Global Car Industry Faces a New Electric-Driven Power Shift
A new report by the International Energy Agency (IEA) highlights the profound changes reshaping the global automotive industry as electric vehicle (EV) demand accelerates and production and sales centres shift geographically. Titled What Next for the Global Car Industry, the report provides the first comprehensive analysis of the sector based on market and cost data, alongside consultations with industry stakeholders. It assesses what these transformations mean for established automakers and their home countries, identifying both risks and opportunities in an increasingly competitive environment.
The report shows that global car sales reached nearly 80 million units in 2024, recovering from the pandemic downturn. However, all recent growth came from electric and hybrid vehicles, which accounted for about 30% of total sales. New entrants are rapidly increasing their share of the EV market, while sales of conventional internal combustion engine (ICE) cars have declined by around 30% since peaking in 2017.
At the same time, the global map of car production and sales is being redrawn. China and other emerging economies now represent more than half of worldwide car sales, compared with just 20% in 2000. China alone accounts for roughly 40% of global car manufacturing capacity after more than doubling its output since 2010, while Europe and North America each hold about 15%. In 2024, China surpassed the European Union as the world’s largest car exporter, and nearly 70% of electric cars sold globally are now produced there.
IEA Executive Director Fatih Birol noted that the car industry remains a vital pillar of national economies, employing over 10 million people directly and underpinning millions of additional jobs. He stressed that the sector is undergoing three major structural shifts: where cars are produced, which regions are driving demand growth, and which technologies consumers are choosing. In this context, the report aims to support informed decision-making by governments and industry leaders, recognising that no single strategy fits all markets.
These shifts present significant challenges for incumbent automakers, but also opportunities to strengthen competitiveness over the medium and long term. While EV adoption is accelerating in China and advanced economies, ICE vehicle demand is expected to persist or grow in some regions, requiring manufacturers to manage multiple technological pathways simultaneously.
The report also finds that producing cars—especially electric vehicles—is generally cheaper in China than in advanced economies. This cost advantage stems mainly from large-scale production and vertically integrated supply chains, with energy and labor costs playing a smaller role. Lower costs for powertrain components account for nearly 40% of the EV manufacturing cost gap, largely due to cheaper batteries. Battery cell prices in China are more than 30% lower than in Europe and over 20% lower than in the United States.
Nevertheless, the IEA concludes that this gap can be narrowed over time with sufficient investment. While access to low-cost components and critical minerals explains about 30% of the difference, roughly half is linked to manufacturing efficiency and automation. As production scales up and experience grows, battery manufacturing efficiency outside China could eventually reach comparable levels.
Source: IEA Organization