Nearly 22 million electric cars were produced globally in 2025 – up more than 25% compared to the previous year. Of those, about one-quarter were traded between major production and demand centres. China remains the world’s largest hub for manufacturing and trade of electric cars, capturing nearly 75% and 40% of the respective global totals. Primarily led by domestic carmakers, China’s 2025 production of 16 million electric cars outstripped domestic demand by 20%, pushing Chinese electric car exports to double to a record high of more than 2.5 million. At the same time, exports of conventional cars from China remained at a level relatively similar to 2024 – meaning that electric cars were the primary driver of growth in car exports. In 2025, electric models represented more than 35% of all Chinese car exports, up from about 20% the year before.

In the European Union, policy-driven growth in electric car sales resulted in production increasing 30% from 2024 to reach nearly 3.2 million in 2025. The European Union remained the world’s second-largest electric car producer. Domestic carmakers continued to capture the majority of the regional output, while the remaining less than 20% was primarily produced by Chinese players (through Geely’s Volvo) and US carmakers (mostly from Tesla and Ford’s European plants). The region remained a net exporter of electric cars, with exports exceeding 1 million in 2025 – a 25% rise from the previous year. Other European countries, principally the United Kingdom, continued to be the main destinations for EU exports, representing two-thirds of the total. Recent tariff hikes in the United States reduced North America’s share of EU exports by nearly four percentage points, though export volumes were similar to 2024 levels. Despite growing exports, the EU net trade balance narrowed as imports went up around 35% year-on-year to reach more than 900 000 in 2025. China accounted for almost 60% of these, equivalent to less than 20% of EU demand, a similar share to the previous year. Chinese-made electric cars sold in the European Union are increasingly shifting to Chinese brands, including Chinese-owned legacy European brands such as Volvo Cars and MG. The share of Chinese brands in total imports from China grew from 50% in 2023 to more than 70% in 2025, while the share of Chinese-made electric cars from Tesla fell from 30% to 10% over the same period. 

Electric car production in other European countries was lower than domestic demand. In 2025, despite some growth in domestic production, those countries continued to rely significantly on imports, primarily from the European Union (representing over half of total sales in 2025) and China (30%). Most of the output was concentrated in Türkiye, led by Toyota and the domestic electric vehicle (EV)-maker Togg, in the United Kingdom, led by Jaguar-Land-Rover (owned by India’s Tata group), and to a lesser extent in Serbia through Stellantis’ assembly plant. However, as incumbent European, Japanese and Korean carmakers, as well as Chinese and Turkish EV makers, expand their EV production capacity, Türkiye, the United Kingdom and Serbia are expected to play a growing role in regional electric car manufacturing and trade. In 2025, more than half of the around 150 000 electric cars they produced were exported, primarily to the European Union.

In 2025, after a year of decline, electric car production in North America returned to growth with a 10% increase from 2024, while domestic sales decreased against the backdrop of changing US policy environment and expiring Canadian EV subsidy programme. This slim increase in output was mainly driven by Korean carmakers ramping up their US production to avoid recent tariff hikes. Despite a slight decrease in imports to the United States in 2025, they remained crucial to meet demand, accounting for nearly 40% of US electric car sales. Mexico’s production increased nearly 5% from 2024he country accounted for more than one-third of US electric car imports in 2025, followed by the European Union (30%) and Japan and Korea (30% combined). Almost all of Canada’s demand was met by imports in 2025, with the United States accounting for almost half of the total (more than 40% of US total exports), and Japan, Mexico, Korea and the European Union supplying the remainder. In early 2026, Canada agreed to cut its 100% tariff on Chinese electric cars in return for lower tariffs on Canadian farm products. Although initially capped at around 50 000 units, this agreement is expected to mean Chinese imports will play an increasing role in meeting Canada’s demand.

