IEA Predicts Electric Vehicles Will Account for over 25% of Global Car Sales in 2025

Electric vehicles (EVs) are poised to surge beyond a quarter of global car sales by 2025, buoyed by improving affordability and unprecedented sales growth, according to the International Energy Agency’s (IEA) recent Global EV Outlook report. Despite lingering economic uncertainties and shifting regulatory frameworks, the EV market remains robust, defying the headwinds to set ever-higher records.

In 2024, global EV sales surpassed 17 million units, marking the first time electric vehicles breached 20% of the total automotive market. Early indicators from the first quarter of 2025 signal a rapid acceleration, with year-over-year sales surging by around 35%. Should this trajectory hold, the IEA projects that annual EV sales will comfortably exceed 20 million units this year, positioning EVs to capture over 40% market share globally by 2030.

China continues to reign supreme in the EV domain, accounting for nearly half of global EV sales in 2024. With over 11 million electric vehicles sold last year, roughly equal to the total global sales figure from 2022, China’s dominance shows no signs of abating. Additionally, Chinese manufacturers exported approximately 1.25 million EVs, significantly contributing to declining prices, particularly in emerging markets.

Beyond China, EV sales witnessed explosive growth across Asia and Latin America, soaring more than 60% in 2024. Contrastingly, the US market experienced a deceleration, posting just a modest 10% year-on-year growth. However, electric vehicles still accounted for over a tenth of new car sales.

Meanwhile, Europe’s EV market stagnated. Subsidies, a critical growth driver in previous years, were phased out by several national governments, causing the continent’s EV market share to stall at approximately 20%.

A pivotal factor behind accelerating EV adoption has been steadily declining prices, driven chiefly by intensifying competition and tumbling battery costs. This phenomenon has reached a tipping point in China: two-thirds of electric cars sold were cheaper than their petrol-driven counterparts, even without subsidies.

Yet substantial disparities persist elsewhere. In Germany, electric vehicles remained on average 20% pricier than traditional cars. At the same time, this gap was even wider in the US, standing at about 30%.

Despite the variance in upfront costs, EVs still offer significantly lower operational expenses in many regions. For example, even if oil prices plummeted to around $40 per barrel—down from roughly $60 today—charging an EV at home in Europe would remain about half as costly as refuelling a petrol car, assuming current electricity prices.

The report also spotlights remarkable momentum within the electric truck sector. Global sales surged by around 80% in 2024, capturing nearly 2% of the total truck market. China led this wave of growth, with sales in the country doubling within the year.

Electric trucks in specific segments have already achieved cost parity with diesel models due to dramatically lower operating costs that offset their initially higher price tags.

Notably, about 20% of global EV sales in 2024 came from imported vehicles, highlighting Chinese automakers' increasingly pivotal role in driving down prices globally, particularly in emerging markets.

However, the IEA cautions that future EV growth could be significantly impacted by global economic shifts and evolving trade policies. A prominent example is North America’s automotive sector, which is currently grappling with supply-chain disruptions stemming from the US government's recent imposition of a 25% tariff on automobile imports. These tariffs compound existing levies on steel and aluminium, complicating industry efforts to scale up EV manufacturing rapidly.

In a tangible example of the disruption, Honda Motor recently announced it would postpone its planned $15 billion EV battery and vehicle assembly plant in Ontario, delaying its launch by roughly two years. The company cited tariff impacts and a softening EV demand as primary reasons for this move. It is now forecasting a significant 59% plunge in operating income for the fiscal year ending in March 2026.

Although these trade measures aim to curb Chinese imports into the US, they could inadvertently channel these affordable EVs into markets with fewer protections, such as the European Union. This could flood EU markets with cheaper electric cars and batteries, creating intense competition for local manufacturers striving to scale their production capacity.

The IEA plans a comprehensive follow-up report later this summer in response to these evolving dynamics. This forthcoming publication will delve deeper into the broader shifts within the global automotive sector, especially examining how resilient global EV supply chains will prove amid mounting uncertainties.