EVs to lead global rise

The Economist Intelligence Unit (EIU) is predicting the automotive market will grow by 2.3 per cent worldwide next year when compared to 2024, largely due to expansion of the electric vehicle (EV) sector.

Its outlook report for 2025 assesses prospects and regulations as geopolitical tensions worsen and climate change poses new challenges.

Arushi Kotecha, automotive analyst at the EIU, says: “After a number of supply shocks hampering new-vehicle supply and sales, we finally expect the global market to recover to pre-pandemic levels along with carmakers’ profitability. 

“At the same time, the EV transition will be hampered by the ongoing geopolitical rivalry between China and the US and EU, which is likely to intensify. But EVs will steadily become cheaper as the technology improves.”

The report highlights key trends to watch in 2025. After a difficult few years, annual new-vehicle sales will reach a record 97.2 million units.

The EIU forecasts that sales of new cars will rise by two per cent and new commercial vehicles by four per cent.

EVs will remain the best-performing segment, increasing by about 16 per cent to 19.4m units. That said, rising trade barriers will likely prevent faster market growth, fracturing supply chains and keeping EV prices high.

Policymakers will continue with efforts to reduce emissions, congestion and traffic, but will encounter increasing pushback from consumers. The outcome of the US presidential election will have important ramifications for the EV transition.

Western carmakers will remain torn between old and new technologies as they face growing competition from China. However, the profitability of EVs will improve as sales continue to rise and commodity prices ease.

Automation and artificial intelligence will continue to be integrated into new vehicles, but self-driving cars remain some way off. For the full report, click here.