More than one in four cars sold globally in 2025 will be electric, marking a significant milestone in the transition away from fossil fuel transport, according to a recent report from the International Energy Agency (IEA). This positive trajectory signifies not just a pivotal shift in consumer preferences but also represents broader implications for the automotive industry and global emissions.
The IEA's Global EV Outlook 2025 strongly underscores this trend, predicting that electric vehicle (EV) sales will climb to 20 million units, up from 17.5 million in 2024. The growth, however, is not uniform across all markets. China continues to lead, accounting for over 50% of global EV sales in 2024, with 11 million units sold. This surge is primarily driven by competitive pricing and robust domestic manufacturing capabilities. In stark contrast, challenges persist in Western markets such as Europe and the United States, where growth has faltered due to reduced subsidies and weakened emissions targets.
In Asia and Latin America, the adoption of electric vehicles has seen a remarkable 60% increase last year, highlighting the international momentum towards cleaner transport solutions. The ongoing demand in these emerging markets is primarily attributed to an increasing awareness of the environmental benefits and improving affordability, driven by falling battery costs. Indeed, the IEA reports a 25% drop in battery pack prices over the past year, making EVs more accessible across various demographics.
Yet, despite these gains, barriers remain. In many regions, including the United States, electric vehicles still carry a price premium, costing nearly 30% more than their petrol or diesel counterparts. This disparity poses a significant obstacle for low- and middle-income consumers, potentially slowing the transition to electric options if not addressed through policy support and incentive structures.
The impact of the expanding EV market on fossil fuel consumption has already become evident. The IEA estimates that the increased uptake of electric vehicles has lowered oil demand by approximately 1.3 million barrels per day as of 2024. However, the agency stresses that the current rate of EV adoption is insufficient to meet global climate goals. To adhere to net-zero targets, particularly in heavy transport segments and developing regions where infrastructure gaps persist, a rapid acceleration in electric vehicle uptake is essential.
IEA executive director Fatih Birol articulated the need for continued support, stating, “Our data shows that… electric cars remain on a strong growth trajectory globally.” He emphasised that policy backing is crucial, cautioning against the adverse effects of trade barriers and inconsistent regulations, which could hamper progress as the market matures.
The broader geopolitical landscape also presents challenges. In the US, recent policy reversals regarding electric vehicle subsidies and emissions standards have led the IEA to revise its long-term projections downward. Analysts indicate that trade tensions and high tariffs in North America, alongside shifts in regulatory frameworks, have begun to influence EV sales dynamics negatively. For instance, while electric vehicle sales are up by 10% in the US, the growth has not matched that of other regions, with North America experiencing a decline for the first time in several months, attributed to the complex interplay of tariffs and shifting political priorities.
Europe, too, has seen a mixed landscape. After a strong start to 2025 with an increase of 28% in EV sales, translating to over 570,000 units in the first quarter, the market faces challenges as some countries reconsider their decarbonisation timelines amid economic pressures. The rollback of subsidies and regulatory adjustments, particularly from influential players like Germany, raises concerns about long-term growth trajectories.
Despite these headwinds, the IEA remains optimistic about the future of electric vehicles, forecasting that by the end of this decade, EVs will represent more than two in five cars sold globally. As the technology continues to evolve and marginal costs decline, the potential for electric vehicles to play a crucial role in both reducing emissions and reshaping the automotive landscape becomes ever clearer.
Nonetheless, the pathway to achieving ambitious climate targets necessitates a confluence of market readiness, extensive policy support, and societal commitment towards sustainable practices. The shift to electric vehicles reflects not just a technological evolution but an imperative transformation required to confront the pressing challenges posed by climate change and resource dependency.
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Source: Noah Wire Services