The global electric vehicle market is taking a K-shape with the United States lagging behind

All of it Doom and gloom About the state of the electric car market? This is just an American problem. The rest of the world can’t get enough electric vehicles, according to A New report From the International Energy Agency.

Electric vehicle sales exceeded 20 million units last year, accounting for 25% of the global market. Growth was highest in China, and market share accelerated in other regions. In Latin America, for example, sales rose by 75%. Meanwhile, sales in the US are stagnating, with electric vehicles accounting for around 10% of the market.

The electric vehicle market has become K-shaped, and automakers of all stripes – old and emerging – would do well to pay closer attention.

Sales numbers in the United States fell last year due to the Big Beautiful Bill Act, which eliminated tax breaks for electric cars, along with policies that prevented Chinese automakers from entering the market.

For startups like Rivian and Lucid, which are investing heavily in the US market, this road ahead is certainly more difficult. Legacy automakers are somewhat isolated, as they can rely on more profitable fossil fuel vehicles – at least in the short term. But without a strong EV strategy, they will lose more global market share as consumer tastes and expectations change.

Elsewhere, Chinese automakers have been driving the top K segment higher. The growth was most pronounced in China, where nearly 55% of new cars were electric. Affordability helps: More than two-thirds of electric cars sold in the country were cheaper than the average price of fossil fuel-powered cars.

Chinese automakers have also helped lift electric vehicle sales in Southeast Asia, Latin America and Europe. For example, more than half of the electric cars sold in Southeast Asia are manufactured by a Chinese company, while Europe has imported more than half a million Chinese electric cars.

The astonishing growth of electric vehicles in Southeast Asia and Latin America is puncturing One prevailing theory Electric cars will be too expensive for developing economies. Prices of electric cars have been on par with internal combustion cars for the past two years in Thailand. “Imports of affordable electric vehicles from China have driven down prices and increased electric vehicle sales in many emerging markets in recent years,” the IEA report said.

But this may not last forever.

Chinese automakers exported 25% more vehicles than those purchased in foreign markets. Dealers outside China may resist accepting more electric vehicles until they can sell what they have. In addition, countries may begin to chafe at the flood of cheap Chinese cars and impose tariffs.

Even if that happens, it would be foolish to exclude Chinese brands. The Communist Party has invested large sums of money to turn the automobile industry into a powerhouse. As a result, the country has enough manufacturing capacity to achieve this 65% of global demand. Thanks to state support, Chinese automakers can produce a large number of vehicles for a much longer period than other companies can remain solvent.

However, in the long term, electric cars promise to undercut fossil fuel vehicles, even without subsidies. As early as next year, they will be battery-powered electric cars Cheaper to make of internal combustion vehicles, according to Gartner.

The Trump administration is trying to redirect the US market toward fossil fuels, perhaps convinced that the domestic market is different from other markets, but it faces severe headwinds. Fossil fuel-powered passenger cars and light trucks market It peaked in 2017According to BloombergNEF, while sales of hybrids and plug-in hybrids are rising, they are not growing as quickly as pure electric vehicles.

Perhaps the most cautionary tale comes not from an American automaker, but from a Japanese company.

Honda, which recently halted three electric vehicle projects, has done just that She put her future at risk As a global automobile manufacturer. By backing away from electric cars, it would be abandoning crucial lessons that helped companies like Tesla and BYD lower the cost of their cars. Because EVs are ideal platforms for building software-defined vehicles, Honda will miss another trend sweeping the industry, one that has also helped companies cut expenses.

Overall, it paints a bleak picture of legacy automakers backing away from their electric vehicle ambitions.

Companies that don’t position their electric vehicle businesses may lose out to competitors in the global market, sacrificing revenue that could keep them competitive for years to come.