The electric vehicle (EV) market in 2024 was characterized by an unexpected slowdown in sales growth – after reaching a record high in 2023.
Global EV sales increased by 21% in the first nine months of 2024, down from 43.66% growth during the same period in 2023 and were heavily led by China as the US and European markets faced challenges, according to data compiled by battery raw material supplier Syrah Resources.
US EV car sales increased by 11% year on year during the third quarter, compared with a 50% jump during the third quarter of 2023, according to Cox Automotive data.
Technological developments are expected to bring changes to the way EVs operate in the coming year. And the transition to a new administration in the US raises questions about the trajectory of the domestic industry as well as the international supply chain.
What are some of the EV trends to be aware of for 2025?
Key Takeaways
- The growth in global EV sales is predicted to pick up from 2024 but remain short of 2023’s record high.
- Traditional automotive manufacturers have started slowing down the pace of their EV production, with some suspending their targets or putting new models on hold in favor of hybrid vehicles.
- Chinese EV manufacturers are expanding their international presence to shore up sales as the domestic economy slows.
- Falling battery costs and increasing competition could see EV prices fall in 2025 – potentially helping sales expand beyond premium markets.
- Government incentives will continue to impact EV purchases in various countries.
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8 EV Market Trends to Expect in 2025
1. Slowing EV Growth Rates
After strong year-on-year growth of 39.5% in 2023, global electric car sales increased by 21% in 2024 to 11.6 million, a 13.2% of the passenger vehicle market, according to S&P Global Mobility, and are projected to grow by 30% in 2025 to 15.1 million units for an estimated 16.7% share.
The pace of EV market growth has slowed as the market attempts to expand beyond early adopters to more price-sensitive mainstream buyers.
Several manufacturers such as Ford, General Motors (GM) and Volkswagen have scaled back their ambitious goals for production as mainstream adoption has not met their EV market predictions and they have lost money on their electric businesses.
Ford President and Chief Executive Officer (CEO) Jim Farley said on the company’s third-quarter earnings call:
“We’ve already reduced $1 billion in our EV costs this year. We remade our battery footprint. We trimmed our capacity by 35%, in line with where we think the market will be in a few years… We’re shifting new launches, focused on getting the products we do have in our EV portfolio profitable within the first 12 months.”
Analysts at Morgan Stanley have lowered their 2025 EV market forecast for the US to 8.5% from 9% previously, stating:
“We think the trajectory will be first a dip, then a rip scenario… However, our long-term outlook remains unchanged, and we continue to forecast significant growth for EVs by 2040.”
When it comes to gauging the impact the Trump administration is likely to have on EV adoption, the analysts note that while Trump is likely to relax US emission standards, reduce EV incentives, and increase tariffs that would drive up the cost of key EV components, “if the US wants to be a leader in autonomy, it must ultimately embrace EVs, which are the sockets of autonomous capability, and expand its EV infrastructure.
“While a rolling back of incentives under Trump may make 2025 a reset year for EV adoption, we view this mainly as a temporary action to help support a more capable and sustainable crop of domestic champions.”
2. Pure-Play EV Manufacturers Will Remain in the Driving Seat
Legacy automotive manufacturers like Volkswagen, Toyota Motor, Stellantis, Mercedes Benz, and Ford have been launching EV models to remain competitive as the EV market share grows. Still, they are less nimble than EV-only manufacturers like Tesla, BYD, Nio, and XPeng.
Pure-play EV manufacturers can move faster than legacy automakers and capitalize on that first-mover advantage in technology innovation.
Traditional manufacturers face challenges in making the EV transition as they face cost pressure and strikes among unionized workers in the US – which have partly been motivated by concerns about EV manufacturing processes that could threaten autoworker jobs.
Ford, GM, and Mercedes have all reduced their forecasts for short-term EV sales and scaled back production plans.
At the same time, Tesla has been able to cut prices for its Model Y car – the best-selling car globally – with higher profit margins than most ICE vehicles.
China’s BYD shifted in 2021 to only manufacture EVs, and has overtaken Volkswagen as China’s best-selling car brand.
3. Chinese Manufacturers Accelerate International Expansion
Chinese automakers are looking to capitalize on their success in their domestic market by expanding their production and sales abroad to hedge against a potential slowdown.
