Otis Singleton
Electric vehicle (EV) sales are a hot topic, with some reports claiming a slowdown in the market. While it is true that growth rates are slowing, it is important to note that this does not mean a decline in sales. In fact, global EV sales are expected to reach a record high, with an estimated 16.5 to 16.7 million units sold in 2024, up from 13.9 million in 2023. This growth is largely driven by the Chinese market, which accounts for six out of ten plug-in vehicles sold globally. However, it is worth noting that this growth is driven by plug-in hybrids and range-extended EVs rather than battery-electric vehicles. While the EV market is growing, it is facing challenges such as the impact of the Inflation Reduction Act in the US and the high cost of vehicles compared to their internal combustion engine counterparts.
| Characteristics | Values |
|---|---|
| Global EV sales in 2024 | Increased by 16% compared to 2023 |
| Global EV sales in 2023 | Increased by 33% compared to 2022 |
| Global EV sales in 2022 | Increased by 60% compared to 2021 |
| EV sales in China in 2024 | Increased by 50% in September |
| Retail BEV sales in China in 2024 | Increased by 18% |
| Total plug-in sales in China in 2024 | Increased by 37% |
| EV sales in the US in the first half of 2024 | Increased by 2.6% compared to the first half of 2023 |
| EV sales in the US in 2023 | Increased by 40.4% compared to 2022 |
| EV sales in the US in the first half of 2023 | Increased by 12% |
| EV sales in California | 22% of new car sales are EVs, with a target of 80% by 2035 |
| EV sales in Japan | Decreased |
| EV sales in South Korea | Decreased |
| EV sales in Germany in August 2023 | Decreased by 61% |
| EV sales in Europe in January 2025 | Increased by 34% |
| EV sales in France in January 2025 | Decreased by 63% |
| Tesla sales in Europe in January 2025 | Decreased by 45% |
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What You'll Learn
Electric vehicle sales are plateauing in the US
Electric vehicle (EV) sales are plateauing in the US, according to a report from Q1 2024. While sales have not decreased, the rate of growth is slowing. In the first half of 2024, global EV sales rose by 26%, with preliminary data suggesting a rise of around 30% in September. This is a decline from a 33% increase the previous year and a 60% increase the year before.
There are a few factors contributing to the plateauing of EV sales in the US. One reason is the waning effects of the Inflation Reduction Act (IRA), which boosted EV sales in recent years. Additionally, there are uncertainties and challenges regarding the eligibility of different vehicles for grants. Delays in vehicle and battery deliveries have also impacted sales, with OEMs rerouting supply chains to comply with IRA requirements.
It's worth noting that the slowdown in EV sales growth is not unique to the US. Countries like Japan and Germany, which are home to some of the largest automotive manufacturers, have seen a decline in EV sales. However, other markets such as Brazil, India, Thailand, and Mexico are experiencing significant growth.
The overall new vehicle market in the US is also facing challenges, with consumers becoming more cautious with their spending unless there are exciting new models or variants. The demand for EVs is still strong, and sales are expected to reach record numbers, but the rate of growth is stabilising.
Looking at the bigger picture, the goal remains to increase the market share of EVs even if total car sales plateau. For example, California aims for 80% of new car sales to be EVs by 2035, currently sitting at around 22%. Despite the plateauing sales, EVs are still gaining ground in a shrinking market, and their market share is increasing.
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Sales of EVs are surging in Europe
While there are reports of a slowdown in electric vehicle (EV) sales globally, Europe is witnessing a surge in the adoption of EVs. In January 2025, electric vehicle sales in Europe grew by 34%, reaching a 15% market share. This surge in EV sales cushioned the overall decline in new car sales in Europe, which saw a 2.6% drop in total new passenger car registrations in the European Union.
The growth in EV sales in Europe has been strong, second only to China. In the 12 months to July 2023, the region saw a surge of 62% in EV sales, while diesel sales dropped by 9%. Germany, France, and Spain have been leading this growth, with registrations in Germany alone jumping by nearly 70% in July 2023.
Despite this positive trend, mass-market adoption of EVs in Europe still faces barriers such as high costs and a lack of charging infrastructure. On average, EVs cost over a quarter more than internal combustion engine (ICE) models. However, over time, the cost of ownership of EVs is lower due to improved battery technology and reduced fuel costs.
The limited range of EVs and the availability of cheap fuel for petrol-powered cars are also factors that affect the market. To address the range anxiety of buyers, Europe aims to have 1 million public charging points by 2025 and 3 million by 2030.
While Tesla experienced a decline in sales in the European market, other EV manufacturers, such as BMW and Chinese-owned brands like MG, saw positive growth in January 2025. The surge in EV sales in Europe is expected to continue, with new models launching and intensifying competition from Chinese automakers.
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China is the biggest driving force behind the global EV market
While there has been a reported decline in electric vehicle (EV) sales in some countries, China is still the biggest driving force behind the global EV market. In 2022, China's new EV sales increased by 82%, accounting for nearly 60% of global EV purchases. This is a significant increase compared to other countries, such as the United States, Norway, and early adopters of EVs in Scandinavian nations.
