Global sales of electric passenger vehicles are expected to increase by nearly a third in 2025, leading an automotive industry that is cautiously optimistic amid economic and political uncertainty, a new study from S&P Global has shown.
Sales of the most popular type of EV are projected to hit 15.1 million next year, which would be about 30 per cent up on this year's estimated 11.6 million, the New York-based ratings agency's mobility unit said on Friday.
That would account for 16.7 per cent of overall global light vehicle sales, which would be an improvement from 13.2 per cent in 2024, it said.
The rise is expected despite concern over a perceived slowdown in demand and EV manufacturers scaling back production plans as governments rethink incentive and subsidy strategies, in addition to infrastructure challenges, analysts at S&P Global said.
China, the world's second-largest economy and biggest EV market, would capture the major chunk of sales with 29.7 per cent, followed by Europe (20.4 per cent) and the US (11.2 per cent). India would only corner 7.5 per cent in 2025, but that would be more than double its share this year.
“Many uncertainties persist regarding the pace of electrification, especially regarding charging infrastructure, grid power, battery supply chains, global sourcing trends, tariff trade barriers, the rate of technological advancements and the necessary level of support from policymakers to facilitate the shift from fossil fuels to electric alternatives,” the analysts said.
Overall global vehicle sales, on the other hand, would inch up by 1.7 per cent annually to about 89.6 million units in 2025, reflecting an across-the-board downgrade underpinned by “cautious recovery growth”, S&P said.
The shift in tone is attributed to the expected policy change by the incoming administration of US president-elect Donald Trump, who has threatened higher tariffs, coupled with other factors, especially interest rates, trade flows, sourcing and EV adoption rates. These are expected to have a “significant” impact on vehicle demand, it said.
Notably, manufacturers remain focused on managing production and inventory levels in response to regional demand patterns, which include slower growth in key markets, in some cases related to slower EV adoption rates, S&P said.
For 2024, global vehicle sales are expected to hit 88.2 million units, also a tepid a 1.7 per cent increase from 2023, supported by continuing inventory restocking throughout the year as supply chains become more stable.
“The forecast outlook incorporates several factors, including improved supply, tariff impacts, still-high interest rates, affordability challenges, elevated new vehicle prices, uneven consumer confidence, energy price and supply concerns, risks in auto lending and the challenges of electrification,” the analysts said.
“In the US, president-elect Donald Trump is expected to hit the ground running in 2025 with a range of policy priorities, including universal tariffs, deregulation and wavering [battery electric vehicle] support.”
EV sales continue to grow, but have slowed down, forcing manufacturers to rethink their strategies. Elon Musk's Tesla Motors, the world's biggest EV maker, has been forced to slash its prices several times to prop up demand.
It also remains uncertain how Mr Trump's tariffs, if they come to fruition, will affect EV appetite in the world's biggest economy that holds big potential for Chinese-made cars.
The EU imposed duties on EVs imported from China from October, which also raises the spectre of another trade war.
“2025 is shaping up to be ultra-challenging for the auto industry, as key regional demand factors limit demand potential and the new US administration adds fresh uncertainty from day one,” said Colin Couchman, an executive director at S&P Global Mobility.
“A key concern is how 'natural' EV demand fares as governments rethink policy support, especially incentives and subsidies, industrial policy, tariffs and fast evolving [original equipment manufacturer] target setting.”
Which products are to be taxed?
To be taxed:
Flavoured water, long-life fruit juice concentrates, pre-packaged sweetened coffee drinks fall under the ‘sweetened drink’ category
Not taxed
Freshly squeezed fruit juices, ground coffee beans, tea leaves and pre-prepared flavoured milkshakes do not come under the ‘sweetened drink’ band.
Products excluded from the ‘sweetened drink’ category would contain at least 75 per cent milk in a ready-to-drink form or as a milk substitute, baby formula, follow-up formula or baby food, beverages consumed for medicinal use and special dietary needs determined as per GCC Standardisation Organisation rules
Key changes
Commission caps
For life insurance products with a savings component, Peter Hodgins of Clyde & Co said different caps apply to the saving and protection elements:
• For the saving component, a cap of 4.5 per cent of the annualised premium per year (which may not exceed 90 per cent of the annualised premium over the policy term).
• On the protection component, there is a cap of 10 per cent of the annualised premium per year (which may not exceed 160 per cent of the annualised premium over the policy term).
• Indemnity commission, the amount of commission that can be advanced to a product salesperson, can be 50 per cent of the annualised premium for the first year or 50 per cent of the total commissions on the policy calculated.
• The remaining commission after deduction of the indemnity commission is paid equally over the premium payment term.
• For pure protection products, which only offer a life insurance component, the maximum commission will be 10 per cent of the annualised premium multiplied by the length of the policy in years.
Disclosure
Customers must now be provided with a full illustration of the product they are buying to ensure they understand the potential returns on savings products as well as the effects of any charges. There is also a “free-look” period of 30 days, where insurers must provide a full refund if the buyer wishes to cancel the policy.
“The illustration should provide for at least two scenarios to illustrate the performance of the product,” said Mr Hodgins. “All illustrations are required to be signed by the customer.”
Another illustration must outline surrender charges to ensure they understand the costs of exiting a fixed-term product early.
Illustrations must also be kept updatedand insurers must provide information on the top five investment funds available annually, including at least five years' performance data.
“This may be segregated based on the risk appetite of the customer (in which case, the top five funds for each segment must be provided),” said Mr Hodgins.
Product providers must also disclose the ratio of protection benefit to savings benefits. If a protection benefit ratio is less than 10 per cent "the product must carry a warning stating that it has limited or no protection benefit" Mr Hodgins added.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
What vitamins do we know are beneficial for living in the UAE
Vitamin D: Highly relevant in the UAE due to limited sun exposure; supports bone health, immunity and mood.
Vitamin B12: Important for nerve health and energy production, especially for vegetarians, vegans and individuals with absorption issues.
Iron: Useful only when deficiency or anaemia is confirmed; helps reduce fatigue and support immunity.
Omega-3 (EPA/DHA): Supports heart health and reduces inflammation, especially for those who consume little fish.
