What Next for the Global Car Industry

The global car industry has operated under relatively stable conditions for decades. The world’s largest car manufacturers are based in the European Union, Korea, Japan and the United States, and – more recently – in China, and the car industry is a major contributor to the economy in these countries. The strength of many of these car makers is built on decades at the forefront of technological innovation around the internal combustion engine (ICE), as well as highly integrated and optimised supply chains that allow for vehicles and their components to be produced at low cost.

Over the past 15 years, however, this business model has increasingly been challenged by the growing adoption of electric cars. In 2024, more than one in five cars sold globally was electric. These changes are increasingly posing challenges for incumbent car manufacturers, who are forced navigate a vehicle technology transition that is moving at different speeds in different markets.

At the same time, growth in car sales has shifted to emerging economies including China since the turn of the century, with around half of global sales now in these regions. Production has also grown unevenly in different regions, especially since the pandemic. China’s car output reached a record 27 million in 2024, when it also became the world’s largest car exporter.

This IEA Special Report, released as part of the IEA’s Energy Technology Perspectives (ETP) series, aims to provide technology and market insights to assist decision makers in government and industry who are seeking to identify the key drivers of competitiveness in electric car manufacturing.