This edition of Macro Trends explores the global EV market's evolving landscape. China and the EU lead in EV adoption due to favorable policies, contrasting with the US despite its higher income. China's EV sales significantly surpass the US, with rapid BEV and PHEV growth. Trade policies are redirecting EV imports, benefiting Mexico and US domestic production. This influences automaker stock performance, with US companies gaining. We also examine Tesla's sales decline amid rising competition and the impact of increasing EV battery costs from raw material fluctuations.

EV penetration does not directly correlate with GDP per capita.

US has the highest income but lags in EV adoption. China, with far lower income, is a global EV Volume and adoption leader.

EU is still the leader in EV share with 60% of new car sales going to EV.

EU and China leading the EV adoption is likely due to favorable policies such as consistent subsidies, mandates, and production focus.

China's EV market dwarfs the US', selling roughly five times more units with faster, more consistent growth.

The US' strong oil supply likely slows EV adoption.

In China, BEVs lead, with PHEVs rapidly gaining traction since 2020 for urban flexibility.

Conversely, the US sees Hybrids dominating EV sales, reflecting consumer hesitancy towards full electrification, as BEV growth trails Hybrids.

US EV imports grew strongly across all major partners since 2017.

This chart vividly illustrates, however, how trade policy can decisively redirect the flow of EV imports, pressuring automakers to diversify production and reconfigure supply chains.

In 2023, the EU and Japan are the largest sources of imports by value.

More recently though, the big winners appear to be Mexico and the domestic US production, while China’s access to the US market was effectively closed.

Moving from macro to micro, we’re now comparing the performance of major car manufacturers with large export to the US, with a rebase at the beginning of the year (1st chart) and since Liberation day (2nd chart).

You can already see a stark difference between the two with American stocks seemingly doing much better since Liberation day and all the European ones as well as BYD dropping in negative territories.

Taking this a step further, we can see a strong gap between the 2 periods and the 4 regions we’re looking at.

While China was the only winner since January 1^st, it dipped just below 0 since Liberation day, leaving the US a strong winner with almost 16% gain and Japan with a reasonable 5.5%, the latter most likely explained by the strong reduction in tariffs imposed by the White House.

For the sake of this exercise, we created custom indices based on equal weighting of the car manufacturers from the previous analysis.

Comparing CAGR with ROE across the automobile industry offers valuable insight into regional financial efficiency and the sustainability of growth.
According to our analysis, there is a positive relationship between ROE and10-year CAGR in Europe and the US, indicating that companies in these region shave been able to efficiently reinvest earnings to support sustained expansion.

In contrast, Japan and China exhibit a neutral to negative relationship, suggesting inefficiencies in translating profitability into long-term growth.

In these markets, a high ROE does not necessarily lead to strong CAGR– possibly due to structural challenges and market saturation in Japan, or aggressive, low-margin expansion strategies in China.

The decline in Tesla’s global sales has been widely discussed in the media, driven by two key factors.

First, Elon Musk’s political affiliations have become increasingly polarizing, potentially affecting the brand's appeal among certain consumer segments.

Second, the broader evolution of the EV industry has intensified competition. Traditional automakers (such as Volkswagen, Ford and Hyundai) are rapidly expanding their EV offerings, while Chinese manufacturers like BYD continue togain global market share through aggressive pricing and rapid innovation.

Ona rolling annual basis, the data clearly shows that Tesla has been losing momentum since late 2021.

In fact, sales growth has turned negative year-on-year in 2025, underscoring as shift in the company’s growth trajectory amid rising competitive pressure.

EV batteries have recently come under increased discussion due to rising production costs, supply chain constraints, and the strategic importance of critical raw materials.
To track price movements, Macrobond has constructed a simple composite index using the 1-year rolling Z-scores of key battery components. The index is weighted as follows:
40% nickel
20% lithium
20% cobalt
10% aluminum
10% copper.

This approach allows us to better understand the dynamics and volatility of the raw materials market that underpins EV battery production – offering insight into potential cost pressures and pricing trends within the broader EV value chain.

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