.
In contrast, the global landscape presented a different story. The “rest of the world” region, which includes South America, Southeast Asia, and Central Asia, recorded a remarkable 48% increase in plug-in sales, totaling 1.7 million units in 2025. Europe followed closely with a 33% rise, amounting to 4.3 million units sold. This region also noted a growing presence of Chinese manufacturers, with nearly 19% of all plug-in vehicles sold in Europe originating from China, led by companies such as BYD, SAIC, Xpeng, and Leapmotor.
The potential for further growth in Europe is on the horizon, as the European Union considers eliminating import tariffs on Chinese vehicles, which currently range from 7.8% to 35.3%. This change could render Chinese cars more affordable, thereby enhancing the attractiveness of electric and electrified vehicles.
China’s own plug-in vehicle market saw a growth of 17% in 2025, totaling 12.9 million units sold. While pure electric vehicle (EV) sales surged by 26%, the growth of plug-in hybrids lagged at just 6%. Notably, there was a slowdown in pure EV sales towards the end of the year, with only a 4% increase in Q4 compared to the previous year. This deceleration is indicative of an evolving market landscape, as the Chinese government partially lifted purchase tax exemptions for plug-in vehicles, introducing a 50% tax burden for consumers starting in 2026. Additionally, new five-year plans signal a deprioritization of new energy vehicles, which could further impact sales.
Japan, on the other hand, has shown a more tepid response to EVs, with only a 6% growth in its plug-in market in 2025. In contrast, South Korea showcased a robust 50% increase, driven by a diverse array of new plug-in models from manufacturers like Hyundai and Kia, alongside a comprehensive incentives program.
Despite the evident cooling in China and the regulatory uncertainties in North America, the global appetite for plug-in vehicles remains strong. As certain regions implement stable incentives and supportive policies, sales are likely to flourish, whereas areas lacking such frameworks may continue to encounter volatility. The trajectory for 2026 suggests that while the world is increasingly eager to embrace electrification, the path for expansion will greatly depend on local market conditions and governmental regulations.
