Electric vehicles became more affordable across much of the world in 2025, but the trend largely bypassed the United States.

Electric cars now account for one in every four vehicles sold globally, underscoring the rapid pace of adoption worldwide.

In contrast, EV penetration in the U.S. remains around 10 per cent, according to the International Energy Agency’s Global EV Outlook 2026 report released on May 20.

The report highlights a sharp decline in battery costs, with average EV battery prices falling 8 per cent over the past year.

The drop was driven by lower raw material prices and the growing use of lithium iron phosphate batteries, which reduce dependence on costly materials such as cobalt and nickel.

The improving cost environment helped fuel strong demand, with global electric vehicle sales surpassing 20 million units in 2025, representing a 20 per cent increase from the previous year.

In the U.S., EV sales slipped slightly last year as policy changes made electric vehicles more difficult to produce and less affordable for consumers.

The market also lacked the low-cost Chinese models that have helped drive adoption elsewhere, while Americans’ enduring preference for larger vehicles further slowed the shift toward electrification.

New electric vehicle sales in the U.S. fell sharply in the final quarter of 2025, dropping 45 per cent compared with the same period in 2024, according to the IEA.