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While the electric vehicle (EV) market is poised for growth in 2025, with China leading the way from both a demand and production perspective, the market in several countries hangs in the balance due to policy changes and the removal of various subsidies. Progress in the roll-out of the greener vehicles as countries work toward decarbonization goals and bans on internal combustion engine (ICE) sales could also be hindered if challenges including charge point availability and high upfront costs continue to be a reality, experts told Fastmarkets.
According to Fastmarkets’ research team, around 17 million passenger EVs are expected to be sold in 2024, 65% of which will be sold within China, contributing to the bulk of wider Asian demand through exports, which are also expected to continue to grow.
Meanwhile, Europe is expected to sell 3 million-3.1 million EVs this year, “assuming a strong finish to what has been an incredibly underwhelming year characterized by smaller countries trying to prop up Germany and France’s near irrelevancy in some months,” Fastmarkets EV battery raw material demand analyst Connor Watts said.
In the UK alone, EV sales have also experienced a surge as manufacturers invest “at unprecedented levels” to bring zero emission models to market, the Society of Motor Manufacturers and Traders (SMMT) said this month, reporting that November battery electric vehicle (BEV) sales grew year on year by over 58%. Such levels of investment, the association said, remain “unsustainable” if the sector is to be profitable, however.
To that end, more clarity is expected in the new year around the UK government’s consultation on its Zero Emission Vehicle (ZEV) mandate due to mounting pressure from automakers to review the targets, which currently state that EVs must account for 22% of all new passenger vehicles sold in the UK by 2024 — a figure that will rise each year to reach 80% in 2030 and 100% in 2035, in the form of battery cell or fuel cell vehicles, although the Labour government is reported to be bringing the final ban forward to 2030.
Meanwhile, in Europe, while experts anticipate a traditional dip in sales in January, recovery for EV sales will come thanks to the support of new emissions regulations, with year-on-year growth of 25% likely throughout the bloc, according to Fastmarkets’ research team.
“It is worth remembering back in 2019, Chinese EV sales dropped after the government announced larger-than-expected subsidy cuts,” Fastmarkets head of base metals research William Adams said, adding that the same seems to have hit Germany’s EV sales in 2024 following the government’s decision to abruptly end EV subsidies at the end of 2023 with almost immediate effect. This caused a drop in sales but “is only likely to be temporary,” Adams said.
In France, the government said in late November that it would redistribute its EV subsidies toward those with lower incomes of €2,000-4,000, down from the previous range of €4,000-7,000. The move is expected to marginally hamper the country’s domestic EV sales, but there will be “increased model availability within the region as its local players like Renault and Citroën continue releasing cheaper electric models like the Renault 5,” Watts said.
In the US, around 1.5 million light EVs are forecasted to be sold throughout 2024, “supported by a strong last two months of regulatory and economic certainty before the incoming Trump administration makes its mark on the sector,” Watts said.
Once the administration is in post, it is widely expected that the new government will cut the Electric Vehicle (EV) and Fuel Cell Electric Vehicle (FCEV) Tax Credit under the Inflation Reduction Act (IRA), which gives a $7,500 reduction on the purchase of new EVs delivered on or after January 1, 2023.
Fastmarkets understands that the credit has not had a significant impact on EV adoption, as carmakers moved to increase retail prices by the same value shortly after its introduction and, according to experts, the tax remained broadly underutilized. The Trump administration is however likely to remove its targets for EV sales — or “ending the EV mandate” in the words of the incumbent President, which would be more harmful for sales of the greener cars.
Under Trump, the Environmental Protection Agency (EPA) is expected to generally shift its standards “because automakers’ EV businesses were doing so badly that it did not make sense to follow the path of proposed fuel economy standards,” head of global oil and downstream and North America energy research at Energy Intelligence Abhi Rajendran said.
Furthermore, if enacted, Trump’s promise of tariffs on China, Canada and Mexico will create “a rush to onshore vehicle production within the US and all the costs that come with it leading to higher EV prices one way or another,” Watts said, adding that assuming these tariffs are enacted quickly, “2025 could struggle to match 2024’s figure of 1.5 million EVs as we’ve seen in Europe this year”.
Meanwhile, domestic EV sales in China, which increased by 31% year on year in the first nine months of 2024, are expected to slow marginally in the new year as companies continue to expand via export markets, with Fastmarkets estimating any sales growth to increasingly take the form of plug-in hybrid EVs (PHEVs) and extended-range EVs (EREVs), “considering this year’s growth rates and promises from large Chinese [original equipment manufacturers (OEMs)] to offer EREVs from the coming year,” Watts said.
The Chinese government mandates that 20% of vehicles on Chinese roads in 2025 must be clean cars, but according to senior research fellow at the Oxford Institute of Energy Studies Anders Hove, this is “far below the current market share, which sits above 50%.”
“Clearly policy is important, but the part of policy that matters most is not subsidies or government targets, which have been important in past,” Hove said, adding that it is “the overall government signal about which industries it considers strategic, and if you are in an industry the government says is strategic, capital and investment flows to new capacity and production.”