EVs accounted for around 55% of new car sales in China last year and could reach 12 million units to outpace sales of vehicles with internal combustion engines (ICEs) for the first time in 2025 – meeting the government’s goal for 2035 a decade early. At the same time, sales of ICE vehicles could fall by more than 10% to less than 11 million.
Between January and October last year, 69% of global EV sales were in China, according to the China Passenger Car Association, up from 60% in the same period of 2023.
Chinese automotive manufacturers are keen to replicate that growth abroad. They lagged behind other countries in producing ICE vehicles. However, they saw the opportunity to make strategic investments in EVs at an early stage to export batteries and vehicles to international markets. The government has also supported EV adoption as a way to reduce air pollution and dependence on oil imports.
Under the Chinese government’s Made in China 2025 industrial strategy, it has set a goal for the country’s largest two EV manufacturers—BYD and SAIC Motor—to generate 10% of their sales abroad by 2025.
As it has ramped up exports and started to establish production overseas, China has overtaken Japan as the world’s biggest vehicle exporter, selling more than 1 million vehicles outside the country.
Chinese manufacturers continue to impress buyers with their affordable EV models packed with advanced features – and more new releases are set to come in 2025.
Chinese EVs have climbed to almost 10% of new car sales in Norway, which, unlike the European Union and the US, has not imposed extensive duties on imports from the country.
Norway is by far the world’s largest EV market by share of overall vehicle sales, with 88.9% of new car sales in 2024, according to the Norwegian Road Federation (OFV).
In a sign of the shifting fortunes of international EV makers, in 2024, global market leader Tesla reported its first year-on-year decline in sales since 2011, down by 1.1% to 1.79 million EVs, while BYD reported a 41% increase to 1.77 million.
4. Automakers, Consumers Take Second Look at Hybrids
As traditional automakers have pulled back on going all-in on EVs, they have doubled down on hybrid vehicles as a low-emission compromise.
Plug-ins offer drivers an intermediate step to electrification – a fuel-efficient, environmentally-friendlier ride without the often-cited anxiety that the car will run out of power on the road.
Imports of plug-in hybrids from China are not included in Europe’s tariffs, allowing Chinese automakers to capitalize on their popularity in the region.
The likes of Toyota, General Motors and Ford have delayed rolling out pure EVs to focus on hybrids, while they wait for the market, and charging infrastructure, to catch up with production.
Ford said last year it is expanding its hybrid electric vehicle offerings, and “by the end of the decade, the company expects to offer hybrid powertrains across its entire Ford Blue lineup in North America.”
At the same time, the automaker delayed the launch of its new three-row EV to 2027 from 2025 to “allow for the consumer market for three-row EVs to further develop and enable Ford to take advantage of emerging battery technology, with the goal to provide customers increased durability and better value.”
5. Battery Makers to Advance Alternative Chemistries
Ford’s reference to “emerging battery technology” reflects automakers’ eagerness to move away from using lithium-ion batteries, particularly those that contain high levels of nickel and cobalt.
These metals are volatile in more ways than one – in terms of price, the geopolitics of supply, and chemistry – and most manufacturers are actively researching and developing alternatives.
Most EV batteries use a lithium-ion electrolyte in the cathode and a graphite anode. Lithium-ion batteries with nickel-based cathodes – either lithium nickel manganese cobalt oxide (NMC) or nickel cobalt aluminum oxide (NCA) – provide higher energy density and longer driving range than batteries that use lithium-ion phosphate (LFP).
LFP batteries are regaining market share from NMC, and many companies are accelerating the development of technologies such as silicon anode, solid-state lithium-ion, and sodium-ion batteries, which offer more stable chemistries while reducing nickel, cobalt, and graphite content.
Several companies developing battery materials with silicon-based anodes expect to scale up their production from pilot to commercial volumes in 2025, including US-based Sila Nanotechnologies and Group 14. NanoGraf expects to break ground on its facility construction during the fourth quarter of 2025.
Sila, for instance, has an agreement to supply its anode to Panasonic Energy for lithium-ion batteries that provide longer driving range and reduced charging times.
6. Falling Battery Costs to Bring Down Prices
Tesla plans to launch affordable EV models starting in the first half of 2025, Elon Musk and other company executives said during its third quarter earnings call. And Chinese automakers are launching vehicles in Europe at price points that appeal to consumers beyond the premium vehicle market.
This is possible as technological innovation and raw material prices have brought down battery prices faster than anticipated.
