• Compared to 2024, electric vehicle sales in China are set to grow by 20 per cent.
• In Europe, by contrast, 2024 closed with a -3 per cent.
• The future of European transport is also being shaped by new emissions targets.

In China, in 2025, electric vehicle sales will exceed those of internal combustion engine vehicles for the first time. A milestone that will be reached a full decade ahead of the Beijing government's own projections. According to the Financial Times, this represents "a historic turning point, placing the world's largest automotive market well ahead of its Western competitors".

Specifically, electric and hybrid vehicles in the Asian country could grow by 20 per cent compared to 2024, surpassing twelve million units sold: a significant leap from the 5.9 million recorded in 2022. Conversely, the traditional car market is set to contract by 10 per cent year-on-year, settling at eleven million units — a drop of nearly 30 per cent compared to three years ago.

Trump and Europe vs the electric car

At the global level too, 2024 closed on a positive note for electric vehicles: +25.6 per cent compared to the previous year, with over 17 million cars sold. However, there are stark differences at the continental level. China, as already noted, leads in sales, while growth in the United States was far more modest (+8.8 per cent). On that note, at his inauguration, newly sworn-in president Donald Trump stated that he would put an end to electric vehicle incentives introduced by his predecessor Joe Biden. Specifically, during his inauguration Trump revoked a 2021 executive order signed by Biden, "which aimed to ensure that half of all new vehicles sold in the United States by 2030 would be electric", Reuters reports. According to the news agency, Biden's target was not legally binding, but "had secured the backing of both US and foreign carmakers". Despite this, analysts predict that 2025 will bring another record in electric vehicle sales in the United States, with a market share of around 10 per cent.

Europe, by contrast, closes the year in negative territory: sales fell by 3 per cent compared to the previous year, with approximately 3 million electric vehicles registered. Italy in particular recorded a decline of as much as 13 per cent, selling "only" around 118,000 cars, including both fully electric and plug-in hybrid models. The most significant drop, however, was Germany's: -27 per cent and 381,000 units sold (still more than Italy, nonetheless). The slump in Germany was largely driven by the scrapping of state subsidies.

Tariffs on electric vehicles have not slowed China's expansion

This surge, analysts at Reuters argue, could be followed by a slowdown in sales within China. This would in turn open up opportunities in other markets, with further global players potentially seeking to reclaim leadership in the sector. For now, however, Chinese companies such as Byd and Nio are targeting foreign markets, offering increasingly competitive electric models in terms of both price and technology. It is precisely thanks to these more affordable models that China has also become the world's leading automotive exporter. And this has been the case since 2023, when Byd overtook Tesla in sales, marking a pivotal moment in the electric vehicle (EV) market.

Such rapid growth has raised concerns among Western manufacturers, who have moved to protect themselves by introducing trade tariffs on imports. But it has not been enough: as observed by Charles Lester, head of data at Rho Motion, a firm specialising in automotive market analysis, when commenting on November figures following the introduction of European tariffs, "no clear dip in sales" of the main Chinese electric vehicle models was recorded.

The "weight" of new emissions targets

And then there is the emissions question. On one hand, Europeans continue to invest in the production of internal combustion engine cars powered by fossil fuels; on the other, they must contend with limits — deemed too "rigid" by some countries (including Italy and Germany) — on emissions. The European Regulation setting out the decarbonisation pathway for cars and vans from 2020 to 2035 has introduced a new emissions target for this year: from 2025, the average emissions of each carmaker's annual registered fleet must fall by 15 per cent compared to the standard in force until 2024. This means companies will need to meet an emissions standard of 95 g/km of CO2 (in practice this is an average figure, since each carmaker has its own specific target calibrated to its fleet).

A European Parliament document circulated last week showed that carmakers are planning to pool and purchase CO2 credits from electric vehicle companies, including Tesla and Polestar, in order to avoid heavy fines. The analysis circulated in Brussels estimates that car manufacturers could face very high fines, of up to 15 billion euros, if they fail to meet their 2025 CO2 targets. However, as the NGO Transport&Environment points out, this estimate is flawed, as it is based on car sales from 2024, a full year before the new targets come into force. "All carmakers have long known they need to maximise their efforts in 2025, both in production and in commercial terms," explains Andrea Boraschi, director of T&E. "It is therefore clear that they will concentrate increases in BEV (battery electric vehicle, ed.) production and their strategies across distribution and sales channels in this year; and that what has been done so far, up to 2024, carries very little weight." Even in the worst-case scenario, total penalties should remain below 1 billion euros, with the Volkswagen Group bearing the largest share.

"Using 2024 car sales data to calculate the 2025 penalty is like judging an athlete's performance in a championship based on their training sessions from the previous year. The athlete saves their best effort for the actual event, just as carmakers strategically align their sales and compliance measures to meet regulatory deadlines," concludes Boraschi. As with past CO₂ targets for cars, carmakers are expected to close their compliance gap in the reference year itself, rather than ahead of time. Consequently, 2024 is not representative of the state of the market. In fact, T&E's analysis argues that the 2025 CO2 target is realistic and that manufacturers should not face the heavy fines that have been announced. Moreover, carmakers have the option to meet their targets through various strategies: the first of which is precisely to increase sales of electric and hybrid vehicles. A message that has already been taken on board in China.