What can we expect from the EV market in 2025?

On the face of things, the global EV market in 2025 looks to be on the up, with regional dynamics playing a key role in shaping this trajectory. Overall, it would be unwise to think that greener cars and trucks won’t continue to eat away at the traditional gas-powered machines of today, especially given that costs are continuing to decline, options for consumers are expanding, and charging stations continue to see an uptick.

Whilst there was a lot of talk last year about the slowing EV market, on the whole sales of BEVs and HEVs actually saw a record high globally. These sales hit figures of almost 17 million vehicles in 2024, with an estimated rise of around 20% this year according to Bloomberg.

Add to this the fact that automakers are making a concerted effort to deliver a wider range of cheaper EV models across the globe, especially in Europe and China, and this positive momentum becomes even more realistic. Citroën, Fiat, and Renault have announced plans to launch models priced around €20,000, aiming to boost adoption rates in response to slowing sales. Similarly, Chinese manufacturers such as BYD, Nio, and XPeng continue to release competitively priced EVs to meet growing demand in the region.

However, not all is totally positive, make no mistake that EV sales growth rates have indeed slowed in recent years as the initial buzz phases. For many around the globe, it is simply that more affordable EV options need to be delivered before they can make the jump, as well as the need for more accessible and convenient charging options.

Contributing to this slowdown has been nations, such as the likes of China, Germany, and New Zealand, have scaled back the subsidies and policies that were previously the key driving force behind the low-emission rollout. America is another funny one, given President-elect Donald Trump’s campaign pledges that target government support for EVs. These pledges could see trade barriers that would ultimately raise prices of EVs for both the consumer and manufacturer.

Yet, in the long run, EV sales determining factor remains the specific factors seen in different regions around the world. So, what might we see from the key regions and their markets in 2025? Let’s take a look at what 2025 will look in for EVs in the US, China and Europe.

The US

Out of all of the regions we are going to discuss, the US is by far the most volatile. America simultaneously is one of the driving forces behind battery, EV, and chargers, yet remains one of the biggest contesters to its success.

America is home to plenty of innovation within the EV industry, within the next few years alone big names like Honda, Toyota, and GM all plan to begin assembly lines for EVs, and this is just to name a few.

This is important as the idea is that these developments will help to drive down the cost of EVs whilst also boosting options on the market, creating a plethora of new jobs, and aid in closing the EV gap for US automakers. The Inflation Reduction Act has already driven significant investment in domestic EV production, with companies scaling up manufacturing plants for batteries, components, and vehicles.

However, it's far from certain that these developments will lead to lower consumer prices and increased demand in the U.S. market. President-elect Donald Trump has reportedly pledged to roll back several key policies currently underpinning the sector. His plans include dismantling the federal tax credits of up to $7,500 for EV purchases, which were introduced under the Inflation Reduction Act to encourage consumer uptake. Removing these incentives could make EVs less attractive to potential buyers, particularly as the upfront cost remains a key barrier to adoption.

Trump has also threatened to impose tariffs on imports from countries like Mexico, China, and Canada, where many EVs and their components are manufactured. These tariffs could potentially offset any cost reductions achieved through domestic scaling of EV production. Higher trade barriers may further restrict the entry of more affordable foreign-made EVs into the U.S. market, reducing competition and keeping prices elevated.

This is of pressing concern given that the number one reason behind EV reluctance in the US is the high price point of these vehicles. Whilst there are some EVs in the US that price below a $30,000 mark, most models, especially SUVs and truck, which are heavily chosen in the country, remain above a $40,000 price point. Without government support or more affordable options on the market, the pace of EV adoption in the U.S. could slow, preventing the country from catching up with Europe and China, where EVs are becoming increasingly mainstream.

China

On the flip side, China is probably now the place to be when it comes to EVs. After an extensive period of investments and policymaking, China has raised itself to become the dominant manufacturer of EVs globally, as well as the biggest market. Despite being hindered along the way by US trade restrictions amongst others, China’s dominance is here, and it’s here to stay.

