EV Market Update: H1 2025 in Review

How did the EV market perform in H1 2025?

Global EV sales reached 9.1 million units in the first six months of 2025, according to EV market research firm Rho Motion, up 28 percent year-on-year. So far in 2025, China continues to be in the driver's seat of the global EV market, with 5.5 million units sold in the first half of the year. That’s up 32 percent from the same period last year.

China’s car buyers are just as likely to choose an EV as an internal combustion engine (ICE) vehicle.

In fact, Bloomberg ran an article in July stating that in 2025, EV sales in China are on the verge of exceeding 50 percent for the first time as prices for the technology become more affordable.

Speaking in June at Fastmarkets' Lithium Supply & Battery Raw Materials event, at which INN was in attendance, Tim Debastos, managing director of LG Energy Solution (KRX:373220), said the Chinese EV market shows potential for future price declines, with many EVs in China being cheaper than gasoline cars.

“There's a perception that EVs are much more expensive than ICE vehicles, but in China they have a much more mature market,” said Debastos. “Two-thirds of the EVS sold in China in 2024 were cheaper than gasoline cars, even without government subsidies. And EV price competitiveness is a major factor driving China's global EV leadership.”

EV sales are keeping pace in Europe despite affordability concerns and trade challenges. However, some countries are experiencing more growth than others. The UK, Spain and Germany are leading the pack, while sales in France are faltering due to slashed subsidies. At 2 million units sold, European EV sales in H1 represent about one-fifth of total global sales for the period, according to Rho Motion’s data. This figure is up 26 percent over sales in H1 2024.

Rho Motion attributes the growth to a boom in small-size battery electric vehicles (BEVs). Also gaining ground are Chinese made plug-in hybrid electric vehicles (PHEVs), which are not impacted by European tariffs on BEVs.

Meanwhile, North American car buyers are sitting on the sidelines for now. With just 0.9 million new EVs on the road, the market overall has only experienced a growth rate of 3 percent this year. The Canadian EV market saw a 23 percent drop in H1 sales as EV subsidy funding has seemingly run out. The US experienced only a 6 percent increase.

Debasto also highlighted that a major hurdle for EV adoption in the US has been affordability. He noted that the average price for an EV in the US was US$51,000 in 2024, with only four EV models below US$40,000.

While the overall North American landscape may be looking rather bleak, Mexico is experiencing significant growth. The country’s EV market sales were up 20 percent in H1 compared to the same period last year.

Analysts have assigned credit to government initiatives in support of Mexico’s 2030 target for EVs to account for 50 percent of all auto sales; these initiatives include tax breaks, subsidies and investments in charging infrastructure. The increasing availability of affordable Chinese EVs is also aiding swifter adoption.

Drilling down further into the US EV market, Cox Automotive reported that General Motors (NYSE:GM) and Tesla (NASDAQ:TSLA) remain the two largest sellers. General Motors’ Chevrolet is the second best-selling EV brand behind Tesla in this market.

“Lower EV sales last quarter underscore the market’s ongoing challenges, as growth in the auto business ebbs and flows on consumer demand,” said Cox Automotive senior analyst Stephanie Valdez Streaty.

“The year-over-year decline in Q2 was only the third decline on record, and a sign of a more mature market.”

Although still the leading EV brand in the country, Tesla is feeling the weight of Elon Musk’s rising unpopularity on both sides of the political aisle, as well as increasing competition in the EV market. In terms of volume, Tesla sales were down 9 percent year-on-year in the first quarter, and that slide deepened to 12 percent in the second quarter.

What’s the EV market outlook for 2025?

Slower sales growth in the European and North American markets may have led some to question whether or not the EV market has run out of steam, but plenty of reason for optimism remain.

This was the message from Paul Lusty, head of battery raw materials at Fastmarkets, during his “Lithium Market Outlook 2025 to 2035: Navigating Demand Across EVs, Storage and Strategic Sectors” presentation.

“Sales in both the US and Europe have certainly failed to meet some previous expectations. This is in a large part due to a higher price tax for EVs relative to ICE vehicles, but also tariffs on Chinese vehicles and the removal of subsidies in some countries, particularly within Europe,” explained Lusty, who acknowledged that declining sales growth rates are definitely a sign that real challenges exist for the industry. However, he also drew attention to the fact that in 2025, EV sales are on track to make up one in four of total vehicle sales globally.

Nearly 22 million new EVs, including battery and plug-in hybrids, are projected to hit the road in 2025, says BloombergNEF in its EV Outlook 2025 report. That’s up 25 percent year-on-year.

EVs are set to account for one in four unit sales in the overall global passenger vehicle market for the year. In terms of larger-scale transport, EVs are expected to make up 43 percent of total bus sales around the world in 2025.

Autovista Group is predicting that year-on-year delivery of BEVs will grow by almost 23 percent to make up about 65 percent of the light vehicle EV market in 2025; meanwhile, PHEVs are expected to make up the remainder of the market after growing at a slower pace at 14.3 percent year-on-year.

Analysts at BloombergNEF say about two-thirds of this year’s EV sales will occur in China, which “is the only country where EVs are on average cheaper to buy than comparable ICE vehicles.”

Rho Motion reported talk of some Chinese cities running out of funding for EV subsidies and a potential slowdown in sales as a result. However, the expectation is that the funding situation will likely resolve in H2 2025.

“Despite some nervousness over subsidies, we expect this strong EV sales trend to continue over the course of the year,” explained Charles Lester, data manager at Rho Motion Data.

The European market can count on Germany for further growth in the second half of 2025. Rho Motion expects Germany’s newly launched EV incentive plan to fast track EV adoption by corporate fleets as it offers several tax relief measures to a sector that represents more than half of the market for new vehicle sales in the country.

EV Volumes data shows that Germany’s EV sales are set to reach a record 829,398 units in 2025, up more than 42 percent from the previous year. Spain is another European nation with an effective subsidy policy, and it is set to see a year-on-year gain of 66 percent to 201,801 new EVs on the road this year.

Rho Motion is forecasting that EV sales in the US will get a bump over the summer, followed by a steep drop in sales for the remainder of the year. That’s because on September 30 of this year, the Trump administration is set to axe the US$7,500 consumer tax credit for EVs offered under the Biden-era Inflation Reduction Act.

It’s likely the market will see a rush of buyers trying to take advantage of the tax credit before it ends.

“With government-backed incentives set to end in September and economic pressures mounting, the second half of the year will be a critical test of EV demand,” said Cox Automotive's Streaty.

“Q3 will likely be a record, followed by a collapse in Q4, as the electric vehicle market adjusts to its new reality.”

One of the trends to watch in this changing market landscape is sales of used EVs, which Cox Automotive believes will see accelerated growth to record highs this year.

Trump’s 25 percent tariffs on imported vehicles and non-US components may also make used EVs more attractive.

“To reduce the impact, there are adjustments for US parts content in Canadian and Mexican-built models, but even vehicles assembled in the US do not escape unscathed," reported Autovista.

"This is because the tariffs still apply to non-US components."

However, the US government is offering carmakers a reimbursement that includes a credit of 3.75 percent of the vehicle’s suggested retail price if it was assembled in the US. That falls to 2.5 percent after two years.