Electric car output in Asia Pacific countries other than China also increased in 2025, albeit less rapidly than demand. Growth was primarily driven by domestic EV makers (Viet Nam’s VinFast and India’s Tata), and Chinese original equipment manufacturers (OEMs) ramping up production in their recently established overseas facilities; production from Japanese and Korean incumbents remained virtually constant in 2025. Trade played an increasingly important role in the region’s electric car markets. Most of the region’s exports originated from Japan and Korea, at levels unchanged from 2024, while their destination increasingly shifted from North America to Europe, as trade barriers with the United States grew in 2025. Imports into the region, particularly into Southeast Asia, Australia and Korea, grew markedly to meet soaring electric car sales, with China representing over 80% of total imports. In Southeast Asia, for example, electric car imports more than doubled year-on-year to exceed 300 000 in 2025, with nearly all coming from China and supplying more than half of domestic demand.

Tight profit margins in China push automakers into overseas markets

China’s electric car exports doubled in 2025 against the backdrop of an intense EV price war in the country, which squeezed automakers’ profit margins, prompting them to seek higher returns in overseas markets. In this highly competitive environment, exports also provided an additional channel to sustain production volumes, helping automakers offset the slowdown in domestic sales growth with additional revenues.

Exports also played a key role in expanding electric car adoption in a number of emerging economies, while continuing to supply established markets. In Europe, sales of Chinese-made electric cars grew almost 50% from 2024 levels to reach about 940 000 in 2025. Despite this, Europe’s share in total Chinese export value continued declining to reach around 40% in 2025, reflecting the increasing importance of emerging markets for Chinese exports. In 2025, more than half of Chinese electric car sales overseas were recorded in markets other than Europe and the United States, with particularly strong growth in Southeast Asia (+130% from 2024), the Middle East (+60%) and Latin America (+55%).

In addition to diversifying their destination markets, Chinese electric car exports were increasingly led by Chinese carmakers. In 2025, four in five Chinese-made electric cars sold overseas were made by Chinese manufacturers, up from less than two in five in 2021. While exports by carmakers headquartered overseas, such as Tesla, Renault’s Dacia and BMW, remained broadly stable in absolute terms, their combined share in Chinese exports declined by nearly 40 percentage points over the same period.

Behind those record high exports lies the expanding Chinese fleet of vehicle carriers. Over the past 5 years, carmakers like BYD and SAIC, along with major Chinese shipping firms, have commissioned a significant number of roll-on/roll-off vessels to serve their fast-growing overseas markets.

Imports from China underpin electric car uptake in many emerging markets

In major electric car markets – like Europe and the United States – the share of Chinese imports in sales is still relatively limited due to trade measures, consumer preferences and large domestic electric car manufacturing capacity. However, outside these two major markets, Chinese imports accounted for 55% of electric car sales in 2025, up from about 10% in 2021. Many countries in Latin America, the Middle East and Africa import more than 80% of their electric cars from China. There are some notable exceptions, for example in India and Viet Nam, where local OEMs supply most electric car demand. Additionally, some countries with well-established automotive manufacturing bases have introduced policy frameworks to promote local manufacturing of electric cars, such as Thailand, Indonesia, India, Malaysia, Brazil, Mexico, and Türkiye. In these countries, imports from China still played a dominant role in 2025, but the share of locally produced electric cars started to grow, notably in Thailand (marking an almost 15‑percentage-point increase year-on-year) and in Brazil (5 percentage points).

Chinese electric car exports are expected to face headwinds in 2026 as overseas inventories build up. In 2025, exports reported by CAAM exceeded overseas sales by over 25%, suggesting a significant increase in overseas inventories, likely constraining additional shipments. Policy developments are adding further constraints. In January 2026, the Chinese government introduced export licenses for BEVs, which replicate the export requirements that already exist for other vehicle technologies and suggest there is government concern around the reputational risks associated with unregulated export practices. Rapidly shifting trade policy settings are also likely to represent another hurdle for Chinese electric car exports in 2026. Trade restrictions in Southeast Asia, the second-largest overseas market for Chinese exports, hardened at the end of 2025 as most investment-linked waivers on import duties expired, namely in Thailand, Indonesia and Malaysia. Additionally, Thailand recently adjusted its industrial policy to incentivise electric car exports over domestic sales, positioning the country as a growing competitor to Chinese exports in the region. Major Chinese export markets in Latin America – such as Brazil and Mexico – also introduced new duties on electric car imports, putting additional pressure on the affordability of imported Chinese electric cars.

