NEW YORK — The demand for electric vehicles (EVs) is projected to continue its upward trajectory this year, although looming uncertainties regarding policy alterations and tariffs are dampening the overall outlook.
S&P Global Mobility anticipates that global sales of battery electric vehicles could reach 15.1 million by 2025, signifying a notable 30% increase. By that time, battery electric vehicles are expected to capture approximately 16.7% of the light vehicle market share.
Significant uncertainties linger as prominent manufacturers such as Tesla and BYD navigate the potential implications of the shifting political landscape. The coming presidential term, particularly under Donald Trump’s administration, could lead to substantial changes in tax policies and incentives impacting both producers and consumers of electric vehicles. Furthermore, the possibility of tariffs on imports and retaliatory measures from other countries could hinder production and sales efforts in the EV sector.
“There’s a prevailing sense of uncertainty,” stated Stephanie Brinley, an associate director for auto intelligence at S&P Global Mobility. “It’s not exactly an ideal environment for aggressive growth.”
Presently in the U.S., buyers can take advantage of a federal tax credit of up to $7,500 for eligible new electric car purchases. The automobile industry has also benefited from federal initiatives aimed at boosting EV production and establishing supporting infrastructure. However, these financial supports could be at risk under a Trump administration, given his previous criticisms of the federal electric vehicle tax credit, branding it as part of a “green new scam” detrimental to the automobile sector. Despite this, a Trump-led government may also advocate for broader deregulation that could favor manufacturers in the long run.
Major electric vehicle producers had a mixed performance in 2024 despite existing benefits for both consumers and producers. Notably, Tesla experienced a 1.1% decline in sales, marking its first annual decrease in over a decade, while Rivian managed a modest 2.9% increase in deliveries.
Tariffs present another challenge for the electric vehicle industry, which relies on a complex global supply chain involving the import and export of parts. Trump has indicated the possibility of imposing taxes on imports from nations such as Mexico, Canada, and China, likely triggering retaliatory tariffs and further complicating the landscape for EV production.
Currently, China leads as the largest market for electric vehicles, trailed by the United States, where Tesla commands around 50% of the market share. The automotive sector is collectively adopting a cautious approach, holding back on aggressive strategies and awaiting clarity on potential policy shifts concerning tax credits and tariffs stemming from the new administration.
Overall, the automotive industry is moving forward with caution in light of these developments. S&P Global Mobility estimates that production of light vehicles may have declined by 1.6% in 2024, with an additional drop of 0.4% anticipated in 2025. This decline is driven by manufacturers adapting their output to more closely align with demand patterns. However, light vehicle sales are still on track to rise by 1.7% in 2025.
The ongoing shift towards electric vehicle production further influences the tempered output as companies like Ford and General Motors realign their manufacturing capacities to prioritize electric vehicles instead of simply expanding production.
