Europe’s EV Boom, America’s EV Slump

Peter Galloway

Welcome to the show. <audio-tag tag="matter-of-fact"></audio-tag>In the first quarter of 2026, Europe’s EV market was up roughly 27% year on year, while the US market was down by about 27%. Same planet, same battery chemistry, same basic improvements in range and charging speeds -- and two markets heading in opposite directions.

Peter Galloway

Right, and that gap is too big to blame on the usual lazy explanations. It is not because Europeans suddenly became morally superior motorists, and it is not because Americans woke up one morning and decided they hate lithium. Consumers did not collectively change species between January and March.

Peter Galloway

The numbers tell the story. Electrek’s global Q1 report put worldwide EV sales at 4 million in the first quarter, up around 29% overall. Europe was part of that growth story. The European Alternative Fuels Observatory said battery electrics reached about a 20% share of the European market at the start of 2026. So this is not some niche corner still waiting for permission to exist. It is a proper market now.

Peter Galloway

Meanwhile in the US, Cox Automotive’s first-quarter commentary painted a very different picture. EV sales fell sharply year on year -- about 27% down -- even though, and this bit matters, the physical product kept improving. More models, better range, more battery supply, more public fast charging. Charged EVs noted US public DC fast charging continued expanding rapidly in Q1. So the infrastructure story did not suddenly collapse either.

Peter Galloway

And if you’re thinking, well maybe the cars just got worse in America -- no. That’s the point. Both markets are benefiting from the same basic industry trends. Batteries are cheaper than they were a few years ago. Software is better -- usually. There are more compact crossovers, more saloons, more SUVs, more choices full stop. We are not comparing 2019 Norway with 2014 Kansas here. These are mature-ish markets seeing the same global technology curve.

Peter Galloway

So when one side accelerates and the other stamps on the brakes, you have to look past the product and into the conditions. What changed around the buyer? What changed around the monthly payment? What changed around tax, rebates, charging support, confidence?

Peter Galloway

Here’s our take. This divergence is policy-driven, not taste-driven. Consumer preference matters at the margin, sure. Brand strength matters. Charging anxiety matters. But not enough to produce a swing this large in opposite directions while the underlying technology is improving in both places.

Peter Galloway

I came into this industry through fleet spreadsheets, not vibes, and the first thing you learn is that people respond to incentives with boring reliability. Knock a few grand off the upfront price, give favourable company-car tax treatment, make charging easier, and demand rises. Remove support, muddy the rules, make ownership economics less predictable, and demand softens. It’s not romantic. It’s just how markets work.

Peter Galloway

Now, Europe is not perfect. Far from it. Public charging prices in parts of the UK are still daft, and there are countries doing much better than others. But if you zoom out, the direction is still toward making EVs easier to buy and easier to live with. In the US, the direction has been muddier and, in some cases, actively hostile.

Peter Galloway

And once you see it that way, the quarter stops looking mysterious. It starts looking inevitable.

Peter Galloway

Alright, let’s start with Europe. <audio-tag tag="skeptical"></audio-tag>It is still a patchwork -- because Europe loves a patchwork almost as much as it loves a committee -- but the broad direction is clear. Purchase grants, registration-tax breaks, lower company-car taxation, VAT advantages in some cases, charging support, and local schemes layered on top. Imperfect? Absolutely. But it nudges one way.

Peter Galloway

Euronews’ roundup on 2026 incentives made the point pretty well: support levels vary a lot, but a lot of European governments are still doing something tangible to reduce the cost or improve the ownership case. And that matters because the most important number for most households isn’t range. It’s monthly payment. It’s what leaves the account every month.

Peter Galloway

Germany is the most useful example here because it has shifted from broad-brush support to more targeted support. The European Alternative Fuels Observatory highlighted Germany’s 2026 EV incentive programme as socially targeted. Translation: they’re trying -- at least in theory -- to push support toward buyers who actually need help getting into an EV, instead of showering subsidies on everyone who was already about to order a premium company car.

Peter Galloway

That is, in my view, the right direction. Not because it’s perfect, but because it recognises reality. If you want mass adoption, you have to care about affordability. A subsidy on an £80,000 electric SUV is politics dressed up as climate policy. A targeted incentive that helps lower-income households or small businesses switch -- that’s a market-making tool.