New battery designs that increase energy density by as much as 30% while reducing costs have contributed to lower vehicle prices, as has a prolonged downturn in metal prices, given that metals account for nearly 60% of the cost of batteries, according to Goldman Sachs.
Average global battery prices declined from $153 per kilowatt-hour (kWh) in 2022 to $149/kWh in 2023 and fell further to around $111/kWh by the end of 2024.
“Our researchers forecast that average battery prices could fall towards $80/kWh by 2026, amounting to a drop of almost 50% from 2023, a level at which battery electric vehicles would achieve ownership cost parity with gasoline-fueled cars in the US on an unsubsidized basis,” according to Goldman’s EV market analysis. “We believe 2026 is when a consumer-led adoption phase will largely begin.”
7. Automakers Address Charging Infrastructure Limitations
The lagging buildout of charging infrastructure in many regions, except EV hotspots such as California, is often cited as one of the major barriers to faster adoption. Drivers remain concerned that they may not be able to recharge their car batteries on the road, preventing them from making long journeys.
Tesla has done much to address range anxiety by building out an extensive Supercharger network in the US and other countries, installing more than 60,000 Superchargers worldwide.
Now, as other automakers move to increase charging accessibility for their customers, they are working with the market leader to open up that network for shared use.
Tesla has developed its own charging connector type, North American Charging Standard (NACS), while other automakers have used Type 1, Type 2, CHAdeMO, or CCS plugs.
Some automakers are now supplying customers with NACS adaptors and will release newer models with native NACS connectors.
Automakers are also partnering with charging equipment suppliers and each other to build out tens of thousands of locations.
In addition, bi-directional battery charging is set to increase in 2025, expanding the ways EV owners can use their vehicles. Models such as Ford’s F-150 Lightning truck and GM’s Silverado enable drivers to send power from their vehicle to provide backup power to their home or back to the grid.
8. Governments to Shift EV Incentives
Given that EVs are typically more expensive to manufacture than ICE vehicles, governments in various countries have supported initial adoption in their countries by paying incentives in the form of rebates, loans, or tax credits to consumers and, in some cases, manufacturers to adopt EVs.
However, as EV sales have increased rapidly over the past few years, some governments are adjusting the focus of their incentives.
- The US government notably directed automotive manufacturers to build out a domestic EV supply chain through the Inflation Reduction Act, stipulating that vehicles containing battery components from a “foreign entity of concern,” such as China, are no longer eligible for its $7,500 federal tax credit. And Trump is expected to repeal the incentive shortly after he takes office later this month.
- In November, France reduced its EV subsidy for 2025 to a range of €2,000-4,000 from €4,000-7,000 and cut the total budget to €1 billion from €1.5 billion.
- Germany, Europe’s largest car market, canceled its subsidy at the end of 2023, resulting in a slump in EV sales last year.
However, lawmakers have debated introducing new incentives, likely in the form of tax breaks.
The Bottom Line
The year ahead will likely see significant shifts in the EV market outlook as manufacturers adapt to changing economic conditions, competitive landscapes, and technological developments.
While the slowdown in sales growth rates seen in 2024 could continue in 2025, global EV sales are forecast to continue increasing in outright terms as part of the broader energy transition to reduce carbon emissions.
New vehicle models, competitive pricing, EV charging industry trends and government incentives will play an important role in encouraging consumer adoption.
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References
- Q3 2024 Quarterly Activities Report (Datocms-assets)
- Electric Vehicle Sales Mark Another Record in Q3, Thanks to Higher Incentives, More Choices (Cox Automotive Inc.)
- S&P Global Mobility forecasts 89.6M vehicle sales worldwide in 2025 (S&P Global)
- A Bumpy Road Ahead for Onshoring EVs (Morgan Stanley)
- Battle Over Electric Vehicles Is Central to Auto Strike (The New York Times)
- China’s EV sales set to overtake traditional cars years ahead of west (FT)
- 2024年1-10月中国占世界新能源车份额69% (Mp.weixin.qq)
- Ford Updates EV, Hybrid Plans, Readies Manufacturing Plants (Ford)
- Panasonic and Sila Sign Agreement for Titan Silicon, Sila’s anode material to deliver enhanced battery performance for EVs (Sila)
- Electric vehicle battery prices are expected to fall almost 50% by 2026 (Goldman Sachs)
- Supercharger | Tesla United Kingdom (Tesla)
- All Electric Cars Compatible with Tesla’s Supercharger Network (Car and Driver)