Over the past couple of years, the electric vehicle (EV) market has had no shortage of negative headlines. Subsidies were reduced in several regions, European sales temporarily plateaued, and investors began to question whether the transition had lost momentum.
However, recent data would suggest the market has far from stalled and is instead moving up a new gear. Global electric car sales exceeded 20 million in 2025, meaning that around one in four new cars sold worldwide was electric. That is expected to be close to 30% in 2026, marking a clear re-acceleration after a period of weaker sentiment, and importantly, the drivers of adoption appear to be broadening.
In the early stages of EV adoption, roughly from the mid-2010s to the early 2020s, subsidies, tax credits and other incentives played an important role in helping consumers overcome the higher upfront cost of electric vehicles. These measures supported the rapid growth of the market and helped manufacturers scale production.
As some of these incentives were reduced or removed, parts of the market experienced a softer period for demand. This was visible in Europe and the US, where changing policy support and weaker consumer sentiment led some investors to look elsewhere for investment opportunities.
Today, however, the EV market is becoming less reliant on subsidies alone. Higher petrol prices, partly linked to tensions in the Middle East and concerns around oil supply, have strengthened the financial case for EV ownership.
In the UK, petrol prices rose sharply earlier this year, with recent reporting noting that the cost of refuelling a typical 55-litre car was around £10 higher than before the Middle East conflict broke out at the end of February. This matters because the running-cost advantage of EVs can be significant, with one UK estimate recently putting it at £760 annually for 10,000 miles driven.
This supports the case that EV demand is increasingly being driven by household economics and energy security, rather than policy support alone.
At the same time, the upfront cost gap is narrowing. Battery technology continues to improve, charging speeds are getting faster, and a growing number of electric models are now priced competitively against petrol equivalents. This is particularly evident in China, where scale, manufacturing efficiency and battery innovation have helped drive down EV prices.
Policy support still remains relevant too. China continues to be the key engine of global EV growth, supported by strong industrial policy, incentives and extensive charging infrastructure. Europe remains broadly supportive, helped by emissions regulation and the need for manufacturers to meet tightening fleet targets, although policy has become more flexible in some areas.
The US, however, is a more challenging environment following changes to consumer incentives. Used EV sales have continued to grow as prices have fallen, while EVs still account for around a quarter of vehicle sales in California. Looking ahead, more affordable models, including Ford’s planned electric pickup, could help broaden adoption further.
Opportunities for investors
For investors, the key question is not simply whether EV penetration continues increasing, but where in the value chain it is most attractive to gain exposure.
Rather than trying to pick the winning car manufacturer or battery chemistry, savvy investors seek out enabling technologies and infrastructure that support the wider energy transition. This matters because the EV market remains highly competitive. Carmakers face intense pricing pressure, especially from China, while battery cell manufacturing is capital intensive and often operates on slim margins.
Raw materials exposure can also bring commodity cyclicality and sustainability challenges, including concerns around cobalt, water use and mining practices.
Instead, there is more opportunity found in the “backbone” of the EV ecosystem: the companies that provide the semiconductors, power electronics, automation, testing equipment, grid infrastructure and clean power that is needed as the EV market expands.
For example, Schneider Electric is exposed to the electrification and grid infrastructure required to support higher EV adoption. As more vehicles are electrified, demand rises for charging infrastructure, grid upgrades, energy management systems and equipment that improves the efficiency and resilience of power networks. Schneider is therefore not dependent on which carmaker ultimately wins market share.
Similarly, Infineon Technologies plays an important role in power semiconductors which help control power conversion, battery management and energy efficiency, all critical areas as vehicles become more electrified and as charging networks scale. Meanwhile, Nvidia also has exposure to technologies supporting vehicle electrification and intelligence, although this represents a smaller part of its business than it does for Infineon.
This is why the recent shift in the EV narrative is encouraging. The opportunity set is now so much more about costs, energy-security and infrastructure than it is about policy. As petrol and diesel sales continue to decline from their peak, and as EV affordability improves, the long-term direction of travel remains clear, even if the pace varies by region.
Read more: Investing in megatrends changing the world