Peter Galloway

And it’s not just the sticker price. Company-car tax treatment across much of Europe has been a huge lever. Fleet and salary-sacrifice style channels matter because they get people into the product, increase used supply later, and normalise EV ownership. Then there’s charging support and broader policy consistency. You may not get every country doing everything well, but buyers can see a direction of travel.

Peter Galloway

Now compare that with the US. The policy story there is not simply “support is lower.” It’s that support has become weaker and less certain. And uncertainty is poison in a car market. If households think the credit may disappear, rules may change, eligibility may shift, or public policy is generally moving against electrification, they wait. Or they stay with what they know. Or they buy used ICE and kick the decision down the road.

Peter Galloway

That hesitation lands directly in showroom demand. Especially when interest rates are still doing what they’re doing, and monthly payments are already stretched. If the economics are marginal, policy can tip you in or out of the market. It doesn’t need to do all the work. It just needs to move the threshold.

Peter Galloway

This is why I get irritated when people frame incentives as some kind of artificial distortion in EVs, but never say the same about the tax structures and fuel systems that benefited combustion for decades. All markets are shaped. The question is by whom, and toward what.

Peter Galloway

Worth knowing -- Europe’s support system isn’t producing a utopia. It is producing momentum. That’s enough. In car markets, momentum matters because consumers copy what starts to look normal. The US, by contrast, has spent a chunk of its political energy making the transition look contested, risky, and optional. And then people act accordingly.

Peter Galloway

Right. The obvious pushback is: maybe American buyers just prefer petrol trucks and Europeans prefer small electric hatchbacks. There’s some truth to that at the edges. Vehicle mix matters. Road trips matter. Home charging rates differ. Fine. But I don’t buy that as the main explanation, because buyers in both places still respond to the same three things: price, tax treatment, and convenience.

Peter Galloway

If you make the EV cheaper to acquire, cheaper to run, and easier to charge, more people buy one. If you make it financially ambiguous and politically contentious, fewer people do. This is not ancient mysticism. It is retail.

Peter Galloway

Tesla is the clearest proof of that right now, because if any brand should be able to power through a soft patch on sheer recognition, it’s Tesla. But its Q1 2026 numbers were weak. Electrek reported deliveries missed expectations. InsideEVs flagged record unsold inventory in the first quarter. And a MarketMinute piece, citing JPMorgan, put that unsold stock at 164,000 vehicles, alongside a warning of major downside if demand didn’t recover.

Peter Galloway

Read that again: 164,000 unsold vehicles. That is not a minor logistics wobble. That is demand and supply getting badly out of sync. Now, some of that is Tesla-specific. Brand damage, product aging, Musk being Musk -- all fair game. I’ve got no interest in pretending otherwise. But the broader point is bigger than Tesla.

Peter Galloway

Even the most recognisable EV brand in the world cannot outrun a hostile market structure forever. Not when incentives weaken. Not when policy uncertainty rises. Not when the politics around the category get more toxic. Not when the monthly payment stops making sense for enough people.

Peter Galloway

And that’s why I think the “consumer rejection” narrative is mostly nonsense. <audio-tag tag="skeptical"></audio-tag>It flatters politicians because it makes the outcome sound natural, like a weather system. As if voters looked at EVs in a fair contest and simply said no thanks. But that’s not what happened. The contest was structured. The economics were shaped. The confidence level was shaped.

Peter Galloway

Europe, messy and inconsistent as it is, is still broadly choosing to lower friction. America is choosing, through policy direction, to increase it. That’s the real divergence.

Peter Galloway

Here’s the uncomfortable conclusion. The US didn’t “fall behind” because drivers rejected EVs on cultural grounds. It chose a policy environment that made adoption harder, slower, and more expensive. Those are not the same thing. One is a market verdict. The other is a political decision with market consequences.

Peter Galloway

And the question now isn’t whether EVs work. They do. It isn’t whether people will buy them. They will, when the maths works. The real question is what America is choosing by continuing down this road: not just fewer EVs this quarter, but more oil demand, slower industrial scaling, weaker charging confidence, and a bigger affordability problem later when the rest of the world has moved further on.

Peter Galloway

That’s the bit I’d sit with. Markets don’t just reveal preferences. They reveal policy. Right, that’ll do. See you next time.