However, the impact of growing overseas inventories and shifting trade policies on Chinese electric car exports could be partly offset by manufacturers’ efforts to weather a slowdown in domestic sales growth. The first quarter of 2026 showed electric car exports more than doubling compared to the same period in 2025, while domestic NEV sales declined almost 25% over the same period. Over the course of 2026 the Chinese market is expected to adjust to the tightening purchase incentives for NEVs, which may weaken domestic sales. As a result, Chinese OEMs may increasingly rely on overseas markets to absorb production. This shift is already reflected in industry targets: the ten largest Chinese OEMs announced combined overseas sales targets exceeding 7 million in 2026, almost doubling their 2025 announcements and approaching China’s total car export levels observed in 2025.

Industrial and trade policies of destination markets, coupled with their low labour and energy costs, have made overseas manufacturing activities increasingly attractive for Chinese carmakers over the past few years. In 2025, dual internal combustion engine (ICE)-EV overseas manufacturing capacity 1 owned by Chinese firms was estimated at about 1.7 million cars per year, compared to a capacity of 29 million in China.

Southeast Asia is the primary location of Chinese carmakers’ overseas car assembly plants. In 2025, the region accounted for more than half of China’s overseas dual ICE-EV manufacturing footprint, with Thailand and Indonesia being respectively home to more than 30% and 20% of the total. However, production has yet to ramp up: in 2025, the average Chinese capacity utilisation for battery electric car production was estimated around 20% in Thailand and below 15% in Indonesia. Utilisation is expected to rise in 2026 as regional trade policy shifts to favour local assembly over imports. The recent rise in Chinese exports of knockdown vehicle kits (semi-knocked down [SKD] and completely knocked down units [CKD]) is also likely to drive up utilisation. In 2025, around half of Great Wall’s and SAIC’s car exports were knockdown vehicle kits meant for final assembly in importing markets. These exports allow Chinese EV makers to mitigate tariffs that are otherwise paid in full on completely built-up units (CBU), while ramping up overseas output wherever the local EV supply chain is not yet sufficiently developed for full-assembly manufacturing, as illustrated by BYD’s plant in Brazil, SAIC-GM-Wuling in Indonesia, or Great Wall, SAIC and Wuling in Malaysia. However, some countries are tightening policies to curb this trend. In 2026, Brazil accelerated the schedule of reinstating import tariffs on SKD and CKD kits to match those applied to CBUs, effectively encouraging EV makers to shift towards higher local content manufacturing.

Incumbent automakers like Japan’s Toyota and Korea’s Hyundai own the largest dual ICE-EV manufacturing capacity in Southeast Asia, totalling 1.2 million cars. However, only a handful of their assembly lines are producing electric models; in 2025, they produced fewer than 2 500 electric cars across these plants. However, rising output from Chinese OEMs is set to intensify competition, and to challenge the EV production ramp-up of incumbents operating in Southeast Asia.

In 2025, global electric truck production reached around 440 000 trucks, more than twice as many as in 2024. More than 90% of production was concentrated in China and just over 3% in the European Union. Despite the strong increase in production, trade remained limited, with only around 3% of electric trucks produced globally in 2025 being traded (just over 12 000 vehicles), down from a peak of around 8% in 2023. By comparison, around one-quarter of electric cars produced were traded last year.

In China, production of electric trucks has been on the rise since 2020, exceeding 400 000 vehicles in 2025 alone, more than the cumulative production recorded between 2020 and 2024. Most of the electric trucks produced in China were destined for the domestic market, with exports representing less than 0.5% of production, mostly to North America and Europe. Chinese truck manufacturers dominate the global electric truck market largely because of the size of the domestic market. However, the competitive landscape differs from the conventional truck sector. In 2025, the five largest conventional truck makers in China (Sinotruk, BAIC, FAW, Shaanxi and Dongfeng) together accounted for less than half of electric truck sales, despite representing nearly 90% of the overall Chinese truck market. New entrants from machinery and heavy industry, such as XCMG and Sany, have steadily gained market share since 2020. In 2025, almost 30% of the Chinese electric truck market was captured by new entrants without ICE models in their line-ups.

