Otis Singleton
Electric vehicles are an increasingly important part of the automotive industry. In 2024, global electric car sales exceeded 17 million, representing a sales share of over 20%. This is a significant increase from previous years, with 3.5 million more electric cars sold in 2024 than in 2023. Electric vehicles are particularly popular in certain regions, such as California, Colorado, Washington, China, and some European countries. However, sales in developing and emerging countries have been slower due to higher purchase costs and a lack of charging infrastructure. Despite this, the electric vehicle market is expected to continue growing, with electric car sales in the United States reaching 7.9% in February 2025. The increasing popularity of electric vehicles is driven by factors such as improved range, wider model availability, and increased performance, as well as government incentives and subsidies.
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What You'll Learn
- Electric vehicles are key to the decarbonisation of road transport
- The rise of electric vehicles poses a risk to auto suppliers
- Electric vehicle battery manufacturing is dominated by China
- Electric vehicle sales are growing, but more in some markets than others
- Electric vehicles are more efficient than fossil fuel vehicles
Electric vehicles are key to the decarbonisation of road transport
The transportation sector accounts for approximately 23% of global energy-related greenhouse gas emissions, with road transport making up 72% of that. Electric vehicles (EVs) are key to the decarbonisation of road transport, a sector that accounts for around one-sixth of global emissions.
The transition to battery electric vehicles (BEVs) would accelerate the decarbonisation of road transport. However, in some countries, such as Australia, BEV uptake has been negligible, and the scale and pace required to reach net-zero emissions by 2050 have not been met. To achieve net-zero emissions, an ambitious and rapid transition to 100% BEVs in new vehicle sales, accelerated fleet renewal, and a shift to renewable electricity generation are necessary.
The EV market has experienced healthy growth in sales, improved range, wider model availability, and increased performance. Policies and regulations have played a critical role in the growth of the EV market, with Europe and China leading the way on EV adoption. Several countries, including England, France, and Germany, have implemented incentives and regulations to encourage the transition to EVs. In the United States, the Biden administration announced a 50% electrification target for 2030, along with investments in charging infrastructure and stricter fleet emissions targets.
The shift towards EVs also brings challenges, particularly for auto suppliers. The absence of major systems found in internal combustion engines (ICEs) in EVs, such as exhaust systems, fuel systems, and transmissions, poses a risk of disruption to these industries. However, advancements in EV technology and increasing consumer demand for shared mobility options are driving innovation in the automotive industry. The electrification of vehicles is expected to transform the industry and help decarbonize the planet.
To ensure the widespread adoption of EVs, continued policy support, investments in charging infrastructure, and advancements in technology are crucial. With sustained growth in EV sales and the necessary infrastructure, CO2 emissions from cars can be reduced, bringing the world closer to the Net Zero Emissions target by 2050.
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The rise of electric vehicles poses a risk to auto suppliers
The electrification of the vehicle parc is witnessing significant challenges, yet it also presents opportunities. The rise of electric vehicles (EVs) is transforming the automotive industry and helping to decarbonize the planet. This shift towards EVs, however, poses a notable risk to auto suppliers, particularly those involved in manufacturing essential components for internal combustion engines (ICE). As EVs become more prevalent, the demand for ICE-related parts will decrease, impacting suppliers' financial stability and market share.
The transition to electric vehicles is well underway, with global sales of electric cars exceeding 17 million in 2024, representing over 20% of total car sales. This surge in EV sales has been driven by factors such as improved range, wider model availability, increased performance, and more affordable prices. According to PwC, the adoption of EVs will continue to grow, and their market share is expected to expand rapidly in the medium term.
The shift towards EVs has significant implications for auto suppliers. Firstly, the rise of EVs will disrupt the market for essential ICE components such as exhaust systems, fuel systems, and transmissions. Suppliers specializing in these components will need to adapt as the demand for their products declines. This disruption will be profound, and suppliers who are unable to adapt may face financial difficulties.
Additionally, the electrification of vehicles introduces new competition for legacy suppliers. The lithium-ion battery, a crucial component in EVs, is primarily manufactured by companies outside the traditional auto supply chain. These new competitors possess expertise in manufacturing electric powertrains, further intensifying the market rivalry. The high cost of lithium-ion batteries, which can account for up to 50% of an EV's value, is another factor that cannot be ignored.
To navigate these challenges, auto suppliers must assess their ability to compete with technology firms outside the traditional automotive supply chain. They should consider their financial flexibility and adaptability to stay strategically agile. Suppliers may need to explore strategic moves such as adding software or advanced electronics capabilities, either through organic growth or partnerships, to remain competitive in the evolving EV landscape.
While the rise of EVs does pose a risk to auto suppliers, it also creates opportunities for innovation and growth. The shift towards electrification has attracted significant investments, totaling over $400 billion in the last decade. This influx of capital presents a chance for suppliers to innovate and collaborate within the EV ecosystem, which includes manufacturers, financers, dealers, energy providers, and charging station operators. By embracing these opportunities, auto suppliers can contribute to the decarbonization of the planet and play a pivotal role in shaping the future of mobility.
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Electric vehicle battery manufacturing is dominated by China
Electric vehicles (EVs) are becoming increasingly popular worldwide. In 2024, global electric car sales exceeded 17 million, with more than one in five new cars sold that year being electric. This shift towards electric vehicles poses a challenge to traditional automakers and their suppliers, as many components essential to internal combustion engines are not present in EVs.
The EV market is dominated by China, which is both the biggest producer and buyer of EVs. China's leadership laid out plans to dominate future technologies at the beginning of the century, and the country's mammoth infrastructure projects and manufacturing dominance have allowed it to realise these ambitions. Chinese entities' global share of patents in the field of electric propulsion increased from 2.4% in 2010 to 26.9% in 2020, and the country's EV and battery manufacturers have benefited from over $230 billion in subsidies from 2009 to 2023.
