In 2024, more than one-fifth of all cars sold globally were electric. Policies remain key to growth in many regions, although falling prices make affordability an increasingly important driver. In China, two-thirds of battery electric cars sold in 2024 were cheaper than internal combustion engine (ICE) equivalents. In other major markets like Europe and North America, electric cars remain more expensive on average. But prices have been falling in many emerging economies on the back of affordable Chinese imports; in Southeast Asia, this helped push the share of electric car sales to 9% in 2024, almost double the share in 2023.

For the same output power, an electric drive is about 60% cheaper, nearly 3 times lighter and generally requires less space than a comparable ICE powertrain. The costs of storage are vastly different: while the fuel tank of an ICE car costs around USD 200, a battery costs around USD 6 500 on average. The value of materials used in a battery electric car is up to 60% higher than in an ICE car, due to the critical mineral content. Demand for refined battery minerals, the supply of which tends to be concentrated in China, is set to keep growing, especially for lithium, for which electric cars already account for over 50% of global demand.

Around a decade ago, several major automakers already had electrification strategies, but approaches differed. Chinese automakers and Tesla were particularly successful at quickly reaching economies of scale for electric cars. Before 2020, only 6 battery electric models had reached the production threshold of 50 000 units per year – 3 were Chinese models, 2 were Tesla models, and 1 was the Nissan Leaf.

While incumbent original equipment manufacturers (OEMs) initially focused on nickel-based batteries because of their superior energy density, Chinese manufacturers succeeded in advancing lithium iron phosphate (LFP) chemistries, which rely less on critical minerals and are therefore cheaper. By 2024, all OEMs either sold or planned to sell cars with LFP batteries, though China maintains a near-monopoly on the technology.

The automotive industry spent around 5% of its revenues on R&D in 2015-2023. Although Chinese OEMs on average invested significantly less, spending only 2% of revenues on R&D in 2016, investment has risen in recent years and accounted for 5% of their revenues in 2024.