How have global EV forecasts adjusted to tariffs?

30 April 2025

Tariffs on automotive imports into the US have shaken the industry, but how will electric vehicle (EV) forecasts be affected? Neil King, head of forecasting at EV Volumes, sets out his expectations with Autovista24 editor Tom Geggus.

Since taking office in January, US President Donald Trump has imposed import tariffs on countries around the world. The subjects of these duties have been broad, with rates subject to change.

Most recently, Trump signed orders easing pressure on carmakers by introducing a mix of credits and relief from duties. Accordingly, these companies will be able to offset a portion of tariff costs on imported parts.

Until 30 April 2026, carmakers can claim 3.75% of the manufacturer’s suggested retail price on vehicles built in the US. From 1 May 2026 to 30 April 2027, this rate will drop to 2.5% and then be phased out.

Furthermore, carmakers will not be subjected to stacked tariffs, meaning no cumulative effects from multiple vehicle-related duties. Companies will instead be subject to the highest import rate. So, a carmaker would pay a component’s 25% import duty, but not the on the part’s steel and aluminium as well.

How have all these tariff changes impacted global EV expectations? EV Volumes’ latest forecast highlights the impact on the global light-vehicle market, covering passenger cars and light-commercial vehicles.

Shake up for global forecasts

By the end of 2025, light-vehicle volumes are now expected to grow by 1.2% year on year. This is down from the 1.9% growth outlined in its March forecast. In volume terms, the reduction equates to 600,000 fewer units in 2025 and one million units in 2026.

The downgrade is due to the added economic uncertainty in the wake of the new US goods tariffs and a spiralling trade war with China. There is also the expected earlier withdrawal of the Inflation Reduction Act (IRA) in the US.

However, the global EV share forecast for 2025 has been increased to 23.6%, compared to 22.7% in the March update. An upgraded outlook in China compensated for the reduction in Northern America and adjustments in Europe and the non-Triad region.

EV sales are forecast to grow by 19.2% year-on-year, up from 16% predicted in March. The latest forecast of 21.32 million EV sales globally in 2025 is 700,000 units higher than EV Volumes predicted previously. EVs are forecast to account for 43% of global light-vehicle sales in 2030, rising to a 65.3% share in 2035, and 84.1% in 2040.

Uncertainty in Northern America

Light vehicle sales in Northern America, including the US and Canada, increased by 2.9% year on year in 2024. This followed 12.4% growth in 2023. The EV share rose to 10.3% in 2024, up from 9.4% in 2023.

On 26 March, the US announced a 25% import duty on vehicles. This did come with an adjustment for US parts in vehicles produced in Canada or Mexico. However, even US-built vehicles do not escape unscathed as a 25% tariff applies on the non-US parts.

OEMs cannot fully pass on these new tariffs through higher prices without incurring large sales declines. However, this has not happened in Europe since import duties were increased for EVs built in China.

According to J.D. Power analysis, the average price of new vehicles in the US is expected to increase by 5% by the end of 2025. This translates to an 8% reduction in the sales rate.

However, a ‘pre-tariff bump’ to sales is expected in the second quarter, a trend already recorded in March and April. Prices are then predicted to rise by between 3% and 5% on average in the third quarter. Then the ‘new normal’ of 5% higher prices is expected to take effect from the fourth quarter.

Alongside automotive and goods tariffs, EV Volumes has factored another upcoming hurdle into its forecast. It assumes the IRA, which provides EV tax credits, will be withdrawn in the second half of 2025.

Forecasts lowered

EV Volumes has lowered its 2025 light-vehicle sales forecast for Northern America to 17.67 million units. This equates to a 0.9% year-on-year decline. The long-term outlook has also been reduced due to the lower base.

The EV share of light-vehicle sales in Northern America is now predicted to reach 11.1% in 2025. This is down from the 12% forecast in March. In 2030, this is expected to reach 27.4%, growing to a 45.2% share in 2035, and then 64.1% in 2040.

BEVs are expected to account for 76.7% of EV sales in 2025. This share is projected to rise to 79.5% in 2026, then reaching 89.7% in 2030, 92.9% in 2035, and 94.2% in 2040.

Europe under pressure

Europe’s light-vehicle market grew by a modest 1.7% year-on-year in 2024. This followed the 14% registrations growth in 2023. There is uncertainty surrounding the new US goods tariffs and Europe’s response.

This is in addition to existing regional stresses such as the war in Ukraine. However, EV Volumes does assume a greater risk of rising inflation and energy costs. This may lead to higher interest rates and taxes across the region and downgraded gross-domestic product forecasts.