China's EV makers have become critical global players in the sector, with companies like BYD, which sold 2.76 million vehicles in 2023, now leading the global EV market. Chinese companies also dominate the global EV battery manufacturing market, with CATL alone accounting for 37% of the global EV battery market. This dominance in battery production is due in part to the lower cost of building battery factories in China compared to other countries, as well as the country's long-term planning and government funding.
The United States has recognised China's dominance in the EV market and is taking steps to accelerate technological innovation and stimulate consumer adoption of EVs. Europe and China will lead the way in EV adoption, with England, France, and Germany all intending to ban the sale of fossil fuel-powered vehicles by 2040 or earlier. While China's dominance in EV and battery manufacturing has raised concerns in some Western countries, there is no denying that China is a key player in the global shift towards electrification of the automotive industry.
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Electric vehicle sales are growing, but more in some markets than others
Electric vehicle sales are growing, but some markets are experiencing a significant slowdown. Electrification is spreading quickly in other areas of road transport, with buses and two- and three-wheelers already reaching very high levels of adoption.
In 2023, electric trucks surpassed electric bus sales for the first time, with sales growing by 35% from 2022. Europe has seen the largest model selection and a threefold increase in sales, reaching more than 10,000 electric trucks. This growth is expected to continue, thanks to ambitious policies such as the European Union's target to reduce CO2 emissions from heavy-duty vehicles by 90% by 2040.
In 2024, electric car sales exceeded 17 million globally, with a sales share of more than 20%. This is a sharp increase from previous years, with just the additional 3.5 million electric cars sold in 2024 exceeding the total number sold worldwide in 2020. Europe accounted for 25% of global electric car sales in 2023, remaining the second-largest market after China. However, EV adoption in Europe slowed in 2024 as automakers delayed sales to coincide with tightening vehicle CO2 regulations in 2025.
The US EV market share reached 8.1% of all light vehicle sales in 2024, up from 7.3% in 2023 and 5.8% in 2022. In Q1 of 2025, the US EV market share was 7.5%, up year-over-year but down from the previous quarter. General Motors doubled its EV sales in Q1 of 2025 compared to Q1 of 2024, while Ford's EV sales were slightly up.
Emerging economies like Vietnam, Thailand, and Brazil are some of the fastest-growing EV markets, with higher adoption rates than wealthier countries. In emerging economies with large car markets, subsidies and incentives for electric cars are crucial for growth. While some countries strive for 100% electrified sales, others plan to ban the sales of internal combustion engine (ICE) vehicles completely.
The transition to electric vehicles poses challenges and opportunities for automakers and suppliers. The rise of EVs may disrupt makers of exhaust systems, fuel systems, and transmissions. Battery prices have been falling, but the manufacturing of battery cells and key components is heavily concentrated in China, creating new competition for traditional suppliers.
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Electric vehicles are more efficient than fossil fuel vehicles
Electric vehicles (EVs) are more efficient than fossil fuel vehicles. In 2023, the number of new electric car registrations in China reached 8.1 million, an increase of 35% compared to 2022. In the same year, China exported 1.2 million EVs out of a total of 4 million cars, making it the largest auto exporter in the world. The United States also saw a similar trend, with new electric car registrations totalling 1.4 million in 2023, an increase of over 40% compared to the previous year. These statistics indicate a growing demand for electric vehicles globally.
One of the main advantages of EVs is their energy efficiency. EVs are more efficient than traditional internal combustion engines (ICEs) in converting energy into movement. While ICEs only convert about 16-25% of the energy from gasoline, EVs utilize approximately 87-91% of the energy from their batteries to propel the vehicle. This higher energy conversion efficiency leads to significant reductions in energy consumption. In fact, with the current electricity blend in the United States, an EV requires only about half the energy needed for a gasoline-powered internal combustion engine. This means that EVs can significantly reduce the amount of energy required to power our vehicles, contributing to energy conservation and sustainability.
Additionally, EVs have zero tailpipe emissions, which means they produce significantly fewer greenhouse gas emissions during their operation compared to gasoline-powered cars. According to a 2019 MIT study, gasoline cars emit more than 350 grams of CO2 per mile driven over their lifetimes, while fully battery-electric vehicles emit around 200 grams. This disparity in emissions becomes even more pronounced when considering the increasing adoption of renewable energy sources like wind and solar to generate electricity for EVs. As more countries add clean energy to their mix, the total greenhouse gas emissions associated with EVs are expected to decrease further.
While it is true that the manufacturing process of EV batteries can result in higher carbon emissions compared to gasoline car production, the overall life cycle assessment of EVs is still more favourable. Over the lifetime of the vehicle, the total greenhouse gas emissions associated with manufacturing, charging, and driving an EV are typically lower than those of a gasoline car. This is because EVs have zero tailpipe emissions and are more energy-efficient, resulting in a reduced environmental impact over their lifespan.
In conclusion, electric vehicles are more efficient than fossil fuel vehicles due to their higher energy conversion efficiency, zero tailpipe emissions, and lower overall greenhouse gas emissions. As the world transitions towards a more sustainable future, the adoption of electric vehicles will play a crucial role in reducing our carbon footprint and mitigating the impacts of climate change.
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Frequently asked questions
Electric vehicles account for less than 1% of the 250 million vehicles in the US. However, in 2024, 9.2% of all new car registrations were for electric vehicles.
Electric vehicle sales exceeded 17 million globally in 2024, reaching a sales share of more than 20%.
If all manufacturers' targets on vehicle electrification are combined, between 42% and 58% of car sales in 2030 could be electric.
The US Environmental Protection Agency (EPA) estimates that electric car sales could reach around 70% of total sales in 2032.