European manufacturers are also looking to expand in the Chinese market. Scania, for instance, has announced a EUR 2 billion investment in a new facility in China capable of producing both ICE and battery electric trucks, with around half of its output expected to be exported to Asia Pacific markets. Meanwhile, some Chinese OEMs are looking to expand overseas. For example, Sany is planning to expand production in South Africa, Brazil and Europe.

In 2025, electric truck production in the European Union doubled from 2024 levels to exceed 13 000 trucks. Despite production being much lower than in China, the European Union remained the world’s second-largest exporter of electric trucks in 2025 – after Canada, where BrightDrop electric trucks are produced for the US market – with export volumes doubling year-on-year to over 2 500, representing around 20% of the region’s production. More than 90% of these exports were directed to other European countries, with the United Kingdom receiving about 40% and most of the remainder going to Norway and Switzerland. Established European truck makers (Daimler, Volvo Trucks, Iveco and Traton) still command two-thirds of electric truck sales within the European Union. However, in 2025, a few foreign manufacturers also made strides: medium-duty models from Chinese SAIC’s Maxus brand and US-based Ford together captured over 10% of the electric truck market.

Established truck makers are also advancing their industrial capabilities: Daimler and Volvo can now assemble battery electric trucks on the same production lines as their diesel models, and Traton is considering the addition of another battery assembly facility in Europe. Scania, part of the Traton Group, had previously struggled to secure battery cells from Northvolt and, following Northvolt’s bankruptcy, acquired Northvolt Systems’ Industrial Division in 2025 to support its expansion into industrial off‑road applications.

Chinese manufacturers are also looking to establish assembly lines in Europe as demand grows. BYD has established a presence in the commercial vehicle sector in the region, with electric truck models already being deployed by European logistic operators. In 2025, the company also unveiled plans to expand its existing commercial vehicle assembly plant in Hungary. Chinese truck maker Sany has announced the release of its Chinese-made e263 electric tractor in Europe, with first deliveries expected for 2026, as well as plans for local production. Other Chinese new entrants, such as SuperPanter and Windrose, are pursuing localisation strategies, shipping key truck modules and components for final assembly in the European Union. These developments point to a likely intensification of competition between established European and North American truck makers and their Chinese competitors within Europe.

In the United States, around 12 000 electric trucks were produced in 2025, but exports fell 20%, having grown steadily through 2024. The medium freight segment accounted for the majority of domestic production and almost all exports, unlike in the European Union or China.

Market entry has proved difficult for a handful of new manufacturers in the United States and Europe. In the past 3 years, several start-ups focused on electric trucks filed for bankruptcy, including Nikola, Bollinger Motors, Proterra, Arrival and Volta, and were subsequently acquired by larger truck makers and industrial players.

The electric truck supply chains in each of the major regions outlined above differ significantly. Of the three, China has the most integrated and geographically concentrated ecosystem. Electric truck sales in China are almost exclusively from Chinese OEMs using Chinese batteries (with CATL supplying 80% of the total) and Chinese truck chassis, reflecting a well-connected domestic network and strong local supplier density. The supply chain in the European Union has a different makeup, with truck manufacturers being predominantly European, and chassis production largely located within the region, although the battery supply chain remains heavily dependent on Chinese, Japanese and Korean companies. Around 70% of trucks sold in the European Union in 2025 were equipped with battery cells produced by manufacturers headquartered in these countries. In the United States, the picture is mixed: while both US- and Europe-headquartered truck manufacturers operate in the country, nearly 90% of the electric trucks sold in 2025 had batteries made by Korean and Japanese companies.

Electric trucks are not currently highly traded, which is reflected in supply chain patterns. Heavy vehicles are costly and logistically complex to ship over long distances, and they often require market-specific modifications for homologation and other regional regulatory compliance. Local production also generally supports after-sales service networks, enabling faster warranty handling, maintenance and parts availability. Fleet operators therefore frequently prioritise suppliers that can offer local supply assurance and dense service coverage, reinforcing incentives for manufacturers to anchor production and delivery capabilities within the regions where the trucks are sold and operated.

This section presents the outlook for manufacturing and trade on the basis of stated policies, using results from the IEA Manufacturing and Trade (MaT) model as presented in Energy Technology Perspectives 2026.

