BloombergNEF’s annual Electric Vehicle Outlook (EVO) expects sales of battery electric (BEV) and plug-in hybrid (PHEV) vehicles to grow 25% this year compared to 2024. Falling lithium-ion battery prices, increased model variety and expanding manufacturing are driving adoption.  

The report also predicts that PHEVs will account for one in four vehicles sold globally in 2025 – remarkable growth from just a few years ago when less than 5% of global vehicle sales were electric vehicles, says BNEF.

China is identified as the key growth engine for nearly two thirds of those sales, followed by Europe at 17% and the US at 7%.  

BNEF reports that EVs are now, on average, cheaper than internal combustion engine (ICE) vehicles in China thanks to policy stability, scale advantages, and aggressive investment. Chinese EVs are also penetrating emerging markets such as Thailand and Brazil. Notably, the report finds Thailand now has a higher EV adoption rate than the US, ‘challenging the widely held assumption that EVs will start in wealthy countries before spreading further’.  

Meanwhile, the US market is slowing down, with the roll-back of federal fuel-economy standards, the phase-out of the EV tax credit and the potential removal of California’s ability to set its own air quality standards. These factors have lead BNEF to revise down its near- and long-term projections. However, despite this revised outlook, US passenger EV sales are still expected to grow, from 1.6 million in 2025 to 4.1 million by 2030.

Elsewhere, the UK leads the pack for EV adoption among major markets in Europe, ahead of Germany.

The report presents two updated road transport scenarios. In the base case Economic Transition Scenario (ETS) – in which EV adoption is shaped by current techno-economic trends and with no new policy intervention – EVs reach 56% of global passenger vehicle sales by 2035 and 70% by 2040, down from 73% in the previous outlook. Under this scenario, only 40% of the global passenger-vehicle fleet is electric by 2040, far short of the share needed to keep road transport emissions on track under the second, Net Zero, Scenario.

The report also finds that while battery demand for EVs is still growing, it is lower than in previous outlooks. BNEF has reduced its EV battery demand forecast by 8% for the 2025–2035 period, equivalent to 3.4 TWh less battery capacity than projected a year ago. Most of this reduction – 2.8 TWh – is attributed to reduced US passenger EV sales. This supply-demand mismatch is now driving down battery costs further, says BNEF, and utilisation rates at Chinese battery plants are now below 50%.

While EV prices continue to improve for buyers, BNEF cautions that the rising cost of public charging could become an obstacle. Although most current EV drivers rely on home charging – which remains 25% to 60% cheaper per km than petrol – public fast charging prices have risen sharply, particularly in the US and Europe. In some cases, per-km costs for public charging now exceed those for ICE refuelling, threatening broader consumer uptake and total-cost-of-ownership parity.

The report also identifies promising growth trends in niche segments:

• Range-extender EVs (e-REVs) are the fastest-growing drivetrain, with sales growth of 83% in 2024 to 1.2 million. These vehicles are a variant of plug-in hybrids but are used more like fully electrics, with average battery pack sizes of 38 kWh, average electric-only range of 170 km, and more than 70% of total distance driven in electric mode, notes BNEF.
• Electric trucks are scaling rapidly in China, driven by government support and subsidies, battery quality, declining costs and heightened manufacturing competition. They are expected to account for 46% of commercial truck sales by 2030.
• Three-wheelers are electrifying more rapidly than other vehicle segments, according to the report. With EVs expected to make up more than 80% of 2024 sales, this the only segment aligned with BNEF’s Net Zero Scenario.

Meanwhile, solid-state batteries are also gaining ground. Although only 9.5% of the announced 830 GWh of capacity has been commissioned – mostly semi-solid-state technology – they are expected to comprise 10% of total EV and energy storage battery demand by 2035.

The report also forecasts that the EV fleet will surpass the size of the ICE fleet in many countries over the coming decades. Norway is projected to reach this milestone in 2030, followed by China in 2033, US state of California in 2037 and Germany in 2039.  

Global auto manufacturers outside China risk losing competitive ground

Meanwhile, in a contemporaneous report, the International Council on Clean Transportation (ICCT) finds that China-based automakers are establishing a clear lead in the zero-emission vehicle (ZEV) market.  

Its annual Global Automaker Rating ranks Chinese firms as the top five for ZEV class coverage, with Geely and SAIC already surpassing 50% EV sales share – one year ahead of their 2025 targets.

Chinese manufacturers have built economies of scale and technological advantage through sustained investment and policy support at home, says the ICCT. Now they are expanding globally, posing stiff competition for Western rivals that are facing the dual challenges of catching up technologically while navigating increasingly uncertain regulatory environments.

For example, it reports that China’s BYD overtook US-based Tesla in global BEV sales for the first time in 2024. It recorded a 25% increase in BEV sales and 47% increase in combined BEV and PHEV sales over 2023. Both companies remain in the ‘Leaders’ category of ICCT’s rating.

Notably, India’s Tata Motors moved from the ‘Laggard’ to ‘Transitioner’ category by introducing new EV models and strengthening its battery recycling strategies. Meanwhile, GM and Honda advanced due to higher-performance model launches, and Nissan clarified its ZEV roadmap. Japanese and South Korean manufacturers overall still lag, although progress is emerging, notes the report.

For the first time, the ICCT included a green steel metric in its rating, recognising the growing importance of emissions in vehicle production. Steel is the second-largest contributor to manufacturing emissions after batteries. Mercedes-Benz, BMW, and Volkswagen scored well for their efforts in procuring green steel and using renewable energy in manufacturing processes.

‘As China-based automakers expand globally, other leading global manufacturers face urgent pressure to accelerate their own transitions or risk losing competitive ground,’ concludes Drew Kodjak, President and CEO of the ICCT. ‘The rapid evolution of the EV market in China has created technological and manufacturing advantages for companies there. For the wider global auto industry, this is no longer just about meeting future goals – it’s about remaining competitive today in a market that’s charging up.’