China's dominance in the EV market is further highlighted by its sales figures. In 2024, China sold nearly 13 million fully electric and hybrid vehicles, about four times as many as the United States, with EVs accounting for 40% of total sales in the Chinese market. This surge in sales is driven by plug-in hybrids and range-extended EVs, with retail BEV sales in China up 18% and total plug-in sales up 37%.
China's success in the EV market can be attributed to various factors, including government subsidies, support for lithium batteries, and the integration of EVs into its public transportation system. From 2009 to 2022, the Chinese government invested over 200 billion RMB ($29 billion) in relevant subsidies and tax breaks, providing a solid foundation for the industry's growth.
Additionally, China's manufacturing capabilities have played a crucial role in its EV market leadership. Cities like Jinhua, with its industrial zones dedicated to automotive culture, have become hubs for EV production, aiming to lead the electric vehicle revolution globally.
The country's EV makers have opened up a vast lead in the global market, and their growing prowess has attracted the attention of European companies looking to tap into China's advancements in EV technology. As a result, international automakers are quickly being squeezed out of the Chinese market as domestic brands gain a strong foothold.
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Automakers are holding off on launching more affordable EV models
While electric vehicle (EV) sales are still growing, there has been a slowdown in the growth rate. This is particularly evident in markets like the USA, where hybrids and plug-in hybrid electric vehicles (PHEVs) are growing at a faster rate than EVs. This can be attributed to the increased availability of hybrid and PHEV models in these markets.
In Europe, automakers are holding off on launching more affordable EV models until 2025 when vehicle CO2 targets across the bloc will tighten again. Currently, many automakers have already met the European CO2 mandates for 2020-2024, so there is little incentive to push for more EV deliveries. This situation is similar to what happened in 2019, ahead of the tightening of emissions standards in 2020, which resulted in a slowdown of EV sales in 2019 followed by a significant increase in 2020.
The same pattern is expected to repeat in Europe, with automakers preparing more affordable models for release in 2025. Examples of these upcoming models include the Renault 5, Hyundai Inster, Fiat Grande Panda, Skoda Epiq, and VW ID2.all. However, pricing remains an issue in Europe, as some automakers struggle to recoup the full development costs of their EV platforms with relatively low sales volumes. For instance, the Fiat 500e is priced at a €12,000 premium compared to the standard Fiat 500, despite only having around €3,000 worth of batteries.
The slower adoption of EVs has resulted in price cuts or discounts on several models, such as the Ford Mustang Mach-E, Tesla Model Y, and Nissan Ariya. Trisha Jung, senior director of Nissan U.S. EV strategy and transformation, stated that these price cuts of up to $6,000 will enhance the model's competitiveness and ensure they deliver maximum value to customers.
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Tesla sales are down in Europe
Electric vehicle (EV) sales are down in Europe, with Germany, Spain, and France seeing the sharpest drops. According to the European Automobile Manufacturers' Association (ACEA), Tesla sales in Europe were down by 49% in January and February 2025 compared to the same period in 2024. This is a massive drop, with only about 19,000 Tesla units registered in the EU during the first two months of 2025, compared to 37,000 in 2024.
There are several possible reasons for this decline. One factor could be the delayed launch of the Model Y reboot, which was refreshed in January but only started shipping in March. Increased competition from other EV manufacturers could also be a contributing factor. Additionally, Tesla's sales may be impacted by the political controversies surrounding its CEO, Elon Musk, and his alleged support for far-right parties and figures in Europe. Musk's close association with former President Trump and his political ambitions have also caused a backlash in both the US and Europe, potentially turning off potential Tesla customers.
While Tesla sales are down in Europe, it is important to note that the overall demand for EVs in Europe is growing. Battery-electric vehicles (BEVs) are gaining popularity, with a 28.4% increase in sales across Europe in the January-February period of 2025 compared to the same months in 2024. This rise in BEV sales is mostly at the expense of petrol and diesel cars. Automakers are also preparing to launch more affordable EV models in 2025 when vehicle CO2 targets across Europe will tighten again.
Tesla's decline in sales in Europe is concerning for the company, and it remains to be seen if they can regain the trust of European buyers and bounce back from this slump.
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Frequently asked questions
Electric vehicle sales are not down, but they are plateauing in certain markets. In the US, for example, sales grew by 2.6% in Q1 2024 compared to the same quarter in 2023. However, this was a significant drop from the 40.4% increase in sales seen in Q4 2023 compared to Q4 2022.
One reason could be that the effects of the Inflation Reduction Act (IRA) are wearing off in the US, following steep growth in EV sales in previous years. There are also uncertainties and challenges surrounding the eligibility of different vehicles for grants.
Electric vehicle sales in Europe are not down overall, but Tesla sales have declined by 45% in Europe. This is likely due to company boss Elon Musk's involvement in European politics and his support for Donald Trump.
Electric vehicle sales in China are not down. China is still the biggest driving force behind the global EV market, accounting for six out of ten plug-in vehicles sold globally. Sales jumped almost 50% in September 2024, and the market shows no signs of slowing down.