The concentration of both demand for and production of EVs and batteries in China has created a tightly clustered supply chain, all the way from critical mineral refining and component production to battery and EV manufacturing. In 2025, China accounted for 70% of electric car production and over 80% of battery cell production, as well as about 85% of global production of cathode active material (CAM) and more than 90% of production of anode active material (AAM) used in electric car batteries.

Outside China, only Korea and Japan currently have sizeable CAM production, while Korea, Indonesia and Japan offer potential diversification options for non‑Chinese AAM supply. Their combined capacity, however, remains insufficient to meet demand outside China. Outside of China, most battery cell manufacturing occurs in Europe and the United States – nearly all by companies headquartered in Asia. Electric car manufacturing is somewhat less concentrated due to the strong automotive industry presence in Europe, North America, Japan, Korea and other parts of the world.

In the Stated Policies Scenario (STEPS), the electric car and battery supply chain diversifies, investment rises, and specialised workforces expand outside China as demand grows. This trend is incentivised by political support, such as production tax credits in the United States and the Net-Zero Industry Act in the European Union.

However, diversification remains limited, with China still the largest source of demand and production in 2035. By then, it supplies nearly 90% of AAM, about three-quarters of CAM and two-thirds of batteries. Most diversification is driven by advanced economies, accounting for almost 10% of AAM, 20% of CAM and about 25% of battery output in 2035, with the European Union and United States together providing almost 10% of CAM and 20% of battery production. EMDEs other than China produce nearly 5% of AAM and CAM by 2035, and increase their battery and electric car output share to about 6% and 10% respectively – about six and five times their 2025 shares. Electric car production also rises in advanced economies, reducing China’s share to just below 60% in 2035.

Nevertheless, while EV production expands in advanced economies, the share of demand met by domestic manufacturing does not increase. Despite more stringent trade measures, such as EU countervailing duties on Chinese-made battery electric cars, tariff reinstatements in Brazil and Mexico and new levies in Türkiye, Chinese exports continue to dominate global trade by 2035 in the STEPS. With unmatched capacity and low production costs across the EV supply chain, China’s exports are projected to grow, with over one in four electric cars sold in advanced economies made in China by 2035 (6 million) – up from 15% (just over 900 000) in 2025.

Several recent policy shifts have tempered the outlook for electric car demand and production in the United States. Although demand is projected to grow 20% by 2030 in the STEPS, this would represent just over 10% of total new car sales – down from the more than 50% that would previously have been needed to comply with the fuel economy standard.

These demand-side revisions have three main implications for the supply side:

• Sufficient domestic capacity: Despite several US carmakers pivoting focus back to ICE cars and delaying their EV strategies following recent policy shifts, US manufacturing capacity dedicated to electric cars is still expected to exceed 3.5 million units by 2030, complemented by a flexible ICE/electric car manufacturing capacity of nearly 8 million units. This project pipeline enables US plants to meet domestic demand through 2035 in the STEPS, without the need for additional investment.

• Reduced need for imports: A greater share of demand served by domestic production sharply cuts import dependency; remaining imports are costly due to a 25% tariff on all-electric cars. While US tariff and duty hikes increase import costs from all countries, they do so to a lesser extent for imports from Canada or Mexico that meet United States-Mexico-Canada Agreement (USMCA) trade agreement content rules, giving North American producers a competitive edge over other importing regions. By 2035, imports are projected to reach 1.5 million units – almost entirely from Mexico – covering roughly one-third of domestic demand.

• Weaker battery demand: Lower EV sales also reduce domestic battery needs, weighing heavily on the US battery industry. Committed battery capacity by 2030 could produce nearly twice the projected US demand in 2035 in the STEPS.

By 2030 and 2035, battery production – supported by tax credits – is expected to be able to satisfy most domestic demand. The supply of cathode and anode active materials remains constrained by available manufacturing capacity, which would require additional investments that are now more difficult to justify because of lower projected battery demand in the United States. In the STEPS, US battery cell production reaches less than 350 GWh in 2030 and just over 400 GWh in 2035, primarily serving domestic needs, with the remainder exported to Mexico – equivalent to only about 40% of the nameplate capacity of currently committed projects.

