Progress Update: Automakers shifting to a decade of flexibility

Key Takeaways

• Combined electric vehicle sales across six major automakers grew by 13% in 2025
• BYD solidified its position as the world’s largest EV producer, surpassing 4.6 million electric vehicle sales and crossing the 1-million-unit export milestone
• Legacy automakers have shifted toward a long-term strategy, utilizing PHEVs and EREVs as strategic bridges towards 100% electrification.

The global automative market went through a period of transition in 2025 as manufacturers adapted to a changing market. While the collective electric vehicle (EV) sales among six key signatories of the Zero Emission Vehicles (ZEV) Declaration expanded by 13% over the previous year, this progress was fueled by the rapid global expansion of emerging volume leaders.

Although the final goal of 100% zero-emission vehicle sales by 2035 remains the industry backstop, 2025 signaled a strategic pivot away from strictly linear battery-electric trajectory. This year’s performance reflects a maturing landscape where automakers are balancing long-term climate commitments with evolving market dynamics and regulatory environments.

Steady progress amidst a diverging market

The global transition to EVs showed continued, albeit varying, momentum through 2025. As illustrated in Figure 1, BYD and VinFast remained the leaders with a 100% EV sales share, while Volvo Cars neared the halfway point with a 46% share. Mercedes-Benz and General Motors (GM) both demonstrated upward trajectories, reaching 22% and 19% respectively. Conversely, JLR saw a slight contraction to 17%, down from 19% last year, and Ford continued its gradual expansion, ending the year with a 7% EV share.

Figure 1: Global electric light-duty vehicle sales share by OEM (2024-2025)

Source: Marklines, March 2026; Gasgoo for BYD, January 2026; VinFast press release, January 2026. 

Building on its momentum in 2024, BYD solidified its position as the global volume leader in 2025 by delivering over 4.6 million global EV sales. The automaker aggressively scaled its international footprint, surpassing the 1-million-unit mark in overseas sales for the first time. This global expansion, supported by newly localized production hubs in Europe, Latin America and Thailand, underscores BYD’s transformation into a truly global brand, ready to capture high-growth markets across the world.

The Vietnamese manufacturer VinFast significantly expanded its global footprint in 2025, delivering 196,919 EVs and marking a 102% year-over-year increase, surpassing its target to double its 2024 volume. This performance, driven by a growing global presence and the diversification of its product lineup, signals a maturing EV ecosystem taking root across the Southeast Asian region and beyond.

European automakers maintained their leadership in EV adoption while reaching critical sustainability milestones in 2025.  Volvo Cars saw significant growth in several key regions to sustain its momentum, including a 91% surge in United States EV sales. Volvo met its 2025 climate target ahead of schedule, achieving a 31% reduction in CO₂ emissions per car compared to 2018.

Mercedes-Benz likewise maintained its position in the premium segment with an expansion of its electric lineup for cars and vans. JLR experienced a 24% decline in EV sales, primarily attributable to a major cyber incident that disrupted production in late 2025 and a planned wind-down of legacy models.

In the United States, GM reached a major milestone, delivering over 1.1 million EVs globally — a 24% year-over-year surge anchored by record-breaking performance in China, where EV sales reached nearly 1 million units. GM also saw a 48% increase in US deliveries. Ford demonstrated some progress in its EV transition, led by its continued market leadership of the electric commercial van segment and steady volume from its electric truck lineup.

A pivot toward flexibility

While the 2035 zero-emission goal remains the long-term benchmark for many manufacturers, 2025 marked a fundamental shift in how this goal is achieved. Following regulatory rollbacks in the European Union and United States, legacy automakers have moved away from BEV-only targets. Instead, the 2035 horizon is now defined by technological flexibility, with more manufacturers utilizing plug-in hybrid electric vehicles (PHEVs) and extended-range powertrains to sustain momentum towards that target year.

Legacy automakers have largely retreated from BEV-only midterm targets, opting instead for multi-pathway strategies to achieve the ZEV Declaration’s 2035 goal. In the US, GM and Ford have reintroduced PHEVs and extended-range electric vehicles (EREVs) to prioritize near term flexibility.

Similarly in Europe, Mercedes-Benz and Volvo Cars recalibrated their 2030 ambitions to include a significant share of PHEVs. These changes reflect a new industry consensus: rather than a linear shift directly from internal combustion engines (ICE) to BEVs, plug-in-hybrids are serving as a prolonged  transitional bridge, supporting decarbonization pathways while the full BEV transition matures through the early 2030s.

While companies like Jaguar, GM, and Ford have adjusted their 2026 production roadmaps, it is worth noting they have stopped short of withdrawing their final 2035 or 2040 commitments.

Widening gap in automotive investment

Across 2025 and into early 2026, global investment strategies have split into two distinct paths, with some doubling down on localized production, while others are shifting capital toward profitability in the short term.

BYD continues to lead the global manufacturing charge, utilizing a hub-and-spoke model to secure market access. Their strategic investments will add production capacity in Türkiye, Indonesia, Cambodia, and Brazil.

Similarly, VinFast has rapidly become a major player across Asia. Its $500 million facility in Tamil Nadu, India enabled a swift rollout, propelling the brand to become India’s fourth-largest EV player within just four months of launch. This was quickly followed by the inauguration of a $300 million plant in Subang, Indonesia.

In Europe, Mercedes-Benz holds firm to its €40 billion investment roadmap, prioritizing research and development of its next-generation EVs. Volvo Cars is proceeding with its $1billion transformation of its largest plant to produce EVs and has expanded production to Belgium to secure global supply chains. Meanwhile, JLR is completing the £500 million transformation of its Halewood facility to produce electric SUVs.

In stark contrast, 2025 marked a period of significant investment pullbacks for US automakers. Ford recorded a historic $19.5 billion write-down in late 2025, including the cancellation of several ZEV models, such as the electric F-150 Lightning. General Motors recorded a $7.6 billion charge linked to EV production cutbacks and shifted its Michigan plant back toward high margin ICE trucks and SUVs. Both manufacturers also cut back their battery supply chains.

Diverse pathways to zero-emission future

Last year clearly showed that the transition to zero-emission transport is not a sprint, but a marathon, with many near-term milestones on the path to an all-electric future. While emerging leaders like BYD and VinFast are aggressively scaling affordable electric models, legacy manufacturers are increasingly adopting technological neutrality as a strategic bridge. Despite investment pullbacks and the recalibration of near-term goals, the 2035 zero-emission target remains the industry’s definitive backstop.