Major Automotive Global Trends September 2026

Global

Vehicle battery market grows by around 20% year to date; seven Chinese companies account for most of the increase

In the first seven months of 2026, vehicle batteries with a combined capacity of 725.2 GWh were installed across 80 countries, up 20.4% year on year, according to a report by SNE Research. This represents a net increase of 123 GWh. In July alone, installed battery capacity reached 116 GWh, an annual increase of 22.1%.

Seven of the ten largest battery manufacturers during the reporting period were Chinese. Their combined market share reached 72.8%, up 3.1 percentage points year on year. Together, they added 108.8 GWh of capacity, accounting for around 88.5% of the net increase in global capacity.

Most Chinese manufacturers rely on their domestic market and are expanding production by drawing on their advantages in lithium iron phosphate battery technology. They are also expanding their business with foreign vehicle manufacturers and in the commercial vehicle segment. Their combined market share continued to rise, while their relative rankings are also changing.

According to the report, Japanese and South Korean battery manufacturers are struggling to close the gap, with growth below the global average. Installed capacity of batteries supplied by LG Energy Solution totalled 60.3 GWh, up 4.5%. The company retained third place, but its market share fell from 9.6% to 8.3%. Panasonic's installed capacity reached 26.2 GWh, up 7.6%, but its market share declined to 3.6%.

The report also highlights the impact of regulation on the supply chain. The battery passport requirement, which includes information on a battery's origin and supply chain, is expected to take effect in the European Union in February 2027. In North America, requirements concerning the origin of critical minerals and battery components are influencing expansion.

The total capacity figure covers vehicle batteries only. Alongside this market, demand for batteries for energy storage at data centres is creating additional opportunities. According to the report, regional plant utilisation, customer base, product mix and supply chain management will continue to influence companies' performance.

Europe

EU asks China to curb hybrid vehicle exports

According to European media reports in September, the European Union has asked the Chinese government to voluntarily limit hybrid vehicle exports to Europe, while considering additional tariffs. The EU currently imposes countervailing duties on battery electric vehicles made in China.

The reports indicate that the EU is seeking an agreed limit to prevent a further escalation of the trade dispute. EU officials argue that these vehicles benefit from extensive government subsidies and that some are sold below production cost, making it difficult for European manufacturers to compete.

The reports referred to a proposed cap of around 15%, compared with a current share exceeding one-third. However, it was not clear whether these figures concern only the plug-in hybrid market or a broader category of hybrid vehicles. The issue is expected to be discussed with Chinese government representatives in Beijing in October, following the EU's June demand for measures to reduce the trade deficit.

Pressure increased following record exports of these vehicles from China to Europe in the second quarter. While battery electric vehicle exports have moderated since the duties were imposed, exports of hybrids and plug-in hybrids, which are subject to a basic 10% tariff, have risen sharply. According to the reports, their sales in Europe increased from 3,800 vehicles in October 2024 to 50,000 in July this year.

Countervailing duties have applied to battery electric vehicles made in China since October 2024. Rates vary by manufacturer and are added to the basic 10% tariff.

As early as summer 2025, Chinese brands, including BYD and MG, redirected some of their operations towards exports of hybrid and plug-in hybrid vehicles. According to the figures cited for Germany, these vehicles accounted for more than 60% of the brands' deliveries in January–August 2026.

EU sources said that the investigation into government subsidies is at an advanced stage. If additional duties are imposed, they could be set by manufacturer, as under the mechanism applying to battery electric vehicles.

Germany's coalition calls for European production criteria in electric vehicle subsidies

In September, Germany's coalition parties discussed the transition to electric mobility in Germany and the European Union. This is an economically and politically sensitive issue in a country whose automotive industry employs around 730,000 people. According to the figures presented, each direct job supports almost seven additional jobs in related industries, including the components sector.

The discussion centred on criticism of the battery electric vehicle purchase subsidy programme launched in May. The coalition argues that the programme does not distinguish between European vehicles and imports, particularly from China. The parties agreed that local content criteria would be incorporated into the programme once developed in accordance with European law and in coordination with EU institutions.

The coalition parties also called on the Commission to postpone the planned tightening of the utility factor for plug-in hybrid vehicles in early 2027. This factor is used to calculate their carbon dioxide emissions. They argue that the change would undermine manufacturers' ability to meet emissions targets and expose them to fines.

The discussion also covered the advancement of autonomous driving. The parties agreed to promote faster approval procedures and dedicated development funding to shorten the transition from testing to commercial operation.