This shift reflects weak domestic demand rather than insufficient production incentives. Recent legislative updates preserve tax credits for battery production while tightening long-term rules on prohibited foreign entities (PFEs), but also introduce greater short-term flexibility. As a result, investment continues to focus on the development of non-PFE supply chains for the US market. However, scaling these supply chains will require additional overseas production capacity, as domestic CAM and AAM committed capacity remains insufficient. Domestic production meets about half of CAM demand and about one-quarter of AAM demand by 2035 in the STEPS, leaving the United States reliant on imports. The shortfall is projected to be largely met by imports from Korea for CAM, while AAM supply is projected to depend on imports from China, Southeast Asia and Korea.

Recent EU policy initiatives aim to bolster domestic EV and battery manufacturing through local content and market access requirements. The Automotive Package introduced CO2 compliance credits for small affordable electric cars (M1E) that are made in the European Union, and proposed a zero-emissions vehicle (ZEV) mandate for corporate fleets. The presentation of the Industrial Accelerator Act (IAA) in March 2026 provided additional details on the criteria for “made in the European Union” status, although the proposal still needs to be debated by EU member states before becoming law.

To qualify for CO2 compliance credits for small electric cars, and for corporate cars to be eligible for company tax incentives and public procurement schemes, final vehicle assembly must take place in the European Union and at least 70% of the vehicle’s components (excluding the battery) in value terms must originate within the European Union. The IAA also introduces battery requirements, requiring that at least three main battery components, including cells, be of EU origin. For M1E vehicles, compliance can be achieved through either the vehicle component or the battery local content requirements, provided final assembly remains in the European Union.

Three years after the IAA enters into force, i.e. in 2030 if adoption occurs in 2027, the scope of battery requirements will be extended to at least five main components, including cells, CAM and the battery management system. This could require greater investments in manufacturing capacity and production of battery components, which today are largely dependent on Chinese imports.

Uncertainty remains regarding the definition of “European Union origin” in the local content requirements set out in the IAA. Components originating in third countries with which the European Union has concluded free trade agreements (FTA), or that are parties to the World Trade Organization Agreement on Government Procurement (GPA), could potentially be treated as meeting requirements, although this is not automatic and will depend on the final legal text. If broadly interpreted, this could extend eligibility to a large number of partner countries. Additional exemptions may further limit the impact of the IAA. Contracting authorities may waive the requirements where only a single supplier can fulfil the contract, or where their application would increase costs by more than 25%.

If adopted in its most restrictive form, the IAA would send a strong signal in favour of greater localisation and supply diversification of electric car and battery manufacturing in the European Union. T&E estimated that around one-quarter of BEVs sold in the European Union by 2030 could fall under the 4.2-metre threshold required to qualify as M1E vehicles (similar to levels observed in 2025). In addition, given that corporate cars account for roughly 60% of new car registrations, a significant share of EU electric car and battery demand could become subject to IAA requirements.

The IAA also proposes to subject to greater scrutiny future foreign direct investments higher than EUR 100 million (about USD 110 million) and made in emerging strategic sectors – including EVs and batteries – from countries holding more than 40% of the associated global manufacturing capacity. To qualify, such foreign direct investments should comply to at least four of the following conditions: local workforce requirements (greater or equal to 50% across all workforce categories), acquiring or owning a share of maximum 49%, investing through a joint venture with an EU entity and owning no more than 49% of the share capital, providing licensing of intellectual property rights and know-how, spending at least 1% of their gross revenue generated in the European Union in R&D within the European Union, or aiming to source over 30% of their inputs within the European Union.

For foreign investors affected by the new rules, compliance could be challenging, prompting some to frontload investment before the IAA enters into force. However, investment from leading manufacturers able to meet these criteria could be particularly valuable in sectors where the European Union has less production experience and a less mature industrial base – most notably batteries, where lower manufacturing efficiency compared with China accounts for more than 40% of the cell‑production cost gap.

