Skip to main content


Global EV Transportation Report

Regional Overview

Globally, the electric vehicle market opportunity is limited to a select group of regions and countries. It is unlikely to change significantly in the next 4-5 years. But the relative market share could. The US market is increasingly poised to expand its share in the global market due to the upfront incentives on offer. The Chinese market is closer to outstripping the European region in electric vehicle penetration rate. At the same time, while mature in several aspects of electric vehicle adoption, the European market could progressively come to the fore in battery manufacturing and sourcing as a counterbalance for supply chain security.

Global EV penetration is led by China, Europe and the US.

Regional Growth Pointers

Global EV penetration is led by China, Europe and the US. The emerging markets in other regions, while promising, do not yet carry a substantial weightage in the global transport electrification ecosystem. The shaping of the global electric vehicle market continues to be led by just the three countries/regions. It is partly a reflection of the policy and regulatory framework adopted in this regard.

Note: The category labelled as ‘others’ includes Eastern Europe, Asia-Pacific Latin America, and Asia-Middle East
Source: EV-Volumes

The growth in the current leading market is an outcome of sustained subsidy commitments over the last 5-6 years. Others such as US did not follow the same path. The US still does not have a federal-level policy and stands out only for the recent massive investment tax credit plan announced to attract manufacturers. The Chinese, on the other hand, show a shift to market maturity, with subsidy support on the wane. Others such as Norway have followed the same trajectory of market development. Passenger electric vehicle segment is in the focus for practically the entire electrification initiative. This is attributed to a mix of factors including share in total emissions, technological feasibility of the platforms, and the rate of adoption. The pattern of growth has been varied even between the leading markets. The four-wheeler passenger vehicle sub-segment for instance occupies all the attention in European and US markets. Yet, in case of China, the two-wheeler sub– segment penetration has been high (70% of the total sales).

The commercial transportation sub-segment shows gradual progress in the electric drivetrain adoption. A key catalyst for growth has been the electric bus. At a policy-level, it is a focus area for the scope of emission control through electrification of existing fleets. So far, the progress in this direction has been limited, in part due to the lack of adequate charging infrastructure. BNEF estimates as of November 2022, indicate a 40% year-on-year growth in electric buses. At a regional level, this is even lower for the otherwise leading global passenger EV markets. A predominant share is that of China, leading in both electric bus fleet size and sales growth.

Note: Data for 2022 is estimated
Source: BNEF

Unlike the passenger vehicle segment, the sales growth in electric bus is led by subsidy support. While the policy-level directions on procurement could be from municipal and local authorities, the budgetary outlay has been vital in propelling the growth. European market for the electric buses is the second-largest after China’s. The European demand growth is limited to the select major cities leading the shift in public transit fleets. Furthermore, it has been observed that the competition from diesel bus sub-segment is still a factor for electric buses, as new products complying with emission standards can qualify for bidding rounds. Other than China and Europe, all regions/ countries operate from a very low base of electric bus adoption.

Some of the recent EV models in 2023 has a driving range of up to 580km.

Emerging Market Economies in Focus

The concentration of electric vehicle sales in select regions can be related to a broader view of disparity – the one between developed and emerging / less developed economies. The growth trajectory is different. The budgetary allocation for the subsidy-led growth in developed economies, together with technology access, cannot exactly be emulated one-for-one in the developing countries’ framework. This was indeed the point prominently pointed out in the World Bank’s November 2022 report on electric mobility. The path to the region’s transport electrification is different. A case in point is the electric two- and three-wheelers’ sub-segment, where growth is progressively led by emerging economies such as India, Vietnam and others in the African region.

Source: BNEF

The need to focus on emerging market economies is vital in global transition in automotive drivetrain. Almost a third of the global sales of internal combustion engine vehicles is in the developing or emerging market economies. With economic growth it is more likely that the share of such vehicles could rise, in absence of a stronger progress in the competing electric vehicle options. BNEF projections indicate that in absence of progress in electrification of mobility, by 2035, about 40% of the combustion- based vehicles could be located in the emerging market economy. Reversing such a potential outcome would require international collaboration and technological assistance in circumventing barriers.


The Chinese market plays an outsized role in the global electric vehicle market. By the end of 2022, the country had about 30% of its total new vehicle sales based on electric drivetrain (including both battery electric and plug-in hybrid). The same year, it registered an 82% year-on-year growth (estimates of EV Volumes) in the total electric vehicle sales. In 2020, the country’s electric vehicle penetration was at about 6%. Both volumes and growth in the Chinese market constitute a compelling case.

To be sure, a moderation is due in the sales, as subsidy rollbacks start working through the market. The policy framework has been clear about phasing out fiscal incentives. Towards the later part of 2022, vehicle registrations rose sharply in the ensuing rush to make most of the incentives that were due to stop from 2023 onwards. The jump was in plug-in hybrid while those of battery electric modes experienced a decline in relative share. A further decline is anticipated during 2023, as the lack of incentives suppresses the market demand temporarily. The ripple effect of an anticipated lower demand is expected to pass across the ecosystem.

