The transition to electric mobility continues to advance rapidly, reshaping global energy and auto markets. Electric car sales in 2024 are anticipated to be robust, with around 17 million units sold over the course of the year. More than one in five cars sold worldwide this year is expected to be electric.
Growth has been uneven across markets. Electric car sales in countries like Australia, Brazil, Canada, China and Indonesia were strong, while in Germany, Italy, Japan and Korea, they declined during the first three quarters of 2024 compared with the same period in 2023. Several carmakers are adjusting their electrification plans as they grapple with these complex market dynamics. For example, Volvo recently revised its 100% fully electric 2030 target to include up to 10% hybrid sales, with the objective of achieving higher profitability by 2026. Meanwhile, Ford cancelled plans to launch a new electric SUV and delayed its next electric truck, pointing to profitability concerns and competitive pressure. Recent reporting suggests that other carmakers, such as Toyota, Mercedes-Benz and Stellantis, may be revisiting near-term electric car sales forecasts.
Global momentum behind electric cars remains powerful in the medium term. Under today’s policy settings, electric cars are expected to account for around 45% of car sales in 2030 and 55% in 2035. However, a crucial factor in the pace of growth across markets will be whether electric cars become more affordable.
Smaller and more affordable electric cars are necessary to deliver faster mass-market adoption
Although electric cars today often have lower total costs of ownership over their lifetimes due to reduced fuel and maintenance expenses, reducing upfront prices is key to boosting uptake. This trend is evident in China, where small, affordable models are driving mass adoption.
In 2023, about 60% of electric cars sold in China were already priced below their internal combustion engine (ICE) counterparts, thanks to over a decade of policy support, increasing competition and falling battery prices. Due to their growing accessibility, nearly 95% of small cars sold in the country in the first half of 2024 were electric. Electric models are set to account for one in two total car sales in China this year.
Battery electric car price premium compared to internal combustion engine cars, 2018-2023
%BEV price premium (%))201820192020202120222023-20020406080IEA. Licence: CC BY 4.0
United States China
- Europe
Average battery size and price index (2018=100) of battery electric cars, 2018-2023
Open Battery size and price index (2018 = 100)201820192020202120222023050100150200IEA. Licence: CC BY 4.0
United States China
- Europe
In contrast, electric cars sold in Europe tend to be bigger premium models that remain pricier than their ICE equivalents. In 2022 and 2023, battery electric vehicles (BEV) sold in the region cost an estimated 40% more than conventional cars, despite declines in average battery prices over that period. A 2023 survey from the European Commission found that the purchase price remains the primary barrier preventing European consumers from adopting electric cars. The median price consumers were willing to pay was EUR 20 000.
In the United States, BEV premiums fell from 50% in 2022 to 20% in 2023, driven by price cuts from Tesla, which repeatedly slashed the prices of its best-selling Model Y between mid-2022 and early 2024. Still, the cheapest electric models available in 2023 were priced around USD 30 000, and only five of the 25 models launched in 2024 have been priced below USD 50 000, whereas best-selling small and medium ICE options stand under USD 25 000.
Emerging markets face similar challenges. In India, the homegrown leading car manufacturer Tata Motors released a few electric models priced under USD 15 000 in 2023, but the best-selling ICE cars averaged around USD 7 000. However, a notable exception comes from Viet Nam, where local carmaker VinFast launched a mini electric SUV priced under USD 13 000 in 2024, competing with existing Chinese electric models as well as the cheapest conventional alternatives.
Across markets, electric cars are generally getting less expensive. However, the fact that both electric and ICE vehicles keep getting larger is partially offsetting this trend. In 2023, nearly 60% of global BEV car sales were large or SUV-type models, more than twice the share seen five years earlier. This rose to over 60% in Europe and over 75% in the United States. In India, Indonesia and Thailand, between 55% and 65% of electric car sales were large models or SUVs, with the share reaching over 85% in Malaysia. By 2028, nearly three-quarters of new electric models launched globally are projected to fall into these segments.
