Automotive

outlook 2024
EV market expansion—is
China in the driver’s seat?
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AUTOMOTIVE OUTLOOK 2024
EV MARKET EXPANSION—IS CHINA IN THE DRIVER’S SEAT?

EV market expansion—is China in the

driver’s seat?
The shift to electric vehicles will gather pace, but China’s
dominance of the sector will add to geopolitical tensions.
• The global automotive sector will be weighed down by slow consumer spending, high interest rates
and the transition to electric vehicles (EV). We expect passenger car sales to rise by 3%, with sales of
commercial vehicles and buses (CVs) up by 1%.

• EVs will remain the most buoyant part of the market, with sales rising by 21%, to 14.9m units. China
will account for more than half of global EV sales and a similar share of exports, but the Chinese
government’s support for the sector will prompt trade tensions.

• Emissions legislation will tighten further, with many cities introducing clean-air regulations that will
affect vehicle usage. We expect the restrictions to support demand for newer vehicles, including
EVs, but to dampen sales of second-hand vehicles.

• Policymakers and automakers will work to ease range anxiety among EV users. This will include
a switch in charging standards, the deployment of fast-charging stations and the rollout of new
battery technologies for better range and performance.

New-vehicle sales will be subdued, but EV sales will soar

Given challenging conditions for new-vehicle demand and supply in 2024, we expect global automotive
sales to remain in low gear next year. Expanding by just 3% and 1%, respectively, new car and new
CV sales will remain just below their pre-pandemic levels. A number of factors will constrain sales,
including weak global economic growth, elevated living costs in developing countries and higher
interest rates. Geopolitical risks will also remain high owing to the war in Ukraine, the Israel-Hamas war
and rivalry between the US and China, forcing companies to rework their supply chains and investment
strategies.
EVs will remain a bright spot: we forecast that New-vehicle sales will edge upwards
global EV sales will expand by 21%, to 14.9m units. (% change in 2024, year on year)
China will account for over half of these, with Cars CVs
8
new EV registrations in the country rising by 19%,
6
to 8.6m units. China will also account for around
half of global EV exports as its sales to developed 4

markets expand. Japanese, European and US 2

automakers will respond by pushing for higher 0
trade barriers and government subsidies. Some
-2
foreign automakers will also scale back investment
in the Chinese market, or follow Mitsubishi ( Japan) -4
USMCA Middle East South Europe Asia- World*
in exiting entirely, as their market shares there and Africa America Pacific
continue to fall. Source: EIU. *58 biggest economies only.

1 © The Economist Intelligence Unit Limited 2023

AUTOMOTIVE OUTLOOK 2024
EV MARKET EXPANSION—IS CHINA IN THE DRIVER’S SEAT?

Government support for EVs will be a source of trade tension

Policymakers will continue to support the EV sector through purchase subsidies, support for
manufacturing and supply chains, or through investment into infrastructure. In China, the industry
has already benefited from state subsidies worth US$57bn between 2016 and 2020 alone, according
to Alix Partners, a consultancy. For 2024 the government has cut the purchase tax on most EVs by up
to Rmb30,000 (US$4,114). Similarly, starting in 2024, EV buyers in the US will be able to transfer their
clean-car credit to the dealer at the point of sale, directly reducing the price by up to US$7,500.
However, these US credits will exclude EVs if their battery components, including refined minerals,
come from “foreign entities of concern”, including China. Similar requirements will restrict the UK’s EV
exports to the EU, which face 10% tariffs unless 60% of their battery and 45% of their parts by value
are locally sourced—a tough target to reach, given China’s dominance of EV technology. Chinese-made
vehicles could also face higher tariff barriers as the EU pushes ahead with its investigation, announced
in September 2023, into whether China’s support for its EV sector constitutes unfair trade. More
EU countries may also follow France in imposing local-content requirements for their EV purchase
subsidies.
Such policies, combined with funding under
China will dominate global electric-vehicle sales regulations such as the US Inflation Reduction
(’000 units, 2024)
Act (IRA) and EU green policies, will also help
China Others EV share of global new-car sales, %
to attract investment into local EV and battery
3.4 5.6 11.9 18.0 21.0 24.6
production. While the main competition for
16,000
investment will be between China, the US, the
14,000
12,000
EU and Japan, other countries will also hone their
10,000 investment environment. Indian policymakers
8,000 will work on rolling out a new EV policy that could
6,000 include slashing import taxes for automakers
4,000 committing to some local manufacturing.
2,000 Other regions, including ASEAN, are likely to
0 benefit from similar tax breaks to attract car and
2019 20 21 22 23 24
component makers that are diversifying away
Sources: International Energy Agency; EIU.
from China.

Policymakers are looking to reduce traffic, congestion and emissions

Apart from increasing EV sales, automakers and governments will also focus on reducing emissions
and congestion through driving restrictions, particularly within cities. Five cities in France—Paris, Lyons,
Marseille, Strasbourg and Rouen—will push ahead with bans based on Crit’Air 3 clean-air stickers
for older diesel and petrol vehicles. Motorists in Paris will also have to comply with a Limited Traffic
Zone restricting use of private vehicles. By the year’s end, all 43 French cities with more than 150,000
inhabitants aim to start introducing Crit’Air restrictions.
A similar “clean transport zone” will be set up in the centre of Poland’s capital, Warsaw, while Krakow
will create a “low emission zone”. These restrictions will be based on Euro 2-3 emissions requirements,
at a time when the European Commission will be confirming its regulations for the upcoming Euro 7.

