Demand for electric vehicles is expected to continue to rise this year, but uncertainty over policy changes and tariffs is clouding the forecast.
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According to S&P Global Mobility, global sales of electric vehicles are expected to reach 15.1 million in 2025, a 30% increase from last year. Electric vehicles are expected to account for 16.7% of the light vehicle market share.
However, Tesla, BYD (China) and other manufacturers face big unknowns in 2025, as Donald Trump’s presidency could mean big policy changes on taxes and other incentives for electric vehicle makers and consumers, the research report suggests. He points out that the threat of tariffs on imports and retaliatory tariffs globally could further complicate the production and sales of electric vehicles.
“There is a lot of uncertainty in the air”said Stephanie Brinley, associate director of automotive intelligence at S&P Global Mobility. “It’s not an environment where you want to throw yourself into it.”
In the United States, consumers can currently benefit from a federal tax benefit of up to $7,500 (7,282 euros) for certain new electric vehicles. Automakers have also benefited from federal aid for electric vehicle production and infrastructure. It is possible that all of this will be removed under Mr. Trump’s presidency.
Mr. Trump condemned the federal tax credit for electric vehicles during his election campaign. He described it as part of a “new green scam” which would harm the automobile industry. Still, the incoming administration is expected to push for broader deregulation of industries, which could potentially help automakers.
-Some of the biggest electric vehicle makers had a mixed 2024, although consumers and manufacturers saw benefits. Tesla sales fell 1.1%, their first annual decline in more than a dozen years. Rivian shipments increased 2.9%.
Tariffs pose another threat to the industry. Production takes place globally and parts are imported and exported throughout the process. Donald Trump has threatened to tax imports from Mexico, Canada, China and elsewhere, likely leading to tariff retaliation.
China is the largest market for electric vehicles, followed by the United States. In the United States, Tesla is the leading manufacturer of electric vehicles, with around 50% market share.
Automakers are in a waiting position, like many other industries, to see if Trump follows through on his threats to cancel tax credits and implement tariffs.
The auto industry as a whole is exercising caution. Overall, S&P Global Mobility forecasts that light vehicle production will have declined by 1.6% in 2024 and will decline by another 0.4% in 2025. This is due to a better match between production and demand from car manufacturers. Overall light vehicle sales are expected to increase by another 1.7% in 2025.
The ongoing transition to electric vehicles also plays a role in moderating production. Companies like Ford and General Motors are in some cases shifting production capacity to electric vehicles instead of increasing capacity.
