Global Shift Towards Electric Vehicles: China's Dominance and the World's Response
The global automotive landscape is undergoing a transformative shift, with electric vehicles (EVs) projected to account for over 25% of all cars sold worldwide by 2025, according to the International Energy Agency. By 2030, this figure is expected to rise to 40%. Among major markets, China stands out as the undisputed leader, with EV sales increasing by 40% in 2024. Last year, approximately half of all new cars sold in China were electric, representing a significant portion of the 17 million EVs sold globally. In contrast, Europe saw stagnant growth, while the U.S. experienced only a 10% increase. The IEA's report highlights how China's strategic investments have not only bolstered its domestic market but also made EVs more accessible in developing nations.
China's dominance in the EV sector has been decades in the making. According to James Jackson, a research fellow at the University of Manchester, Beijing's commitment to EVs stems from both symbolic and economic motivations. This drive has led to heavy subsidies and fierce competition among startups, ultimately resulting in cost-effective EVs. For instance, two-thirds of the EVs sold in China in 2024 were cheaper than their gasoline counterparts. Companies like BYD, the world’s largest EV manufacturer, exemplify China's vertically integrated business model, controlling everything from battery production to financing solutions for buyers.
Beyond China, other regions are navigating their own paths in the EV transition. In Canada, EVs accounted for 17% of all new car sales in 2024, up from 13% the previous year. However, domestic manufacturing remains limited, producing just 25,000 EVs annually. Tariffs imposed by Canada on certain U.S. imports highlight the complexities of international trade dynamics, though most EVs sold in Canada originate from Europe and South Korea. Experts emphasize the importance of maintaining policies that promote EV adoption, such as the EV Availability Standard, which aims for an all-electric fleet by 2035.
Hongyu Xiao, a transportation analyst at the Pembina Institute, underscores the critical role EVs play in achieving Canada's climate goals. With transportation being the second-largest emitting sector after oil and gas, the shift to EVs aligns with the country's renewable energy sources. Restoring incentive programs, such as those offering financial assistance for EV purchases, could further accelerate adoption. Meanwhile, Canada's rich reserves of critical minerals present opportunities to attract global automakers amidst shifting U.S. policies.
Looking ahead, the global EV industry is likely to be heavily influenced by China. Legacy automakers must adapt, either integrating into China's supply chain or exploring niche markets where Chinese manufacturers do not dominate. While brands like Volkswagen, Ford, and Peugeot will continue to exist, they may operate on a reduced scale compared to their current production levels. As the world moves towards a sustainable future, China's leadership in EVs sets the pace for innovation and affordability across the globe.