Two Roads Diverge: U.S., China Head in Opposite Directions on EV Adoption

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Part II of a Series

Written by Paul Wiseman for IIR News Intelligence (Sugar Land, Texas)

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Summary

U.S. rollbacks on energy transition funding are making EVs "the road less traveled," while China and the rest of the world drive on. Overall, this will increase demand for battery energy storage systems and lithium.

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Icing the ICE Transition

In the early 2020s, world governments were avidly committing to the energy transition, promising to reduce or eliminate internal combustion engines (ICE) by around 2035. This is key because ICE-powered transportation is seen as accounting for "more than 25% of worldwide carbon dioxide (CO2) emissions from fossil fuel in internal combustion engine vehicles (Girod et al., 2013)" said a 2023 story in ScienceDirect.

But in the last 12 to 18 months, some nations, especially the U.S., have walked back on those promises. Rising costs and challenges with juggling the exploding power demands for generation and distribution between EVs and data centers have been a reality check.

U.S. In Reverse--for Now

David Pickering, Industrial Info's senior VP of research - industrial manufacturing, sees a huge rollback in the U.S.

"From our point of view, EVs have virtually disappeared in the U.S. with the reversal of all the mandates." Pickering sees the EV transition as something that is inevitable eventually, but for now lithium-ion battery manufacturers are switching to battery electric storage systems (BESS), particularly for grid-scale projects. To learn more about BESS, see February 4, 2026, article - .

However, that might be about to change. A January 27 federal court ruling reversed some Trump Administration EV-related funding rollbacks. The court said the U.S. Department of Transportation (DOT) and the Federal Highway Administration broke the law when they abruptly froze the $5 billion National Electric Vehicle Infrastructure initiative, and they must now release those funds. The initiative's purpose was to fund the building of publicly accessible charging infrastructure.

But for now, the U.S. trails the rest of the world. According to Benchmark Materials International study released in January, worldwide EV sales of all types--including battery-only and plug-in hybrid electric vehicles (PHEV)--were up 20% in 2025, when compared with 2024. Norway (49%) and Germany (49%) led the way in percentage increase. At the bottom of the list were the U.S. (1%) and France (2.1%).

China by far had the largest dollar amount increase, but because they already spend significant amounts on EVs, the percentages were lower.

But the most telling U.S. statistic, to Pickering's point about the administration's mid-year changes, is that December's numbers were down a whopping 44% for BEV sales compared to November's, after the Trump Administration rulings. That drop put them at -.08% for the year. In December, PHEVs were -13% month-over-month, but still up by 8.2% year over year.

China Maps More EVs

Industrial Info research shows that China's domestic new energy vehicle (NEV) sales in 2025, including PHEVs, rose by 29% compared with 2024. Currently, 52% of Chinese households opt to purchase NEVs, a figure projected to reach 60% in 2026.

On top of that, China has recently signed an agreement with Canada to send them 49,000 EVs annually. Included in the agreement is a Most-Favored Nation (MFN) tariff of 6.1%, a fraction of the previous 100% punitive tariff.

As a result, Industrial Info believes larger markets in Canada and in Europe will increase lithium demand in the near future. The lithium impact will be explored further in the next installment of this series.

By the Numbers

• $5 billion: National Electric Vehicle Infrastructure initiative funds back in play after U.S. court ruling
• +29%: Rise in new energy vehicle sales in China in 2025 vs. 2024
• +1%: U.S. rise in new energy vehicle sales, same period

Road Hazards Remain

Geoffrey S. Lakings, Energy Market Strategist for Industrial Info, cites some recent U.S. and European EV manufacturer write-downs as bumps in that road.

"Ford is going to write down $19 billion from their EV divisions and from its transition to BESS. GM, too, is doing a multi-billion write-down, as it plans to refocus on hybrids (PHEVs) and BESS. The European Union (EU) also has walked back its 2035 'no ICE' pledges."

Lakings sees this backpedaling as a potential mistake, bur for a reason that may not be obvious. "I think before long, they will regret this move. Their EVs are actually mobile BESS units, which could be vital in addressing the strained grids involved in large loads from data centers and the like."

He explained, "These EV's would be the vehicle for 'smart microgrids/virtual power plants,' and could be the road traveled to a brighter electrified future. We will truly need an 'all of the above' energy strategy."

Lithium Can Still Bless BESS

As IIR's Pickering noted, administration changes in the U.S. and elsewhere have dampened EV transitions, but future elections could put EV adoption back on the road. Meanwhile, lithium investors can still look to utility-scale BESS as a growth area.

Part III of this series will evaluate lithium markets as a whole.

Key Takeaways

• EV sales continue strong in China
• Europe has rolled back some EV goals
• U.S. manufacturers Ford and GM have written off billions in EV investments

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About IIR News Intelligence
IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resources' Global Market Intelligence (GMI).

About Industrial Info Resources
Industrial Info Resources (IIR News Intelligence) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 250,000 current and future projects worth $30.2 trillion (USD).