In response to this looming threat from the East, Europe introduced sharply higher tariffs on China-built EVs in October 2024, citing concerns that Chinese manufacturers have directly benefitted from state subsidies which birthed an uneven playing field in the global market. The idea is that by imposing these tariffs, European automakers are better protected from being undercut by the vast array of cheap Chinese EV imports which have seen upticks across Europe. These actions mirror those seen in the US under the Biden administration, which imposed a 100% tariff on Chinese vehicles in May 2024, citing unfair trade practices and intellectual property theft.

The tensions seen between China and the West in regards to EVs only hold to bolster the impressiveness of what they have managed to achieve, as well as the growing influence Chinese automakers have. BYD, Nio, XPeng, and Xiaomi have been able to produce affordable, high-quality EVs which rival the likes of Western EV champions such as Tesla. The International Energy Agency (IEA) has found that just over 60% of Chinese EVs are already more affordable than ICE competition in China, something the West is trailing in massively.

Chinese officials contend that their dominance in the EV market stems not just from government intervention but from a combination of innovation and manufacturing efficiency. By investing heavily in research and development, Chinese automakers have streamlined production processes and scaled up operations, allowing them to offer electric vehicles at significantly lower prices than their Western counterparts. Their focus on affordability has proven successful in capturing the domestic market, where budget-conscious consumers have gravitated towards lower-cost EVs, and in gaining a foothold in international markets.

However, rising protectionist policies in regions such as Europe and North America now pose a major hurdle to China's global EV ambitions. Recent tariff increases and stricter regulations could hamper the flow of Chinese-built electric vehicles into Western markets, which may, in turn, slow the downward trend in EV prices that consumers have been anticipating.

While these trade measures aim to shield local industries from foreign competition, some experts caution that they could inadvertently stifle global progress on vehicle electrification. If Chinese automakers are blocked from exporting their more affordable models, the overall pace of EV adoption could slow, particularly in markets where price remains a significant barrier. Limiting access to lower-cost options might ultimately hinder efforts to transition away from combustion engines and reduce vehicle-related emissions on a global scale.

Europe

If the US embodies turbulence and China the peak, Europe’s EV story is one of a slower optimism. Moving into 2025, the EU is set to tighten its policies when it comes to carbon-emitting vehicles, making automotive manufacturers adhere to a 15% climate pollution reduction across their fleets from the previously outlined 2021 levels. The EU’s current climate rules state that every five years targets become stricter, eventually leading to a gradual full elimination of emission producing cars and trucks by 2035.

To meet this new 2025 stage of emissions rules, automakers in the EU are planning to introduce a wave of affordable EV models in the opening months. These models are likely design specifically to hit the new goals. For instance, Fiat is introducing the new Panda EV which is rumoured to enter the market with prices as under £20,000 for a hybrid model, or around £22,000 for a fully electric model. VW are also joining this parade with its ID.2all, featuring Golf-esque styling and considerable power for around £21,000.

According to the International Council on Clean Transportation (ICCT), automakers will need to increase the share of battery-electric vehicles to roughly 28% of their total sales by 2025, up from 16% in 2023, to stay on track with the European Union’s climate targets. To achieve this, some European manufacturers have begun shifting their pricing strategies—raising the cost of combustion-engine vehicles while slashing prices on their existing EV models to make them more appealing to consumers.

However, not all automakers are embracing the challenge with enthusiasm. Several companies have expressed concerns about meeting the stricter targets within the given timeframe and are lobbying the European Commission to relax its regulations. They argue that supply chain constraints, high production costs, and slower-than-expected consumer adoption of EVs could make compliance difficult.

While the push to adjust the rules is unsurprising, critics warn that any softening of the EU’s emissions regulations could undermine efforts to accelerate the transition to cleaner vehicles. With the automotive sector accounting for a significant share of Europe’s greenhouse-gas emissions, hitting these targets is seen as critical to achieving broader climate goals.

Whilst this talk is needed, the reality is that at the end of the day sales trends in the EU largely depend on local conditions and whether they can facilitate this switch. One needs only look at Germany, Europe’s largest automotive market, to see this effect live. Sales for EVs took a heavy hit in 2024, a result of Germany’s government cutting subsidies at the later stage of 2023.

As 2025 begins, EVs make up roughly 25% of EU new vehicle sales, with estimates putting 2030 as the year they will surpass ICE sales – aligning with the emission tightening rules.

As for the UK, you can find out about its EV situation, here.