Current trade policies partly shield the EU automotive industry from lower-cost Chinese car imports. The OEM-specific countervailing duties (CVDs) implemented in July 2024, following an anti-subsidy investigation initiated in October 2023, have helped keep the share of Chinese imports in total EU electric car sales below the 20% mark in 2025. Current EU trade policy officially maintains CVDs on imports of Chinese battery electric cars until the end of 2029.

In January 2026, in an attempt to prevent any tariff escalation with China, the commission issued guidance on possible submissions from Chinese carmakers of price undertaking offers to avoid current CVDs. The framework introduces the possibility to set a minimum import price, at the vehicle model level, that cannot be lower than the final vehicle price otherwise paid with duties. Volkswagen (Anhui)’s joint venture was the first to file such an undertaking in February 2026, whereby it committed to minimum import prices, export quotas and local BEV manufacturing investments in the European Union.

The STEPS assumes the CVDs will continue beyond 2029, thereby constraining the market share of lower-priced Chinese models. In addition, EU manufacturing capacity is unlikely to limit supply, as many existing production lines can be quickly retooled to support EV production alongside conventional models: of 13 EV manufacturing projects announced in 2025, only 5 are greenfield investments, with the remainder involving conversions.

Based on current project pipelines, EU EV manufacturing capacity, including EV-dedicated and dual ICE-EV assembly plants, could reach 15 million units by 2030, far exceeding domestic demand, which stands at just 7 million in the STEPS. Under this scenario, the share of domestic demand met by imports remains around one-quarter through 2035 – with a growing number of cost-competitive imports from Korea, the rest of Europe and from Japan reducing China’s share of EU imports to around 30% in 2030. From 2030 onward, limited manufacturing capacity among other exporters makes China’s unused capacity increasingly relevant to meeting the European Union’s growing demand. While imports from other regions remain unchanged in absolute terms, China’s share rises again, capturing more than two-thirds of EU imports by 2035, or just over 20% of the electric car sales in the region.

Chinese exports to other EMDEs are set to rise, underpinned by competitive pricing, expanding shipping capacity and fast-growing demand in emerging markets. However, local production in EMDEs is well-poised to intensify competition with Chinese imports. Chinese OEMs, domestic brands such as Viet Nam’s VinFast, and India’s Tata and Mahindra, as well as incumbent automakers from overseas, are building or repurposing plants in EMDEs to serve local EV demand and export markets, benefiting from lower labour and energy costs. Southeast Asia is already home to more than half of China’s overseas dual ICE-EV manufacturing footprint, with capacity reaching almost 1 million units. Japanese and Korean incumbents in India and Southeast Asia, and European brands in South America, also own ample car manufacturing capacity and are retooling assembly lines. In India, for example, capacity could hit 1.8 million by 2030, more than double the projected domestic demand in the STEPS.

In addition, while trade policy settings in the form of import duty waivers in Southeast Asia, India, Brazil and Mexico have fuelled growth in Chinese exports prior to 2025, recent policy updates are expected to curb this trend. India’s policy limits import duty exemption to 5 years, Brazil reinstated tariffs on electric cars in 2025, Mexico announced in 2025 it will raise tariffs on Chinese and other Asian EVs to 50% from January 2026, and most Southeast Asian countries’ significant tariff exemptions expired in December 2025, with industrial policy focus shifting towards increased localisation.

In 2025, nearly two-thirds of electric car sales in EMDEs other than China were Chinese imports. By 2030, in the STEPS, although Chinese exports to other EMDEs grow more than 70% from 2025 levels, to exceed 1.2 million units, their share in these markets falls below 40%, as local output grows. By 2035, exports to EMDEs could reach around 1.6 million units – one-fifth of China’s total exports – but make up only 25% of total EMDE sales.

The committed battery project pipeline is sufficient to meet global deployment needs by 2030 across all regions, with substantial short-term overcapacity projected in China and the United States. Although building manufacturing capacity is only the first step – new facilities can take more than 5 years from the start of operations to near nominal output – the pipeline remains robust, indicating that producers are well positioned to supply the batteries needed for transport electrification and for stationary storage systems supporting power grids worldwide.

Among all regions, Chinese, Korean and Japanese producers are expected to remain the dominant players in battery manufacturing through this decade, although Japan’s global share of installed battery manufacturing capacity is expected to decline based on current project announcements.