Global sales of fully electric and plug-in hybrid vehicles are projected to rise by at least 17% in 2025, surpassing 20 million units, as China prolongs auto trade-in subsidies and Europe implements stricter CO2 emission regulations, research firm Rho Motion said on Tuesday.
China, already the world’s largest electric vehicle (EV) market, is expected to exceed earlier growth forecasts after its 2024 sales surged by a record 40% to 11 million units. The extension of subsidies has further solidified its dominance, with Chinese automakers capturing over 80% of Latin America’s EV market in 2024 and expanding rapidly in Asia-Pacific and emerging markets.
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Europe, the second-largest EV market, anticipates 15% sales growth in 2025, reaching 3.45 million units, driven by cheaper models and new CO2 targets. However, automakers face fines totaling 10 billion euros ($10.51 billion) for missing EU emission standards, down from prior estimates of 15 billion euros, due to industry-led emission credit pools.
In the United States, EV sales are forecast to grow 16% in 2025, with limited short-term impact from former President Donald Trump’s rollback of federal electrification targets. Rho Motion warned of long-term risks, including a potential 47% decline in EV battery demand by 2040 under a worst-case policy scenario. “In the U.S. market, a lot of uncertainty has obviously hit the market in the last year or so, and we are expecting reduced EV forecasts,” said Iola Hughes, Head of Research at Rho Motion. “However, the shift to electric vehicles is still very much happening, and we will still see growth over the next decade.”
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The auto industry faces a pivotal year in 2025, with divergent regulatory landscapes shaping global trends. While China and Europe push forward with policies to accelerate EV adoption, the U.S. lags in federal targets, creating a fragmented market outlook.