IEA: What Are the Latest Trends in the Global EV Sector?

The IEA's new report, What Next for the Global Car Industry, is an eye opener.

The report evaluates the progress the transport sector is making when it comes to electrification, highlighting the encouraging signs and causes for concern alike.

It also calls attention to the "profound changes" that are taking place with regards to the geography of car sales and the adoption of EVs.

China powers ahead in the energy transition

The IEA reports that global sales of pure petrol and diesel vehicles have dropped by around 30% since their 2017 peak, thanks to policies, pressure and the cost of technology. Nowadays, the market is far more tilted towards clean energy than ever before.

In 2024, for instance, of the 80 million cars sold around the world, around 30% of them were electric or hybrid. This is expected to continue to rise in the near future, notwithstanding certain regional barriers.

Speaking of regions, the IEA's report regularly points to China as the current Mecca of EVs, with its dominance in EV manufacturing, infrastructure and resources making it the undisputed world leader in sustainable mobility.

The country now produces around 40% of the world’s cars, overtaking the EU as the top vehicle exporter in 2024. Its production rate has more than doubled its output since 2010. What's more, around 70% of all EVs sold globally originate from Chinese factories now.

China's pre-eminence in both EVs and renewable energy now make it a leading force in the field of global sustainability.

The electrification of the transport sector

In its report, the IEA notes that the restructuring of the automotive sector is as much a story about energy as it is about industry.

“The global car industry is a cornerstone of many national economies, directly employing more than 10 million people worldwide and supporting millions of additional jobs,” says Fatih Birol, the Executive Director of the IEA.

“The market for cars is one of the largest for a single product and cars are the single largest source of global oil demand today," he adds.

As such, the adoption of EVs will be one of the most crucial parts of the global energy transition. Electric vehicles consume electricity instead of liquid fuels and are far more energy-efficient, converting a greater share of power into motion.

The shift towards EVs also has major implications for steel, aluminium and battery supply chains, as well as for regional energy demand.

The sector already represents about 6% of global steel use and 17% of aluminium demand, with these figures expected to rise as lightweight materials become more important to energy efficiency.

Battery manufacturing, which is now the largest single driver of industrial energy use growth, is clustering near cheap and reliable electricity sources.

For instance, Shanghai alone is home to 26 battery plants, together representing more than 5% of global capacity.

The difference in capacity from region to region is beginning to sharpen too. While Europe and North America still dominate traditional engine manufacturing, Chinese firms now account for roughly 80% of capacity for battery-related production as EV components scale rapidly.

Costs, materials and the new economics of energy

The IEA’s data shows that EV production in China remains cheaper due to integrated energy supply chains and economies of scale.

Battery cell prices are more than 30% lower than in Europe and over 20% lower than in the US, amplifying cost advantages for energy-efficient manufacturing hubs.

“The global car industry is currently undergoing major changes that have significant implications for economies around the world and for the energy sector,” Fatih explains.

“Three structural shifts are underway, in terms of the geography of production, in terms of the regions that are driving sales growth and in terms of the technologies that car buyers are choosing.

“Against this backdrop, this new IEA report provides a strong basis to inform discussions and decision-making by governments and industry, noting that there is no one-size-fits-all model.”

Batteries are now a strategic energy asset in their own right. For the EU, which imports a high share of components, this is driving concern about energy security and supply resilience.

Meanwhile, China and Japan are maintaining integrated supply chains that give them a much tighter control of energy and mineral flows.

Aligning industrial growth with clean energy

To accelerate adoption of EVs worldwide, the IEA suggests that governments can create stable demand through EV sales targets while promoting cleaner grids to ensure electrification delivers genuine emissions cuts.

Domestic battery industries should be supported through risk-sharing partnerships, workforce training and local supply development.

The IEA also explains that the sector is at its most sustainable when the most cost-effective batteries are produced close to assembly plants, thereby reducing logistics and embedded emissions.

The report also foresees how the electricity market will shape the cost and cleanliness of EV production going forward.

For the IEA, cheaper, lower-carbon power contracts for energy-intensive processes like the assembly of batteries could deliver both competitive and environmental gains.

With nations ramping up their net zero efforts, it seems crystal clear that EVs will become one of the key battlegrounds of the energy transition.