Lithium prices (as in the mineral Lithium Carbonate) show a decline from the sharp rise till late 2022. The moderation in Lithium Carbonate and Lithium Hydroxide prices is an outcome of both decline in demand and the expected new supplies to be onstream. A similar impact was on battery supply – the market leader CATL offered discounted offers to counter the impact on sales. The leading automakers took to sharp price discounts, highlighting the competitive pressure. The most notable case is of the US-based manufacturer Tesla (operating through its Shanghai-based Gigafactory), whose multiple discounts till January 2023 made its vehicles cheaper by 14% against local competition and by over 50% when compared to US and Europe. Expectedly other market players followed suit, including the leading global majors such as Volkswagen.

The context of heightened competition in the Chinese electric vehicle market extends beyond the episodic price war between automakers. The subsidy-model that helped cultivate the demand also helped facilitate a strong domestic ecosystem for electric vehicles. Major domestic integrated production facilities, notably the Gigafactories, are part of the success stories of the active state support. Over the years, the local home-grown companies have come on their own in the market. In effect, the Chinese companies offer a stronger competition to the global automakers. The market share of Chinese brands in the domestic electric vehicle segment has, as a result reached 80%. About a decade back, the foreign brands held 70% share.

The flux in the market has significant implications. The major global automakers and related investors have stakes in this market where penetration is almost imminent to exceed Europe’s by 2025. The next phase of growth would likely involve more strategic investment commitments including acquisitions (example: Volkswagen’s €2.4 bn joint venture investment with Chinese AI chip designer firm Horizontal Robotics). A few other automakers may also face the decision about market exit (example: South Korea’s Hyundai and Japan’s Honda scaling down Chinese presence).

As of the end 2022, the European Union had a penetration of over 22%.


The European region has had the most notable progress in transport electrification. As of end 2022, the European Union had a penetration of over 22%. Conventional hybrids (combined with petrol and diesel) constitute another 22.6%. Effectively, the region has been able to implement a transition to alternate fuels in transport, of which battery-electric is a critical component. BNEF estimates indicate that the European region was responsible for about 36% of the global electric vehicle sales in 2021. As of H1 2022 the same share stood at 28%.

The most visible path to the transition is the European Union’s ban on new sale of combustion-based vehicles by 2035. The sustained subsidy support in the policy and regulatory framework helped narrow the gap in parity against combustion vehicles. The Dutch automotive lease provider, Leaseplan partly confirmed this in its latest report, highlighting electric vehicles’ total cost of ownership being same or lower across 22 European countries.

An added backdrop to the European transport electrification is the region’s focus on decarbonization and climate change mitigation. The focus on clean energy acts as an overarching goal in the sectoral targets of decarbonization, such as in transport electrification. For the electric vehicle market, such an interrelation has helped tie-in the policy goals and their implementation. For instance, many of the European cities have restricted the circulation of diesel- based bus transport for emission concerns. This, in effect, sets the stage for electrification.

The regional estimate of penetration is an average. The leading markets reveal the sharp change. Norway is an outlier, not just for the highest penetration globally, but also the share in total fleet (at 86% in 2021). Some of the other countries with similarly high share of electrified fleet include Finland, Iceland, Denmark and Sweden. There is another set of countries notable for the sharp rise in penetration in the last 3-4 years till 2022. These act as the demand drivers for the next growth phase. Germany for instance is also the emerging hub for battery and other critical component manufacturing.

Source: ACEA

Helped in fair measure by the demand momentum, Europe is progressively taking a centerstage in global capital flow for battery manufacturing. A major point of contention is to mitigate Chinese concentration in the supply chain. Related to the same is the need for local sourcing for a competitive edge in supply. As of mid-2022, Europe’s Gigafactory pipeline reached a 780GWh capacity, for commissioning  by  2030.  More capacities are in contention as various stakeholders finalize partnerships, joint ventures or even strategic acquisitions. With each such capacity involving upfront investment above €2-3 billion, the potential is a huge one. The externalities that typically arise from such cluster-based investments, such as in terms of technology transfers, development of ancillary industries, etc. make the scope even wider and dynamic.

Note: Data refers to a comparison between H1 2019 and H1 20222 time points.
Source: BNEF

About $370 billion worth of government incentives is on offer to enable local sourcing.


The US electric vehicle market has been late to catch up to the transport electrification theme. Part of the reason could be traced to the lack of a cohesive national program on the same. Even now, the country’s policy targets on electrification are largely at the level of states and local authorities. Yet, the progress has been notable, to the extent that it is the next largest electric vehicle market after China and Europe.

As of end-2022, the electric vehicle sales grew 65% year-on-year even as the overall passenger transport business contracted. The consumer preference for such vehicles is clearly established in the market, with the number of product launches and market entry across price points in the last two years. New entrants such as Rivian have been notable for making inroads in the competitive market. For most of the established market players, however, the focus is on getting the platforms ready for meeting the demand across the board.

The investment landscape for transport electrification changed drastically with the enactment of the Inflation Reduction Act (IRA). The generous tax credits offered for investment commitments set the stage for the manufacturing base of electric vehicles, batteries and the related critical minerals and components. About $370 billion worth of government incentives is on offer to enable local sourcing. With federal incentives, some of the states are bettering the bargain with added support to attract investments. A geographical cluster of the US states, christened as the “battery belt” is emerging as the focal point. While the actual materialization of planned investments is down the line, the US IRA is one unprecedented development for permanent changes in the electric vehicle market structure.