The initiative is intended to address driver shortages in public transport and enable on-demand transport services in outlying areas. It also seeks to respond to competition from US companies, including Waymo, which plans to launch a commercial robotaxi service in Munich by the end of 2027.

Tighter plug-in hybrid emissions calculations spark debate in the EU

The European Union is preparing to tighten the utility factor formula used to calculate the official carbon dioxide emissions of plug-in hybrid vehicles in 2027. The change is expected to increase the weighting assigned to driving on the petrol engine, thereby raising official emissions figures.

The European Automobile Manufacturers' Association, ACEA, is calling for the amendment to be withdrawn. A position paper published in March 2026 argued that the current factor, reflecting an electric driving share of 54%, should be retained and that improvements in charging infrastructure and vehicles should be taken into account, rather than placing the burden of resolving the issue on manufacturers.

Opponents argue that the amendment would undermine the economic viability of producing small, affordable plug-in hybrids, reduce demand for them and make it harder for manufacturers to meet emissions targets. A decline in their sales could be accompanied by an increase in demand for battery electric vehicles, but would particularly affect manufacturers for which plug-in hybrids represent a significant share of sales.

By contrast, an ICCT study published in Berlin in September 2026 calls for the amendment to be implemented and even brought forward. The study examined around 920,000 plug-in hybrid vehicles registered in Europe in 2021–2023, using real-world fuel and energy consumption data reported by manufacturers to the authorities.

According to the study, real-world carbon dioxide emissions were 3.5 times the official values for vehicles registered in 2021 and 4.6 times the official values for those registered in 2023. For vehicles with internal combustion engines, including full and mild hybrids, the ratio was 1.2.

For vehicles registered in 2022, the researchers found that a factor reflecting an electric driving share of around 21% would have been more consistent with actual usage than the assumption of around 80% used in the official calculation.

The study also found that, despite longer electric ranges in new models, the actual share of electric driving declined. Real-world emissions rose from 130 to 134 grams per kilometre, while official values fell from 37 to 29 grams per kilometre. The organisation argues that this gap gives plug-in hybrids an unjustified advantage in calculations of manufacturers' compliance with emissions targets.

The organisation recommends implementing the amendment in 2027 and revising the formula further thereafter. According to its statement, Chinese manufacturers accounted for 28% of new plug-in hybrid registrations in Europe in January–July 2026.

EU advances public procurement reform to favour local production

The European Commission is advancing a reform of public procurement law that would make it easier to exclude companies from outside the EU from tenders. The initiative targets Chinese companies, among others. European Commissioner Stéphane Séjourné cited BYD's electric buses as an example, even though they are manufactured in Hungary for EU customers.

The draft proposal to modernise public procurement law still requires approval by Parliament and EU member states. It could affect tenders for electric buses, charging infrastructure for public transport operators and electric vehicle fleets for local authorities and municipal corporations.

The reform is intended to allow public bodies to take strategic considerations into account when awarding contracts, including restrictions on companies from third countries perceived as a strategic risk. Large European tenders already include criteria beyond price.

For example, Deutsche Bahn's tender for thousands of electric buses considered energy consumption, maintenance costs, service coverage, production locations and compliance with corporate and environmental responsibility standards. BYD won around 5% of the contract, while most of the order went to MAN.

The Commission seeks to establish a legal basis for European preference criteria that would allow quality, security and industrial independence to be prioritised and address unfair trading practices. EU officials note that China, India and the United States already use similar tools.

The EU is expected to draw up a list of countries eligible for equal treatment on the basis of reciprocal access to tenders. China is not expected to be included.

However, BYD's operations illustrate the complexity of implementation. The company has manufactured buses in Komárom, Hungary, since 2017 and employs local workers. Since contracts are concluded with a Hungarian subsidiary, it cannot necessarily be automatically excluded as a Chinese company.

The draft is expected to distinguish between the identity of the company and the origin of the goods. Decisions could be based on EU rules of origin and contracting authorities' powers to require a minimum share of European-made components.

Germany considers further measures to protect industry from Chinese competition

According to European media reports, the German government is developing a package of economic security measures in response to rising imports from China. Several ministries are examining the country's dependence on China and considering additional tariffs, joint venture requirements, stricter investment screening and tighter export controls.

Commentators describe the initiative as a shift from Germany's previously cautious approach, which reflected the scale of its exports to China and its commercial ties with the country. The background includes the EU's trade deficit with China, which exceeds approximately €1 billion a day, a contraction in German industry and plans to reduce employment. Volkswagen has announced plans to expand its global workforce cuts to around 100,000 jobs.

