The global electric vehicle (EV) market is settling into a more mature phase of expansion.
After several years of rapid acceleration, 2025 delivered solid — though more measured — growth in EV sales, alongside widening regional divergence and evolving battery chemistry preferences. For investors, the shift is less about a slowdown and more about structural recalibration: volumes are still rising, but the drivers of growth are becoming more nuanced.
2025 in review: Expansion with divergence
According to analysis from RK Equity, global EV sales (battery electric and plug-in hybrid combined) reached around 20.7 million units in 2025, up roughly 16% year on year. While still substantial, that growth rate is below the step-change increases recorded earlier in the decade.
China remained the dominant force, accounting for the majority of global EV sales. However, growth moderated in the second half of the year as subsidy programmes wound back. In the United States, EV sales slipped into negative growth territory by year-end, reflecting pricing pressures and policy uncertainty. Europe saw more modest gains, supported in part by the rollout of more affordable models, while the fastest percentage growth came from the rest of the world, where adoption continues to build from a smaller base.
RK Equity expects 2026 to deliver continued expansion, albeit at a slightly softer pace than 2025. Importantly, EVs are still projected to account for more than half of total global battery demand this year — underscoring their central role in the broader energy storage ecosystem.
Chemistry shifts reshape demand
While headline vehicle sales often dominate attention, battery chemistry trends may prove more consequential for materials markets.
Industry research from IDTechEx highlights the growing global penetration of lithium iron phosphate (LFP) cells, which are gaining share beyond China into Europe and North America. Their lower cost profile and improving energy density make them increasingly competitive in mainstream segments.
At the same time, nickel-rich chemistries such as NMC remain important for higher-range vehicles, preserving demand for nickel and cobalt in premium models. This dual-track chemistry environment is reshaping demand patterns across lithium, nickel, manganese and iron supply chains.
On the anode side, IDTechEx expects silicon to gradually capture greater share alongside graphite as manufacturers seek incremental improvements in energy density and performance. Although adoption remains gradual, even modest penetration of silicon-enhanced anodes could materially alter future raw material demand profiles.
The firm forecasts that total EV battery material demand could exceed 22 million tonnes annually by 2036, reflecting both rising EV deployment and evolving pack architectures designed to optimise cost and performance.
Structural demand still climbing
For investors in battery materials and related technologies, the key takeaway is that moderate unit growth does not necessarily translate to weakening fundamentals.
Even if annual EV sales growth settles into the mid-teens, cumulative deployment continues to expand the installed base rapidly. That supports ongoing demand for lithium, cathode and anode materials, pack components and associated processing capacity.
Meanwhile, pack design innovations — including cell-to-pack integration and lightweighting strategies — are improving efficiency but not eliminating material intensity. Instead, they are refining how and where materials are used.
What to watch in 2026
Several themes are likely to shape the year ahead:
- Regional policy shifts, particularly in China and the US
- The pace of LFP adoption outside China
- Pricing dynamics across lithium and nickel markets
- Silicon anode commercialisation milestones
The EV story in 2026 is less about explosive headline growth and more about consolidation, chemistry competition and supply chain positioning. Sales volumes are still increasing, but the market is becoming more complex — and arguably more investable — as regional demand patterns and technology choices diverge.
For materials producers and technology developers, that complexity presents both risk and opportunity. The next phase of EV expansion may be steadier, but the underlying demand curve for battery inputs continues to bend upward.