Electric Vehicle 'Tariff War' Slows Sales... Limited to 17.7 Million Units by 2026

2024: 12.9 Million to 11.1 Million Units
Tesla Lineup Aging and US Presidential Election Impact

Electric vehicle sales are expected to decline amid the trade confrontation between the West and China, with projections showing sales reaching only 17.7 million units by 2026.

BloombergNEF (BNEF) on the 12th (local time) revised down its 2026 battery electric vehicle sales forecast from 20.1 million units to 17.7 million units.

BYD electric vehicle from China. On the 12th (local time), the EU announced that it will impose an additional tariff of 17.4 percentage points on BYD. [Image source=AP Yonhap News]

The 2024 sales forecast was adjusted from 12.9 million units to 11.1 million units, and the 2025 forecast was revised from 16.6 million units to 14 million units.

Colin McKerracher, a BNEF analyst, stated, "Some markets are experiencing significant slowdowns, and many manufacturers have postponed their electric vehicle targets."

BNEF explained that China dominates the global supply chain for electric vehicles, batteries, raw materials, and components, leading the United States and the European Union (EU) to impose tariffs on Chinese electric vehicles in response. The EU announced on the same day that it would raise tariffs on Chinese electric vehicles from the existing 10% to as high as 48.1%. Earlier, the U.S. increased tariffs on Chinese electric vehicles from 25% to 100%. In retaliation, China warned last month that it might impose a 25% retaliatory tariff on some imported cars.

BNEF noted that China has provided incentives worth hundreds of billions of dollars to the battery industry, and battery prices have dramatically decreased due to production exceeding demand. This is one of the main reasons for the decline in the price of China's lithium iron phosphate batteries. As a result, China is regarded as the only major automotive market that has reached a consumer-driven surge in electric vehicle sales.

On the other hand, battery price declines have not been significant in other countries. BNEF stated that this has led to downward revisions in electric vehicle sales forecasts, including plug-in hybrids, over the next four years in the United States, Germany, Japan, Italy, and the United Kingdom.

In the U.S., poor performance by Ford and GM, aging Tesla lineups, and uncertainties due to the presidential election have had an impact. Germany is expected to see a decline in electric vehicle sales due to the sudden suspension of electric vehicle subsidies and a worsening economy. Japan's major manufacturers are not proactive about electric vehicles, and especially in the minicar segment, there are few new electric vehicle model launches. Italy and the U.K. face inconsistent policies that act as obstacles to electric vehicle growth.

Ola K?llenius, CEO of Mercedes-Benz Group, said last month, "The change may take longer than expected." Mercedes-Benz is expected to continue producing internal combustion engine and hybrid vehicles into the 2030s. The goal to sell only electric vehicles in some markets by the late 2030s has been withdrawn.

This content was produced with the assistance of AI translation services.