According to the Federal Statistical Office, German exports to China fell by 9.7% in 2025 to €81.3 billion. Imports from China rose by 8.8% to €170.6 billion. According to Dataforce figures cited by Bloomberg, Chinese brands accounted for around one-third of plug-in hybrid registrations in Europe in July 2026.

Earlier this year, Chancellor Friedrich Merz said that Europe had underestimated China's economic strength. According to the reports, Germany is working with France to build support ahead of the EU summit in Brussels and talks with China in October.

The two countries are expected to prepare a joint position paper on trade defence, public procurement, supply chains, critical raw materials, investment screening and technology.

The government is also considering extending export controls to artificial intelligence technologies and semiconductor manufacturing equipment, amid concerns about military uses of items not currently included in control lists.

In telecommunications, Germany has already begun reducing its dependence on Chinese suppliers. By the end of 2026, operators are required to remove key Huawei and ZTE components from their 5G networks and replace key functions in their network management systems by the end of 2029. According to the sources, extending this approach to other digital infrastructure is under consideration, including areas involving communications components in vehicles.

Hungarian government tightens oversight of Chinese automotive and battery investment

Hungary's new government is tightening oversight of some Chinese companies operating in the country. Measures include reviewing previously approved financing and investment arrangements and imposing stricter environmental requirements on factories. The changes are already affecting electric vehicle and battery production projects.

The government led by Péter Magyar, who took office in May, has made rebuilding relations with the European Union a priority. This marks a shift from former Prime Minister Viktor Orbán's policy towards China.

The government has pledged to tighten environmental and employment standards and increase transparency in the award of subsidies. Magyar announced that some projects agreed with China and other countries would be reviewed.

A major focus is the automotive and battery industry, including BYD's operations. The company has established its European headquarters in Hungary and plans to begin operating an electric vehicle plant in Szeged this year. In August, the Minister of Transport and Investment announced a freeze on environmental concessions granted to battery plants, including accelerated approval procedures.

In June, the authorities revoked the operating licence of a Chinese battery membrane manufacturer after aluminium concentrations exceeding permitted levels were found in groundwater at its plant. In August, another Chinese manufacturer was fined for breaches relating to hazardous waste storage and environmental requirements.

Orbán's government sought to attract Chinese investment and viewed it as a source of growth. In 2024, the two countries agreed to expand investment in electric vehicles, including through subsidies and favourable regulatory conditions.

Italian association proposes 80% tariff on Chinese vehicles and components above a quota

In September, a senior official at the Italian automotive industry association, ANFIA, called for the European Union to impose an 80% tariff on Chinese-made vehicles and components exceeding an import quota, to protect European industry.

The association's president, Vavassori, proposed allowing duty-free imports equivalent to up to 8% of new vehicle registrations in Europe and imposing an 80% tariff above that threshold. He said the policy should also cover components, which account for around 80% of a vehicle's value.

The association expressed concern about the future of an industry it considers essential to Europe's strategic independence. According to the figures cited, Chinese brands accounted for around 9% of total vehicle sales in the first half of the year.

In 2025, Italian components companies exported products worth around €4.9 billion, equivalent to approximately US$5.7 billion, to Germany. The Volkswagen Group purchased up to around 20% of that total.

Against a backdrop of declining European production, Italian components exports fell by around 4.6% in the first half of the year and could decline by around 10% over the full year. The association warned that Volkswagen's efficiency measures could signal the beginning of wider disruption.

The association estimates that, without protection against imports from China, Italian components exports could decline by 40%–50% by 2028.

The association also criticised the EU's proposed Industrial Accelerator Act. It argues that the legislation could encourage imports from countries with free trade agreements, such as Morocco and Türkiye, rather than strengthen local production. It questioned Chinese manufacturers' willingness to develop European supply chains and argued that their European plants mainly assemble imported components.

United States

Trump supports Chinese vehicle production in the US while maintaining import restrictions

In early September, President Donald Trump said that he did not object in principle to Chinese manufacturers establishing vehicle plants in the United States, despite opposition in Congress and the automotive industry. He referred to Japanese companies' operations in the United States and emphasised the importance of employing American workers.

However, Trump made clear that he did not want Chinese vehicles to be manufactured in Mexico for export to the United States as fully built vehicles.

The remarks met with opposition from the US automotive industry and its representatives in Congress, who called on the President not to sign an agreement allowing Chinese manufacturers to enter the market.

In early 2025, the administration issued a regulation that effectively restricts Chinese manufacturers' ability to sell or produce passenger cars in the United States. At the same time, combined tariffs exceeding 100% were imposed on Chinese electric vehicles.

