Electric vehicle sales to zoom by nearly a third in 2025, S&P says

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.”

Electric vehicle sales to zoom by nearly a third in 2025, S&P says

Overall car industry sales are set to inch up by only 1.7 per cent next year