EV Volumes forecasts that light-vehicle sales in Europe, covering Western and Central regions, will grow by 0.15% this year. This is lower than the 0.65% growth predicted in its March forecast. At just under 15 million units, this outlook falls far short of the 18 million light vehicles registered in Europe in 2019. Additionally, the European market is not expected to return to this level during the current forecast horizon to 2040.

European EV deliveries fell by 2.2% year on year to 3.07 million units in 2024, representing a 20.5% market share. This is compared to 21.3% in 2023. This was mostly because of changes in EV subsidies. This includes shifts in France, Germany and Ireland. Incentives also fell during the year, especially for PHEVs. Even EV-friendly Norway ended its VAT exemption.

Most legacy OEMs could stay safely below their CO₂ limits without selling more EVs. There was even a clear year-end push on ICE vehicles in many markets. This was so the models would not count towards the lower average emissions targets from 2025.

Positively, more affordable BEVs such as the Citroen e-C3 are rolling out. BYD also has regional expansion plans, as do other Chinese OEMs. Furthermore, Germany is considering a possible reintroduction of BEV incentives. However, this may not be implemented given the current socio-economic climate.

BEV growth to continue

Considering the latest changes to the EU CO₂ emissions targets, EV Volumes forecast that European EV sales will increase by 14.3% this year. Therefore, 3.51 million units will likely be sold by the end of 2025, equating to 23.4% of all light-vehicle sales. This is higher than the 20.5% share achieved in 2024 and the 21.3% gained in 2023.

BEV volumes are forecast to grow by 20% this year, accounting for 71.8% of EV sales. Meanwhile, PHEV deliveries are only expected to increase by 2.8%. The rollout of new EVs and the EU’s latest CO₂ emissions targets will also influence market developments.

EV Volumes foresees EVs capturing 26.4% of European light-vehicle sales in 2026. By 2027, these powertrains are forecast to account for one in three new vehicle registrations.

Economic stimulation in China

China’s EV growth continued last year, supported by greater price competitiveness. A scrappage scheme was introduced in April 2024, encouraging vehicle replacements through higher incentives. This programme has been extended to 2025, meaning there is continued support for EVs in China.

The country is currently facing a challenging economic situation. So, the government is attempting to stimulate domestic consumption while addressing deflation and the BEV price war. State-owned OEMs are seeing considerable support as a result.

The spiralling trade war with the US has also compounded the challenge. There are concerns about the country reaching its growth target of 5% this year. EV Volumes now expects the country’s light-vehicle market to reach 26.69 million units in 2025. This equates to 2.7% year-on-year growth.

Chinese OEMs will continue to roll out countless new PHEVs and extended-range electric vehicles, exacerbating their appeal. EV Volumes forecasts these powertrains will capture a 44.5% share of the EV mix in 2025. However, BEVs are expected to gain ground from 2026 onwards.

In the medium and long term, EV Volumes’ China forecast is not restricted by target shares or capacity limitation. EVs are forecast to account for 52.6% of light-vehicle sales in 2025, and 73.8% in 2030. Come 2035, they are expected to make up 89.3% and 96.5% in 2040.

Growth rates could suggest even faster electrification, but EV Volumes remains cautious because of regulatory and economic uncertainties. This forecast for China shows retail sales, not wholesale, for historic and forward volumes. This excludes exported units and inventory build-up.

Non-Triad region to see growth

Light-vehicle volumes in the non-Triad markets rose for the fourth consecutive year in 2024. EV demand is increasingly supported by a wider availability of products, higher incentives, and lower import duties in some countries.

EV sales reached 1.34 million units last year, representing a year-on-year growth of 32.6%. In 2024, the EV share increased to 4.4%, bolstered by EV incentives in countries such as India, Malaysia, Thailand, and Colombia.

The region is feeling added economic uncertainty stemming from the new US tariffs, and government responses. EV Volumes has therefore lowered its growth forecast for light-vehicle sales in 2025 to 1.7%. This is down from the 2.3% assumed in March.

A strong performance is still anticipated in the first half of 2025. However, an even greater slowdown is now expected in the second half. There is a greater risk if tariffs are applied at the elevated levels in place before the 90-day grace period took effect on 9 April. The 2025 EV share forecast for the non-Triad countries sits at 5.85%, translating to 1.8 million EV sales.

Additionally, countries like South Korea and Japan continue to offer financial support for PHEVs. South Korea has even reduced subsidies for BEVs and increased support for hydrogen fuel-cell models. However, incentives and tax breaks could be in jeopardy if governments need to introduce measures to counter an economic downturn.

The EV share of non-Triad light-vehicle sales is predicted to rise to 16.8% in 2030, 41.6% in 2035, and 76.7% in 2040. This trails global EV adoption by five to six years. Many developing countries impose high tariffs on vehicle imports. Unless EVs are exempted, these countries will need to develop their own EV industry to catch up with more mature markets.