In September, the US Alliance for Automotive Innovation called on Congress to pass legislation by the end of December permanently prohibiting Chinese vehicles from entering the US market. Its members include General Motors, Ford, Toyota, Volkswagen, Hyundai, Honda and Stellantis.

California advances legislation to expand electric vehicle charging infrastructure

In September, California Governor Gavin Newsom signed a package of legislation intended to make electric vehicles and charging infrastructure more affordable and accessible. The laws focus on reducing bureaucracy and accelerating the deployment of charging stations across the state.

The initiative complements an electric vehicle purchase subsidy programme and other legislative proposals, not yet approved, aimed at reducing electricity prices, expanding electrification and encouraging rooftop solar installations.

According to the Governor, the laws will enable faster installation of public charging stations and expand charging options in residential and mixed-use buildings.

California recently launched a programme providing an immediate rebate of US$3,500 on a new electric vehicle or US$1,750 on a used electric vehicle. The rebate is deducted from the purchase price by participating manufacturers.

The legislation addresses, among other issues, delays in bringing charging stations into operation caused by outdated inspection procedures. Streamlined permitting also applies to associated works, including trenching, electrical upgrades, solar canopies and energy storage systems.

Permitting barriers and fees are also being reduced for projects in residential and mixed-use buildings. According to Newsom, the initiative is intended to expand clean transportation and reduce exposure to fluctuations in oil markets.

China

China scales back tax incentives for electric vehicles and batteries

The Chinese government continues to scale back some incentives for electric vehicles and batteries as the industry matures. In September 2026, a 2% consumption tax on lithium-ion batteries took effect. The rate will rise to 4% in September 2027.

The tax ends the exemption that had been in place since 2015. By contrast, sodium-ion batteries, solid-state batteries and fuel cells will continue to benefit from the exemption established through the end of 2028, with the aim of encouraging a shift towards advanced and alternative technologies.

According to the estimates cited, for an electric vehicle with a 60 kWh battery, a 2% tax represents an additional cost of around CNY 438, or approximately US$62. At a rate of 4%, the additional cost could reach around CNY 876, or approximately US$125.

This change should be distinguished from taxation of vehicles themselves. In 2026–2027, new energy vehicles benefit from a 50% reduction in purchase tax rather than the previous full exemption. The effective tax rate is 5%, and the reduction for a passenger car is capped at CNY 15,000.

Separately, exemptions from vehicle and vessel tax will be abolished from the beginning of 2027. This includes battery electric commercial vehicles, plug-in hybrid vehicles, including range-extended vehicles, and fuel cell commercial vehicles. The removal of the exemption for plug-in hybrids is not limited to commercial vehicles. It applies to both existing and new vehicles and does not cancel the purchase tax reduction described above.

The measures could weigh on domestic demand and strengthen export efforts. Meanwhile, indirect government support continues, particularly for charging and battery swapping infrastructure. The remaining tax benefits also apply to electric vehicles manufactured in China by foreign companies.

China issues conduct guidelines for vehicle manufacturers operating overseas

Against a backdrop of rising vehicle exports, Chinese regulators are tightening oversight of manufacturers' overseas operations through guidelines on pricing, marketing and trade.

The guidelines, issued by three government ministries in early September, require compliance with China's trade and foreign investment laws and competition laws in destination countries, alongside anti-corruption measures and corporate responsibility.

The initiative follows Chinese brands' rapid international expansion amid excess production capacity and intense competition in the domestic market.

Manufacturers are required to align pricing with costs and market conditions and avoid pricing that provides an unfair advantage or sharp price fluctuations that could harm consumers or the brand. They are also required to ensure transparent, reliable marketing and comply with local labour laws.

A representative of the Ministry of Commerce in Beijing said that the measures are intended to ensure the orderly development of international supply chains and protect the reputation of China's automotive industry. The guidelines were issued in part following investigations that raised concerns about unchecked competition among Chinese manufacturers in export markets.

China's vehicle exports exceed one million units for the third consecutive month

China's vehicle exports totalled around 1.01 million units in August 2026, exceeding one million for the third consecutive month. Cumulative exports from the start of the year through August reached approximately 7.153 million vehicles.

According to data from the China Association of Automobile Manufacturers (CAAM), published by China's industry ministry, exports in August fell by 3.2% from July but rose by 65.3% compared with August last year. Cumulative exports in January–August increased by 66.7% year on year.

Passenger car exports totalled around 890,000 units in August, down 3.5% month on month and up 67.1% year on year. Commercial vehicle exports reached around 120,000 units, down 0.8% month on month and up 53.3% year on year.

