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EV Penetration On Course to Achieve Record Levels

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Fransua Vytautas Razvadauskas Bio

In 2023, new electric vehicle registrations – battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs) – are poised to achieve a record 20% worldwide, up from 16% a year earlier. Western Europe and China will collectively account for 83% of all new EV registrations in 2023 and are expected to continue driving the global EV transition in the short to medium term.

As sustainability policies advance, governments need to prioritise developing infrastructure that pertains to the long-term goal of decarbonising the wider automotive and mobility sectors.Share of New Electric Passenger Car Registrations by Region

Western Europe and China are leading the EV transition

2023 is expected to be another record year for EV penetration as consumer and business appetite for low-emission mobility rises.

In 2023, 20% of new passenger car registrations worldwide are predicted to be electric

Source: Euromonitor International

Western Europe and China are anticipated to continue leading the global EV transition, buoyed by strong incentive programmes, investment in charging infrastructure and ambitious government targets promoting clean mobility. In 2023, the economies collectively are expected to account for 83% of new electric passenger car registrations globally. In addition, based on the EV Readiness Index 2023, which assesses 40 countries’ preparedness to welcome the EV transition, Western Europe boasted eight of the top 10 economies, while China ranked seventh, which further emphasises the appeal and desire for the EV transition in the two markets.

However, some are falling behind, including the US and Japan and several other major emerging and developing markets, despite improving in recent years.

Only 13% of new passenger car registrations in the US are expected to be electric in 2023 – far below the 36% and 27% rates in China and Western Europe, respectively

Source: Euromonitor International

Meanwhile, in India and Brazil, this share is anticipated to reach just 1.9% and 1.3%, respectively, underpinned by the high cost of EVs, the lack of government incentives, lax emissions targets and lagging charging infrastructure. In the case of India, motorcycles and mopeds are much more common, so if people are to buy a mode of transport, it is likely to be a 2-wheeler as opposed to a fully-fledged vehicle.

Governments need an all-encompassing strategy to embrace long-term EV readiness

As the transition to low-emission mobility evolves, governments need to go beyond the passenger car segment and incorporate policies that support the electrification of the wider automotive and mobility industries. This move will be critical in achieving long-term EV readiness when factoring in larger vehicles such as buses for consumer transport and medium and heavy-duty trucks in logistics and freight.

For example, China has led the transition with larger-duty vehicles – according to the IEA, the country accounted for 85% of medium and heavy-duty EV truck sales in 2022, while the US and Western Europe have fallen behind due to cost, infrastructure and technological constraints.

The move towards a comprehensive EV strategy will involve building an ample supply of EV charging stations, devising an efficient upstream EV battery supply chain and upgrading existing energy infrastructure. According to an energy policy project from Princeton University, between 2022 and 2035, domestic electricity demand in the US is expected to rise by 18%, compared to a 5% rise between 2012 and 2022. Delivering innovative solutions such as bi-directional charging and smart charging will be critical in balancing the electricity grid as an increasing share of electricity will be consumed by transport in the future. In the case of bi-directional charging, this focuses on balancing the grid by allowing the charger to provide energy flow in both directions (between car and grid and vice-versa), whereas smart charging allows the charging station owner to monitor, manage and curb the use of their devices remotely to regulate energy consumption.

Challenges today will transform into future opportunities

While 2023 is expected to be a record year for EV passenger car sales, the industry will still have many bottlenecks to overcome before it reaches carbon neutrality. The decision by UK Prime Minister Rishi Sunak in September 2023 to push the EV transition back to 2035 has further frustrated car manufacturers and businesses which have pivoted to an EV future.

However, as public and private investment in EV research and development mounts, new opportunities will open up for developing cost-effective and sustainable mobility technologies for the wider automotive and mobility sectors.

Learn more about the pace of electric vehicle adoption in our report, EV Readiness Index 2023.

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