2 © The Economist Intelligence Unit Limited 2023

AUTOMOTIVE OUTLOOK 2024
EV MARKET EXPANSION—IS CHINA IN THE DRIVER’S SEAT?

China, meanwhile, will end its transition period for implementing its China 6b standards, currently the
strictest in the world. As well as forcing vehicle makers to innovate, these standards and restrictions will
support demand for newer vehicles, including EVs. However they will impose new costs on carmakers
and households, with poorer city-dwellers worst affected.

Automakers will move towards faster charging

In 2024 we expect more automotive companies to adopt the North American Charging Standard
(NACS) developed by EV maker Tesla for its US and Canadian customers. We expect NACS to become
the industry standard in North America, although Europe will continue to rely on the Combined
Charging System (CCS), with adapters becoming commonplace. Japan and China will make progress
on implementing a common Chaoji standard for Asia, with a view to replacing Japan’s Chademo and
China’s GB/T.
Ford and General Motors (both US) will give drivers of their EVs in North America access to Tesla’s
Supercharger Network in 2024, while Mercedes-Benz (Germany), Nissan ( Japan), Volvo (Sweden)
and Honda ( Japan) will also expand access. The six, combined with Stellantis (Netherlands), will
simultaneously open the first in a network of fast-charging stations across the region. The network
will offer charging for both CCS and NACS connectors. The deployment of CCS fast-charging
stations across the EU is expected to accelerate in 2024, following the passing of the Alternative Fuel
Infrastructure Regulation in July 2023. The law requires fast-recharging stations every 60 km across all
major transport corridors in the EU from 2025 onwards.

Better batteries to ease range anxiety

New EV battery technologies will be rolled out in 2024, with goals including increasing driving range,
reducing charging time, cutting costs and improving safety, depending on the battery type. Lithium-
ion batteries will take a leap forward as China-based Gotion launches its lithium iron manganese
phosphate (LMFP) batteries, which the company claims can achieve a range of up to 1,000 km before
recharging. Mass production is due to start in 2024. BYD, a Chinese carmaker, will also start mass
producing sodium-ion batteries at its factory in Xuzhou. Rather than offering range and power, these
aim to cut costs by using sodium instead of
lithium ion. Revolutionary solid-state batteries—
EVs will drive demand for critical minerals*
which could save space and reduce fire risks— (kilotonnes)
may take longer. China’s SAIC says that they will Lithium Nickel Cobalt Copper Graphite
be ready in 2024, but Toyota ( Japan) and others 6,000
are targeting 2027. 5,000
We will also see automotive companies
4,000
making direct investments, entering into long-
3,000
term supply agreements or focusing on recycling
to ensure that supplies of battery materials are 2,000

uninterrupted. Tesla’s construction of a lithium 1,000

refinery in Texas is expected to be completed
0
in 2024. We expect the US to attract new 2022 25 30 35 40 45 50
investments in battery manufacturing in 2024, *Forecast based on announced
Source: International Energy Agency. climate-change pledges.

3 © The Economist Intelligence Unit Limited 2023

AUTOMOTIVE OUTLOOK 2024
EV MARKET EXPANSION—IS CHINA IN THE DRIVER’S SEAT?

owing to local-content conditions imposed under the US IRA, while new battery plants will also open in
Germany and other EU countries.

What to watch
Slowdown in US legislation. We expect slow progress in approving legislation relating to EVs and
emissions in the run-up to the 2024 US presidential elections. The incumbent president, Joe Biden, will
focus on implementing bills already passed, but the most likely Republican candidate, Donald Trump,
has already said that he will try to stop the transition to EVs, saying that it will kill automotive jobs and
benefit China. Implementation of the toughest ever vehicle emission standards in the US, passed by
the Environmental Protection Agency in April 2023, may stall indefinitely.
More robotaxis on the road. The automotive industry will move faster towards adopting self-driving
technology. Regulators will grant robotaxi permits covering major locations in the US, Germany,
the UAE and China. For private vehicles, Mercedes-Benz will offer its Level 3 autonomous driving
technology, Drive Pilot, in the US cities of California and Nevada at the price of US$2,500 for the first-
year subscription. DrivePilot is already available in Germany. BMW’s long-awaited Level 3 technology
will launch in its Series 7 sedan in 2024. Ford will focus on expanding BlueCruise, its Level 2+ vehicles,
following the closure of its self-driving project Argo AI in 2022.
The Carbon Border Adjustment Mechanism (CBAM). The EU’s CBAM, which will oblige importers
of selected goods to pay a carbon tax from 2026, began its transitional phase in October 2023, with
reporting scheduled to start in January 2024. The regulation will apply to materials such as steel and
aluminium, critical for manufacturing vehicles. Although its aim is to ensure that EU metals producers
(which already have to abide by stringent emissions regulations) are not undercut by importers from
higher-emission countries, the CBAM is likely to increase input costs for EU carmakers.

EIU's weather forecast for automotive businesses in 2024

Automation ICE vehicles EVs EV batteries

and charging
Source: EIU.

4 © The Economist Intelligence Unit Limited 2023

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