MIT Technology Review’s What’s Next series looks across industries, trends, and technologies to give you a first look at the future. You can read the rest of them here.
It looks as though 2025 will be a solid year for electric vehicles—at least outside the United States, where sales will depend on the incoming administration’s policy choices.
Globally, these cleaner cars and trucks will continue to eat into the market share of gas-guzzlers as costs decline, consumer options expand, and charging stations proliferate.
Despite all the hubbub about an EV slowdown last year, worldwide sales of battery EVs and plug-in hybrids likely hit a record high of nearly 17 million vehicles in 2024 and are expected to rise about 20% this year, according to the market research firm BloombergNEF.
In addition, numerous automakers are preparing to deliver a variety of cheaper models to auto showrooms around the world. In turn, both the oil demand and the greenhouse-gas emissions stemming from vehicles on the roads are likely to peak over the next few years.
To be sure, the growth rate of EV sales has cooled, as consumers in many regions continue to wait for more affordable options and more convenient charging solutions.
It also hasn’t helped that a handful of nations, like China, Germany, and New Zealand, have eased back the subsidies that were accelerating the rollout of low-emissions vehicles. And it certainly won’t do the sector any favors if President-elect Donald Trump follows through on his campaign pledges to eliminate government support for EVs and erect trade barriers that would raise the cost of producing or purchasing them.
Industry experts and climate scientists argue that the opposite should be happening right now. A critical piece of any realistic strategy to keep climate change in check is to fully supplant internal-combustion vehicles by around 2050. Without stricter mandates or more generous support for EVs, the world will not be on track to meet that goal, BloombergNEF finds and others confirm.
“We have to push the car companies—and we also have to help them with incentives, R&D, and infrastructure,” says Gil Tal, director of the EV Research Center at the University of California, Davis.
But ultimately, the fate of EV sales will depend on the particular dynamics within specific regions. Here’s a closer look at what’s likely to steer the sector in the world’s three largest markets: the US, the EU, and China.
United States
The US EV market will be a mess of contradictions.
On the one hand, companies are spending tens of billions of dollars to build or expand battery, EV, and charger manufacturing plants across America. Within the next few years, Honda intends to begin running assembly lines retooled to produce EVs in Ohio, Toyota plans to begin producing electric SUVs at its flagship plant in Kentucky, and GM expects to begin cranking out its revived Bolts in Kansas, among dozens of other facilities in planning or under construction.
All that promises to drive down the cost of cleaner vehicles, boost consumer options, create tens of thousands of jobs, and help US auto manufacturers catch up with overseas rivals that are speeding ahead in EV design, production, and innovation.
But it’s not clear that will necessarily translate into lower consumer prices, and thus greater demand, because Trump has pledged to unravel the key policies currently propelling the sector.
His plans are reported to include rolling back the consumer tax credits of up to $7,500 included in President Joe Biden’s signature climate bill, the Inflation Reduction Act. He has also threatened to impose stiff tariffs on goods imported from Mexico, China, Canada, and other nations where many vehicles or parts are manufactured.
Tal says those policy shifts could more than wipe out any cost reductions brought about as companies scale up production of EV components and vehicles domestically. Tighter trade restrictions could also make it that much harder for foreign companies producing cheaper models to break into the US market.
That matters because the single biggest holdup for American consumers is the lofty expense of EVs. The most affordable models still start at around $30,000 in the US, and many electric cars, trucks, and SUVs top $40,000.
“There’s nothing available in the more affordable options,” says Bhuvan Atluri, associate director of research at the MIT Mobility Initiative. “And models that were promised are nowhere to be seen.” (MIT owns MIT Technology Review.)
Indeed, Elon Musk still has yet to deliver on his 18-year-old “master plan” to produce a mass-market-priced Tesla EV, most recently calling a $25,000 model “pointless.”
As noted, there is a revamped Chevy Bolt on the way for US consumers, as well as a $25,000 Jeep. But the actual price tags won’t be clear until these vehicles hit dealerships and the Trump administration translates its campaign rhetoric into policies.
European Union
The EV story across the Europe Union is likely to be considerably more upbeat in the year to come. That’s because carbon dioxide emissions standards for passenger vehicles are set to tighten, requiring automakers in member countries to reduce climate pollution across their fleet by 15% from 2021 levels. Under the EU’s climate plan, these targets become stricter every five years, with the goal of eliminating emissions from cars and trucks by 2035.
Automakers intend to introduce a number of affordable EV models in the coming months, timed deliberately to help the companies meet the new mandates, says Felipe Rodríguez, Europe deputy managing director at the International Council on Clean Transportation (ICCT).
Those lower-priced models include Volkwagen’s ID.2all hatchback ($26,000) and the Fiat Panda EV ($28,500), among others.
On average, manufacturers will need to boost the share of battery-electric vehicles from 16% of total sales in 2023 to around 28% in order to meet the goal, according to the ICCT. Some European car companies are raising their prices for combustion vehicles and cutting the price tag on existing EVs to help hit the targets. And predictably, some are also arguing for the European Commission to loosen the rules.
Sales trends in any given country will still depend on local conditions and policy decisions. One big question is whether a new set of tax incentives or additional policy changes will help Germany, Europe’s largest auto market, revive the growth of its EV sector. Sales tanked there last year, after the nation cut off subsidies at the end of 2023.
EVs now make up about 25% of new sales across the EU. The ICCT estimates that they’ll surpass combustion vehicles EU-wide around 2030, when the emissions rules are set to significantly tighten again.
China
After decades of strategic investments and targeted policies, China is now the dominant manufacturer of EVs as well as the world’s largest market. That’s not likely to change for the foreseeable future, no matter what trade barriers the US or other countries impose.
In October, the European Commission enacted sharply higher tariffs on China-built EVs, arguing that the country has provided unfair market advantages to its domestic companies. That followed the Biden administration’s decision last May to impose a 100% tariff on Chinese vehicles, citing unfair trade practices and intellectual-property theft.
Chinese officials, for their part, argue that their domestic companies have earned market advantages by producing affordable, high-quality electric vehicles. More than 60% of Chinese EVs are already cheaper than their combustion-engine counterparts, the International Energy Agency (IEA) estimates.
“The reality—and what makes this a difficult challenge—is that there is some truth in both perspectives,” writes Scott Kennedy, trustee chair in Chinese business and economics at the Center for Strategic and International Studies.
These trade barriers have created significant risks for China’s EV makers, particularly coupled with the country’s sluggish economy, its glut of automotive production capacity, and the fact that most companies in the sector aren’t profitable. China also cut back subsidies for EVs at the end of 2022, replacing them with a policy that requires manufacturers to achieve fuel economy targets.
But the country has been intentionally diversifying its export markets for years and is well positioned to continue increasing its sales of electric cars and buses in countries across Southeast Asia, Latin America and Europe, says Hui He, China regional director at the ICCT. There are also some indications that China and the EU could soon reach a compromise in their trade dispute.
Domestically, China is now looking to rural markets to boost growth for the industry. Officials have created purchase subsidies for residents in the countryside and called for the construction of more charging facilities.
By most estimates, China will continue to see solid growth in EV sales, putting nearly 50 million battery-electric and plug-in hybrid vehicles on the country’s roads by the end of this year.