Despite advances in the global EV market, charging infrastructure remains a serious concern for consumers, which if addressed appropriately could boost EV sales, experts told Fastmarkets.
For example, according to Fastmarkets’ research team, Belgium more than halved its public charger-to-vehicle ratio in 2023 from 20.8 to 10.2 and has since seen explosive growth in its EV sales growth despite the overall negative backdrop shared by some of its neighbors.
In the first nine months of the year, BEV sales grew by 40% in Belgium, jumping to 97,057 units from 68,724 units in 2023, following significant growth in 2023 when BEVs sold over 140% more — or 68,724 units vs 26,005 year on year — advances which were enabled in part by growth in charger deployment, “as you can’t have one without the other,” Watts said, adding that some regions could struggle with this more than others.
Overall, however, Transport & Environment data shows that public chargers have been steadily increasing across the EU following the binding targets on governments agreed in 2023, with charge point numbers increasing threefold over the last three years.
According to the non-governmental organization, many eastern and southern European countries have more charging power available relative to the number of EVs on the road than most of their western and northern European counterparts.
In the UK, according to the latest data available from Zapmap, as of November, there were 72,594 public EV charge points across the UK, across 36,316 charging locations.
The number of public charge points in the UK has grown from 20,964 at the end of 2020 to 53,865 at the end of 2023 and more than 70,000 by November of this year, Zapmap data shows, which represents a 32% increase in devices since December 2023 and a 37% year-on-year increase in installed charge devices since November 2023.
A December 14 report issued by the National Audit Office found that charge point numbers have increased “in line with what is needed, and the installation of 300,000 charge points by 2030, estimated to be the minimum needed, appears achievable.”
However, a September report from EV charging engineer Versinetic showed that 35.9% of EV drivers report difficulties in accessing available charge points, while 46% of drivers continue to come across public chargers that are out of order or are physically blocked by regular passenger vehicles. Issues with payment also continue to be reported across the UK, as charge points have yet to streamline payment options and often reject attempts made, Fastmarkets understands, while public charging costs also remain high relative to costs associated with home-based charge points.
According to the US government’s Department of Transportation, as of late August, there were “over 192,000 publicly available charging ports with approximately 1,000 new public chargers being added each week” by the Biden administration, but what future roll-out might look like under the Trump administration remains unclear.
“In Europe and the US, a lot of the time charge points don’t work and require several different memberships or applications etc.,” Hove said, adding that, while these bottlenecks exist also in China, “they’re not as severe” and that paying for EV charging in China “is no more difficult than paying for a candy bar.”
In China, the current number of chargers “is much greater even in proportion to larger numbers of vehicles on the road,” Hove told Fastmarkets, adding that the number of fast charge points “is also huge, which blows any region of the world out the water.”
According to the latest available data from China Electric Vehicle Charging Infrastructure Promotion Alliance (EVCIPA) for October, at the end of the month China had 3.4 million public charge points, of which 1.5 million were fast speed. However, charging prices have been rising in China, Hove confirmed, “which does make the cars less attractive.”
High costs remain a barrier to mass adoption of the greener cars, experts told Fastmarkets, “and that will remain the case for a while to come given there is not yet a mass market, plus the fact that range anxiety and charging times remain issues,” independent energy analyst Neil Atkinson said.
“While survey after survey shows people are open to buy EVs, and the example of French leasing in France — which was over-subscribed four times in one month of launching — shows there is demand, the problem is the price,” Transport & Environment’s senior director of electric vehicles and batteries Julia Poliscanova said, adding that “mass market buyers require mass market models at mass market prices [and] we have not had them so far as OEMs prioritize high margins in larger vehicles in their value-over-volume strategy.”
The year 2024 has seen several carmakers backtrack on their commitment to widen their electric vehicle offering or take their manufacturing lines fully electric. The latest carmaker to change plans this year, Ford, announced its plans to restructure its European business in November, which would include up to 4,000 job cuts in Germany and the UK.
The US carmaker joined the likes of Japanese automaker Nissan and Sweden’s Volvo, which both rolled back on promises to boost their EV offering in 2024, citing difficulties in meeting the rising demand for affordable EVs while maintaining profitability.
However, around a dozen EV models priced below €25,000 are expected to enter the market in late 2024 or early 2025 in Europe, which Poliscanova said “should completely shift the EV market dynamics [and] is why we are positive about the EV demand in Europe next year.”
These sentiments were echoed by Watts, who confirmed that EVs remain expensive relative to internal combustion engine (ICE) vehicles. “Considering the EU’s continued deliberations over tariffs on Chinese vehicles, it is on Western manufacturers to offer more price-competitive vehicles, which has proven to be a much slower process relative to allowing Chinese companies unfettered access to the market,” he said, adding that if this was not the case “then the EU wouldn’t feel a need to protect itself from Chinese imports at all, and so the severity of its tariffs makes for a good barometer for product competitiveness.”
The successful roll-out of EVs in China is also down to the fact that “they happen to be near the price point they needed to be, while access to low-cost capital, battery materials and supply, consumer subsidies and innovation has been a very important part of this story too,” Hove concluded.
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