Falling battery costs to drive big lift in global plug-in car sales to 22 million in 2025

A new report from leading energy research firm BloombergNEF predicts that nearly 22 million battery electric (BEV) and plug-in hybrid (PHEV) vehicles will be sold in 2025, up 25 per cent from 2024.

BNEF’s latest Electric Vehicle Outlook (EVO) published this week says the sharp increase is due in large part to the falling cost of lithium-ion batteries and the ramp up in production of more affordable EV models.

China is expected to account for nearly two-thirds of all sales in 2025, followed by Europe with 17 per cent and the United States with 7 per cent.

Importantly, however, China’s increasing dominance is helping grow EV adoption in emerging markets due to the expanding presence of Chinese automakers in countries like Thailand and Brazil.

Globally, 69 per cent of all EVs sold in 2024 were manufactured in China. Some emerging markets, like Thailand, are seeing higher EV adoption than in the United States, “challenging the widely held assumption that EVs will start in wealthy countries before spreading further,” according to BNEF.

By year’s end, BNEF predicts that plug-in electric vehicles (BEVs and PHEVs) will account for one in four vehicles sold around the globe, “a remarkable growth,” according to BNEF, “from just a few years ago when less than 5% of global vehicle sales were electric vehicles.”

Conversely, BNEF is reducing its long-term and short-term passenger EV adoption outlook for the first time, due primarily to the devolving policy situation in the United States.

BNEF points to the roll-back of federal fuel-economy standards, the phase-out of the EV tax credit, and the potential dismantling of California’s ability to set its own air quality standards, as the leading reasons for a “notable” drop in US EV adoption.

Specifically, while EV sales in the US are still expected to rise this decade, from 1.6 million 2025 to 4.1 million in 2030, BNEF predicts the drop in policy support for EVs in the United States will result in 14 million fewer cumulative EV sales by 2030.

Overall, then, based on BNEF’s Economic Transition Scenario (ETS), which sees EV adoption as shaped by current techno-economic trends and with no new policy intervention, EVs are expected to reach 56 per cent of global passenger vehicles sales by 2035 and 70 per cent by 2040, down from 73 per cent on the previous outlook published before Donald Trump retook the US presidency.

This will mean that only 40 per cent of the global passenger-vehicle fleet is electric by 2040, well below what is required to keep road transport emissions on track to reach net zero.

“2024 was a landmark year for electrified transport, with electric vehicles hitting global sales highs and rapidly increasing adoption from emerging markets across Asia and LatAm,” said Colin McKerracher, head of clean transport and energy storage at BloombergNEF, and lead author of the report.

“Despite these positive tailwinds, we see slower EV adoption in the short and long-term due in large part to the changing landscape in the US. This shift in global adoption will also have major impacts on the battery industry, leading to overcapacity in manufacturing.”

The report also found that EV battery demand is still growing, but at a slower rate than previous outlooks predicted, with BNEF’s battery demand outlook between 2025 and 2035 falling by 8 per cent compared to last year’s. This would equate to 3.4 terawatt-hours fewer batteries due primarily to decreasing passenger EV sales in the United States.

Similarly, the cost of public EV charging remains a challenge to widespread EV adoption.

According to BNEF, the majority of EV drivers remain heavily reliant on home charging – which works out to be between 25 to 60 per cent cheaper than gasoline on a per-kilometre basis – public EV charging costs remain high and have rise sharply since 2022, especially in the United States and in Europe.

“Despite significant leaps in EV adoption globally, stable and comprehensive policy still matters in advancing it further,” said Aleksandra O’Donovan, head of electric vehicles at BloombergNEF.

“Automakers that lose sight of the longer-term trend towards electrification – supported by falling battery prices and improving economics of EVs – risk being squeezed out of the major car markets.”