DRESDEN, GERMANY – JUNE 8, 2021: Volkswagen's ID.3 electric vehicles line up in a storage tower after finishing assembly at the “Gläserne Manufaktur” (“Glass Manufactory”) production facility in Dresden, Germany. The Dresden plant currently produces 35 ID.3s per day. The ID.3 and ID.4 are also produced at Volkswagen's Zwickau plant in the same area. (Photo by Sean Gallup/Getty Images)
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The global electric vehicle market has been on a strong growth trajectory in recent years, driven by a significant expansion in manufacturing capacity and surging consumer demand. This growth is driven by several factors, including increasing environmental awareness, stricter emissions regulations, and the expansion of charging infrastructure.
According to the International Energy Agency, more than 14 million EVs will be sold worldwide in 2023. Electric vehicles will account for 18% of total auto sales in 2023, up from about 4% in 2020.
EVs and the supply chain that supports them are major drivers of foreign direct investment globally, with EV projects becoming one of the most sought-after destinations among economic developers in cities, regions and countries around the world. Capital investment in EV-related FDI projects is expected to grow from $7.4 billion in 2016 to $93.7 billion in 2022, according to data from fDi Intelligence, a division of the Financial Times.
China is the world's largest producer of EVs, with companies such as BYD, Geely, NIO and Xpeng as major players. China also now leads the world in battery production, strengthening its position as a major hub for EV manufacturing.
Meanwhile, German automakers such as Volkswagen, BMW and Mercedes-Benz are rapidly expanding EV production, and in the US, Tesla is the pioneer, but traditional automakers such as General Motors and Ford are also significantly expanding their EV offerings.
Currently, the largest consumer markets for EVs are Europe and China, but the US market is growing rapidly, driven by the Inflation Control Act of 2022, which introduced generous incentives for EV adoption and domestic production.
Despite the global growth trajectory, there are signs of saturation in major EV markets. According to data compiled by the Global Trade Algorithm Information Center (GTAIC), EV imports are expected to decline in most European markets in 2024. For example, EV imports into Germany are down 40.7% year-on-year in the first five months of 2024, 41.1% in Spain and 33.5% in Sweden. Norway saw a drop of 31.7% in the first seven months of 2024.
Negative rates were also recorded in the Netherlands and Finland, at 31.2% and 29.5% respectively in the first five months of 2024. Imports into Belgium fell by 15.2% and imports into Ireland fell by 33% in the first half of 2024.
Meanwhile, Denmark, France and Italy saw EV imports increase by 46%, 10.5% and 1.3% respectively in the first half of 2024.
Due to the importance of these markets as importers, this decline will have a major impact on global EV sales. The top 10 EV importing countries (US, Germany, UK, Belgium, Canada, Sweden, Norway, Spain, Netherlands and Australia) account for more than 70% of total global imports. The top three countries account for more than 40%.
The largest supplier to these markets in 2023 will be Germany, followed by China, Belgium and South Korea.
As demand in developed markets weakens, EV manufacturers may be looking to emerging markets for help to make up for it, where EV adoption has been limited by high costs, inadequate infrastructure and weak regulations. However, improvements are being seen in all three factors, with many emerging countries becoming important growth markets for EVs.
According to GTAIC research, imports into Brazil increased by a staggering 973% in the first seven months of 2024. Turkish imports increased by 93% in the first five months of the year, while Malaysia's increased by 82%.
“Despite a lack of available infrastructure and stiff competition from conventional vehicles, the EV market is growing steadily in developing countries, driven by a variety of factors including government incentives, environmental concerns and improving technology,” contributor Ariel Cohen wrote in Forbes in March 2023.
Major emerging countries such as India are also competing as EV producers with their own domestic brands, putting further pressure on European, US and Chinese EV exporters. “Developing world EVs are already reshaping and unlocking the economic potential of the global South. US and European EV manufacturers have a lot of work to do,” Cohen concluded.
