In the first seven months of 2026, battery electric cars claimed 22% of new registrations in Europe — up from 17% a year earlier. The headline number masks two crosscurrents. BMW Group hit 29% BEV share. Toyota more than doubled its electric share from 4% to 10%. And Chinese-brand car sales in Europe, up 29% in 2025 to roughly 920,000 units, were growing at over 100% year-on-year by mid-2026.
The European Commission's response arrived as a proposal: the Industrial Accelerator Act, presented in March 2026, would tie EV purchase incentives, corporate fleet tax benefits, and public procurement eligibility to local assembly and component origin. For small electric cars, 70% of components by value would have to originate in the European Union. For batteries, cells and modules would face their own origin thresholds. Even on an optimistic timeline, the measures are unlikely to take effect before 2027 or 2028.
Japan's automakers — already losing share in China, once their second-largest foreign market after North America — are watching with alarm. Japanese brands' share of the Chinese passenger-car market has fallen from about 23% in 2020 to roughly 10% in 2025. In Thailand, where Japanese marques held close to 90% of the market a decade ago, their share fell to 69% by 2025 and Chinese brands have risen to about 22%. The question being asked in Tokyo — and in Stuttgart, and in Detroit — is whether the internal combustion engine's decline will take entire national industries with it.
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