This article is an on-site version of our Moral Money newsletter. Premium subscribers can sign up here to get the newsletter delivered twice a week. Standard subscribers can upgrade to Premium here, or explore all FT newsletters.
Visit our Moral Money hub for all the latest ESG news, opinion and analysis from around the FT
Welcome back, and a very happy new year.
Shareholders in some of the biggest global car groups have been hit by a wave of massive writedowns in the past few months, as several top western automakers drastically cut back their electric vehicle strategies.
Evidence that the EV shift has gone into reverse gear? Not quite.
LOW-EMISSIONS TECHNOLOGY
Global EV growth keeps rumbling on
The mood music around the auto sector’s electric transition has slipped into a minor key, with a string of starkly downbeat announcements from global carmakers.
Ford last month took a $19.5bn financial charge as it axed large parts of its electric vehicle strategy. General Motors wrote off $1.6bn for similar reasons, while VW took a €5.1bn hit connected with an EV strategy retreat at its Porsche unit. Stellantis, owner of brands including Peugeot and Fiat, has dropped a once-trumpeted plan to sell only electric vehicles in Europe from 2030.
But the latest sales figures and forecasts make clear that this shift is still very much under way — albeit at a significantly slower pace than many had hoped.
UK data releasedyesterday shows electric vehicles (including plug-in hybrids) accounted for 34 per cent of all passenger car sales last year, up from 29 per cent in 2024.
In the EU, the figure for the first 11 months of the year was 26 per cent, up from 21 per cent a year before. In the same period in China, plug-in vehicles accounted for 47 per cent of all passenger car sales, up from 41 per cent.
True, expansion in plug-in vehicle sales is set to slow this year. Researchers at Benchmark Mineral Intelligence expect the rate of EV sales growth to decline from last year’s 22 per cent to 13 per cent this year — the slowest rate since the chaos of the Covid-19 pandemic.
Growth is expected to moderate in China, where tax rebates on EV purchases will halve this year. In the EU, the sector faces uncertainty after the European Commission moved to dilute a long-standing policy to ban sales of new combustion-engine vehicles from 2035.
The starkest challenges are in the US, where Donald Trump’s administration has scrapped the EV tax incentives introduced under Joe Biden. Ford chief executive Jim Farley predicts that near-term EV penetration in the US will buck the rising global trend, perhaps halving from last year’s level of around 10 per cent of total new car sales.
But as long as electric vehicle sales continue to grow more quickly than the wider market, they will eventually squeeze combustion-powered ones out. For now, that trend remains clearly intact. JPMorgan forecasts an overall global rise in passenger car sales of just 0.7 per cent this year, with EV sales growth offset by a fall in combustion-engine car purchases.
In fact, global sales of petrol and diesel-powered cars have been falling for nearly a decade. They peaked in 2017 and had slipped nearly a third by 2024, according to the International Energy Agency. That decline continued last year — at an annual rate of 6 per cent in the UK and EU, and 2 per cent in China. (These figures include non-plug-in hybrids; sales of purely combustion-powered cars have been falling still more steeply.)
A key question now is whether this market shift will continue at its current gradual rate, or accelerate sharply — as was seen in Norway, where electric vehicles now make up 96 per cent of new car sales. After passing the 50 per cent mark in 2020, electric penetration of the Norwegian car market shot up over the following years.
Norway — an exceptionally rich country with a small, concentrated population — can’t provide a reliable guide to the outlook in other markets. But as innovation in batteries and manufacturing processes continues to push down the cost of plug-in vehicles, there are early signs that such a “tipping point” dynamic could be taking hold in the European and Chinese markets, according to modelling in a paper published last month by the academic journal Nature Communications.
“The critical mass [in the electric vehicle market] is there now,” said lead author Jean-François Mercure of Exeter university. “And that induces more people to buy into that new system.”
Smart reads
Behind the scenes What is the human cost of the battery industry? David Pilling reviews Nicolas Niarchos’s book The Elements of Power, which makes the case that “mining should not be pushed out of sight, but should be cleaned up — both environmentally and socially”.
Atomic dreams Are US hopes of a nuclear power revival realistic?