In January–August, around 6.248 million passenger cars were exported, an increase of 71.8%, along with around 905,000 commercial vehicles, up 38.1%.

New energy vehicles (NEVs) are driving growth. The category includes battery electric vehicles, plug-in hybrids, including range-extended vehicles, and fuel cell vehicles. It does not include conventional hybrids.

New energy vehicle exports totalled around 526,000 units in August, down 5% month on month and up 134.6% year on year. Exports of internal combustion engine vehicles totalled around 485,000 units, an annual increase of 25.2%.

In January–August, around 3.435 million new energy vehicles were exported, up 124.3%, along with around 3.718 million internal combustion engine vehicles, up 34.7%. The association notes that export growth is a major factor in stabilising the industry.

Thailand

Thailand considers excise tax of around 30% on fully built electric vehicle imports

In September, Thailand's finance minister said that an excise tax of around 30% on electric vehicles imported as completely built-up vehicles was under consideration. The final rate remains under discussion with the industry. The initiative is intended to encourage the establishment of local production lines.

Low import duties have allowed large numbers of affordable Chinese electric vehicles to enter the market in recent years. This has intensified price competition and put pressure on local manufacturing, a central component of Thailand's economy.

According to the minister, the country's commitments under free trade agreements limit its ability to raise tariffs directly. The use of excise tax is therefore being considered as a means of encouraging local investment and strengthening the supply chain.

Under the proposed tiered policy, the highest tax burden would apply to imports of fully built vehicles. Local production would receive preferential treatment, and the extent of local parts usage would influence taxation.

The minister noted that manufacturers currently exporting from China and Europe had already approached the government about investment in Thailand. Eligibility for incentives would depend on increased investment and integration into the local supply chain.

Thailand is Southeast Asia's largest vehicle production hub. Decades of Japanese investment have created an extensive network of components suppliers. In recent years, Chinese manufacturers have also invested billions of dollars in electric vehicle plants. Nine electric vehicle manufacturers operate in the country, and some also export from it.

 Israel

Energy Ministry recommends incentives for electric vehicles and charging infrastructure, and a phased introduction of a distance-based road tax

In September, the Ministry of Energy and Infrastructure published a review and policy paper on electric vehicle uptake in Israel and the measures needed to promote it. Prepared with support from consultancy iscon, the paper was released for public comment. It warns that slowing electric vehicle uptake carries an economic cost.

According to the paper, after approximately four years of rapid growth, electric vehicles' share of new vehicle sales fell to around 20% in 2025, compared with around 25% in 2024. In the first four months of 2026, it fell to around 11%, while Europe saw the opposite trend.

At the same time, plug-in hybrid sales increased. Drawing on European data, the paper notes that many of these vehicles are driven mainly on petrol. It refers to the government's electric vehicle uptake target, set out in Resolution 171, of around 90% by 2030.

One of the main barriers is the installation of private charging in multi-unit residential buildings, where around 75%–80% of households live. Barriers include difficulties in organising residents' committees, conflicting interests among residents, costs and legal complexity.

Another barrier concerns vehicle fleets and leasing companies, which purchase around 40% of all new vehicles. Challenges include employee fuel benefits, concerns over depreciation, range anxiety and uncertainty about a distance-based road tax. The authors warn that the transition to electric vehicles could become concentrated among owners of private homes with dedicated parking.

According to the paper's central calculation, switching from a petrol vehicle to an electric vehicle generates a net economic benefit of around NIS 24,700 per vehicle in the baseline scenario and up to around NIS 46,500 in the high scenario, after deducting infrastructure costs of around NIS 6,000.

According to the calculation, the shortfall in uptake in 2026 compared with the approximately 40% share previously projected for that year is expected to cost the economy around NIS 1.4 billion in the baseline scenario or around NIS 2.8 billion in the high scenario. Meeting the end-of-decade target is expected to generate an economic benefit of around NIS 16 billion. Savings for an individual consumer are estimated at around NIS 70,000 over the vehicle's lifetime, assuming no distance-based road tax is imposed.

The paper proposes three areas of action: advancing charging solutions in residential buildings through standardization and financial assistance; providing economic incentives over a period of at least five years, linked to progress towards the targets; and addressing barriers in vehicle fleets and leasing.

The tools under consideration include purchase tax and a system of penalties for failing to meet electric vehicle sales targets. If a distance-based road tax is introduced, the paper recommends phasing it in alongside purchase incentives. It also recommends helping local authorities establish public charging stations and monitoring the development of the electricity grid.