Near-Term Outlook

Passenger EV sales are set to continue rising sharply in the years ahead as policy pressure continues to increase, more models hit the market, and consumer interest takes off. Plug-in vehicle sales rise from 6.6 million in 2021 to 20.6 million in 2025. This is higher than last year’s Outlook, due primarily to higher adoption in China.

The rising cost of batteries does not derail near-term EV adoption. Some of the factors that are driving high battery raw material costs – war, inflation, trade friction – are also pushing the price of gasoline and diesel to record highs, which is driving more consumer interest in EVs. Internal combustion engine vehicles are also becoming more expensive to produce.

By 2025, plug-in vehicles represent 23% of new passenger vehicle sales globally, up from just under 10% in 2021. Three quarters of those are full battery electric vehicles (BEV). Plug-in hybrids do not gain a significant share of the market outside Europe and peak globally around 2026. Fuel cell vehicle sales increase slightly due to a push in China, but overall have no meaningful impact in the passenger vehicle segment.

The EV share of sales in some markets is much higher, with EVs reaching 39% of sales in 2025 in China and in Europe. Some of the major European car markets go even faster, with Germany, the UK and France all between 40-50% in 2025.

China and Europe account for almost 80% of EV sales in 2025, with adoption running much slower elsewhere. The U.S. market starts to pick up from 2023 but still only represents 15% of the global EV market in 2025.

Most importantly, the market is shifting from being driven primarily by policy, to one where organic consumer demand is the most important factor. As regulatory drivers begin to play less of a role, consumer adoption dynamics – the ‘S-curve’ – take over. Supply is already a larger constraint on adoption than demand in many countries.

The acceleration in EV adoption means that combustion vehicle sales peaked globally in 2017 and are now in permanent decline. By 2025 passenger ICE sales are 19% below their 2017 peak. Managing the decline while investing in the future is a major challenge for some legacy automakers.

As of mid-2022, there are just under 20 million passenger EVs on the road (including plug-in hybrids), representing 1.5% of the global fleet. It takes time for the change in new sales to flow through to the fleet.

"By 2025 there are 77 million passenger EVs on the road, representing 6% of the fleet. Some regions go faster, with EVs represent 13% of all vehicles on the road in China and 8% in Europe in that year."

Electric Vehicle Outlook 2022, BloombergNEF

The global fleet of passenger vehicles with an internal combustion engine continues to grow

for another two years, but then starts to decline in 2024.

Electrification of other segments is also accelerating and there are a growing number of successful country case studies in both wealthy and emerging economies. For example:

- China has 685,000 electric buses on the road and 195 million electric two-wheelers
- 17% of light commercial vehicles sales in South Korea were electric in 2021
- Almost 40% of India’s three-wheeler fleet is already electric

"Global sales of commercial electric vans and trucks more than doubled in 2021. Most of these are lighter vehicles, where the market is set to turn electric quickly in the 2020s."

Electric Vehicle Outlook 2022, BloombergNEF

Adoption is supported by more models available, corporate fleet commitments, favorable economics and rising concerns about urban air quality.

The market for medium- and heavy-duty trucks is also starting to move, with close to 10,000

units sold in 2021. That is set to continue, as some of the largest global truck makers are targeting between 35% and 60% of their annual sales to be zero-emission, and primarily all-electric, by 2030.

The truck market is highly varied. In urban duty cycles, battery electric trucks of any size become the cheapest option for several use cases in the 2020s. That is due to a combination of factors, including improving battery technologies, modest driving ranges, and the relatively large efficiency penalty of diesel trucks in urban traffic, which tend to consist of congested and recurring start-stop operation.

Megawatt-scale charging stations, as well as the emergence of higher energy density batteries by the end of the 2020s, result in battery-electric trucks becoming a viable option for heavy-duty long-haul operations, especially for volume-limited use cases.

Fuel cell models in this segment will be introduced in higher numbers in the late 2020s, but more all-battery trucks are launching and they are set to command a higher market share. FCV adoption remains case- and location-specific, requiring substantial and technology-exclusive policy support. The hydrogen supply, distribution and refueling infrastructure for trucks is also still years away from reaching the necessary scale for most fleet operators to make the switch.