The global plug-in electric car market is expanding but at an uneven pace across key regions like China, Europe, and North America. China continues to lead in growth with a robust 31% increase year-over-year in the January-May period. In contrast, Europe noted only a 4% increase, while the U.S. and Canada combined saw a modest 5% rise.

China Leads EV Market with Robust Growth

China holds over a 50% share in the global plug-in car market and remains the fastest growing EV market. In May alone, China’s EV sales surged by an impressive 36%. The country’s dominant position in the EV landscape is further bolstered by its concentrated battery manufacturing capabilities.

Region	EV Sales Growth (Jan-May)
China	31%
Europe	4%
US & Canada	5%

Europe and North America See Muted EV Sales Increases

In stark contrast to China’s blistering growth, Europe and North America are experiencing a plateau in EV sales due to weaker incentives and a challenging economic environment. Policy measures like reduced subsidies and tax credits have dampened consumer enthusiasm for electric vehicles in these mature markets.

Additionally, geopolitical tensions and trade disputes have led to higher tariffs on imported EVs, particularly those from China. Europe now applies tariffs of up to 38.1% on Chinese EVs, while the U.S. has set rates as high as 100%. These protectionist policies aim to defend domestic EV industries but may hinder short-term EV adoption.

May EV Sales Decline in Key Western Markets

The most recent data shows that the European EV market decreased by 9% in May compared to the previous year. Similarly, the U.S. and Canada each saw their EV sales shrink by about 3% during the same period. This slowdown in key Western markets underscores the challenges in maintaining steady EV growth momentum.

Factors Impacting EV Market Growth and Dynamics

Several complex factors are shaping the trajectory of the global EV market, influencing both short-term fluctuations and long-term growth prospects. Policymakers and industry stakeholders must navigate these dynamics to foster sustainable EV adoption.

Tariffs and Trade Policies Affect Short-Term EV Uptake

The escalation of tariffs on Chinese EVs in Europe and the U.S. has created headwinds for the global EV market. These trade barriers not only impact near-term EV sales but also complicate efforts to achieve climate goals through transportation electrification. Reduced access to affordable Chinese EVs may slow adoption rates in price-sensitive segments.

Balancing Local Production, Economy and Security Goals

Policymakers face the challenge of crafting EV strategies that balance multiple objectives, including:

Stimulating local EV production and manufacturing
Supporting economic growth and job creation
Ensuring energy security and reducing reliance on oil imports

Striking the right equilibrium requires a nuanced approach that considers both the benefits and trade-offs of different policy levers.

Profitably Producing Affordable EVs Remains a Challenge

For the EV market to reach mass adoption, automakers must be able to profitably produce electric cars at price points accessible to average consumers. However, the industry continues to grapple with the high costs of EV batteries and other components. Achieving cost competitiveness with traditional internal combustion engine vehicles remains a significant challenge in the coming years.

Global EV Market Projections and Growth Drivers

Despite near-term hiccups, the long-term outlook for the global EV market remains bullish. Falling costs, supportive policies, and maturing industry ecosystems are expected to drive substantial EV adoption in the coming decades.

EVs Poised to Capture 50% of Global Auto Sales by 2035

The Electric Vehicle Outlook report by Bloomberg projects that EVs are accelerating towards capturing 50% of global auto sales by 2035. This transformative shift could reduce oil demand by a staggering 6-10 million barrels per day.

Region	Projected EV Share of New Vehicle Sales (2035)
Global	50%
China	45%
Europe	25%
United States	11%

Falling EV Costs and Price Parity Expectations

A key driver of future EV adoption will be the continued decline in vehicle costs. Technological advancements and expanded manufacturing are expected to make EVs increasingly cost-competitive with conventional cars. Many analysts anticipate that EVs will reach price parity with internal combustion engine vehicles by the 2030s, removing a critical barrier to widespread consumer acceptance.

Policy Support and Industry Maturation Fuel EV Growth

Ambitious climate policies and emissions reduction targets are propelling governments to prioritize EV adoption. Measures like stringent fuel economy standards, EV subsidies, and investments in charging infrastructure are creating a supportive environment for EV market growth.

Concurrently, the EV industry itself is maturing, with automakers ramping up production, battery manufacturers expanding capacity, and charging networks proliferating. This virtuous cycle of policy support and industry development is laying the foundation for a robust and sustainable EV market.

Implications of Rising EV Adoption for Key Stakeholders

The accelerating transition to electric vehicles will have far-reaching consequences for a range of industries and stakeholders. Understanding and preparing for these implications will be crucial for navigating the evolving transportation landscape.

Oil Demand Reduction and Pressure on Fuel Retailers

As EVs gain market share, they will progressively displace demand for gasoline and diesel fuel. This shift poses significant challenges for oil companies and fuel retailers, who will face declining sales volumes and the need to adapt their business models. Some oil majors are already investing in EV charging infrastructure and renewable energy to diversify their portfolios and mitigate risks.

EV Battery Recycling Capacity Ramps Up to Support Circularity

The rapid growth of the EV market will generate a substantial volume of spent batteries that require proper management. Developing robust battery recycling infrastructure is essential to minimize environmental impacts and support the circular economy.

Battery recycling capacity is projected to exceed 1,500 GWh by 2030, enabling the recovery of valuable materials like lithium, cobalt, and nickel. Closing the loop on EV batteries will enhance the sustainability credentials of electric vehicles and reduce reliance on virgin raw materials.

EV Charging Infrastructure Investments and Rollout

Expanding access to convenient and reliable charging infrastructure is a prerequisite for widespread EV adoption. Governments and private sector players are ramping up investments to deploy public charging networks and encourage the installation of home chargers.

The US government, for example, has committed $7.5 billion to build a national network of publicly accessible chargers. By 2030, the country aims to have half a million EV charging stations in place. These infrastructure investments will be critical in overcoming range anxiety and making EVs a viable option for all drivers.

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