Battery electric car sales breakdown (2022-2023) and expected new launches by segment through 2028 in selected regions
%20222023Launch20222023Launch20222023Launch20222023Launch020406080100ChinaEuropeUnited StatesWorld IEA. Licence: CC BY 4.0
Small car Medium car Large car SUV
- Pick-up truck
Market competition is helping to bring down electric car prices
Despite the trend towards larger cars, competition – which is becoming tougher in global car markets – could be a force for greater affordability in the coming years. This is primarily a result of strong sales from Chinese manufacturers. In 2015, major incumbent automakers accounted for a combined 55% of global electric car sales. In 2023, their share had fallen to 30%, while Chinese carmakers commanded over 50%.
Amid tough competition in China, led by front-runner BYD, carmakers are cutting prices quickly, and international automakers, which accounted for less than 20% of electric car sales in China in the first half of 2024, are increasing investments to catch up. BMW, Mercedes and Volkswagen have announced a combined USD 7.5 billion in local manufacturing and R&D to develop new models for the Chinese market by 2026.
Additionally, some automakers are bucking the wider SUV trend by announcing smaller and cheaper models, including BYD, Leapmotor International (a joint venture between Stellantis and China’s Leapmotor), Renault, Stellantis and Volkswagen. Within the European market, the release of new, more affordable electric models by carmakers is scheduled to align with regulation. In 2025, as the European Union’s fleet-wide carbon dioxide (CO2) emissions targets for new cars get stricter, about nine electric models priced under EUR 25 000 are expected to launch, helping carmakers serve the rapidly growing BEV market and comply with the updated standards. Prices for electric SUVs are falling quickly as well, with carmakers such as VW (with its brand Skoda) and Kia racing to build models for the European market that are designed to be priced on par with their ICE equivalents.
As upfront prices come down, second-hand electric cars are also getting cheaper. As of mid-2024, the average price of used electric cars was above USD 33 000 in the United States, a year-on-year decline of more than 20%. For comparison, the average price of used ICE cars fell by just 7% to USD 27 000.
Policy support has the potential to boost the cost-effectiveness of local manufacturing
Policy support for clean energy technology manufacturing from several governments in major car markets could also help bring down prices down the line. While primarily aimed at supporting industrial competitiveness and creating local jobs, well-designed policies that seek to boost innovation could also drive supply chain optimisation and cost reductions, ultimately resulting in lower final purchase prices.
In the United States and Europe, increasing policy support for manufacturing, as highlighted in the 2024 edition of IEA’s Energy Technology Perspectives, could help lower the price of domestically produced electric cars and batteries over time as supply chains strengthen and further integrate and as growing production volumes drive greater economies of scale (the IEA will publish a commentary exploring the latest trends in battery supply chains in early 2025).
Meanwhile, social leasing programmes could facilitate EV adoption for low- and middle-income households. For example, France’s social leasing scheme, launched in December 2023, has enabled tens of thousands households to drive electric, with monthly payments ranging from EUR 49 to EUR 150. Making EVs with a carefully defined maximum price tag eligible for social leasing could further incentivise automakers to release more affordable models to tap into the growing demand created by such initiatives.
However, recent tariffs and countervailing duties on electric car imports from China, adopted by countries and regions including Canada, the European Union, Türkiye and the United States, could limit the availability of affordable models in the short term. While these measures aim to support local manufacturing and level the playing field with Chinese manufacturers suspected of benefiting from unfair subsidies, they might also reduce the competitive pressure on domestic automakers to release more affordable electric models in the medium term.
Price is not the only factor that affects electric car uptake. Others, such as range and the availability of charging infrastructure, remain important. Yet if market competition and policy support succeed in bringing electric car prices on par with ICE ones in more countries, it could unlock a new leg of growth, putting mass-market adoption within reach.
Jules Sery, Transport Modeller
Jean-Baptiste Le Marois, Energy Innovation Programme Officer
