Despite concerns over market stagnation, electric vehicle (EV) sales surged by approximately 30% last month compared to the same period last year, according to new data. On October 15, Reuters reported that consulting firm LMC Automotive found global sales of battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs) reached 1.69 million units in September. This marked the first time in nine months that sales surpassed 1.5 million units, a milestone last achieved in December 2022.

China played a significant role in this surge, with a 47.9% increase in sales compared to September 2022, reaching a record-breaking 1.12 million units. China accounted for 66% of the total global EV sales last month. North America (U.S. and Canada) saw a more modest increase of 4.3%, with 150,000 units sold, while European sales grew by 4.2% to 300,000 units.

The U.S. EV market also showed signs of growth. According to data from Kelley Blue Book (KBB), U.S. EV sales for the third quarter rose by 11% compared to the same period last year, reaching a record 346,000 units. This represented a 5% increase from the previous quarter. The share of EVs in total vehicle sales also hit an all-time high at 8.9%, up from 7.8% in the same period last year.

Tesla dominated the U.S. market, with the Tesla Model Y and Model 3 being the best-selling EVs in the third quarter. Tesla’s new Cybertruck also performed well, securing third place with 16,000 units sold. Following Tesla in sales were General Motors (GM) and Hyundai.

However, the rise in EV sales has come at a cost for manufacturers and dealers, who have had to offer greater incentives and discounts to attract consumers. Incentives in the third quarter rose to over 12%, significantly higher than the industry average of 7%. Additionally, since the Inflation Reduction Act (IRA) came into effect, more consumers have been leasing EVs to take advantage of federal subsidies. EV leasing rates reached 42.7% by the end of the third quarter, compared to just 10% when the IRA was introduced in December 2022.

The combination of incentives, discounts, and leasing has driven down prices in the used EV market. According to Edmunds, the average price of a three-year-old used EV in September was $28,400, a 25% drop compared to early 2022. This contrasts with the relatively stable prices of used internal combustion engine vehicles.

Meanwhile, traditional German automakers like Volkswagen, BMW, and Mercedes-Benz are losing market share in China’s EV market due to their slower transition from internal combustion engines to electric vehicles. In response, the European Union (EU) is planning to impose tariffs of up to 45% on Chinese EV imports, with the new tariffs likely taking effect by October 31. While negotiations between the EU and China are ongoing, it appears unlikely that a resolution will be reached before the tariffs are implemented.

Despite global demand for EVs softening and the EU’s impending tariff hikes, Chinese automakers remain committed to increasing their market presence in Europe, intensifying competition in the region.