The electric vehicle recalibration of 2024 to 2026: how the S curve flattened in the West, why China kept going, and where margins, batteries, and policy reset

The 2024 numbers, region by region #

The IEA Global EV Outlook 2025 puts global plug in light vehicle sales at 17.1 million in 2024, up roughly 25 percent year on year, against a global new car market of about 78 million. Plug in share reached 22 percent. The shape is unbalanced. China alone sold 11.3 million plug ins per the China Passenger Car Association, with new energy vehicle penetration crossing 47 percent of domestic passenger car sales and reaching 53 percent in July 2024. Europe, the second largest market through 2023, fell back. ACEA registrations show European Union battery electric share at 13.6 percent of new car sales in 2024, down from 14.6 percent in 2023, with absolute BEV registrations roughly flat at 1.45 million as Germany ended its purchase subsidy in December 2023.

The United States is the most discussed laggard. Cox Automotive, consistent with the DOE Alternative Fuels Data Center, reported 1.3 million BEV sales in 2024 against 1.19 million in 2023, a 7.3 percent gain that broke a five year trend of 40 percent plus growth. Plug in hybrids added another 0.36 million, bringing total US plug in volume to about 1.66 million, roughly 10 percent of new vehicle sales. Tesla US deliveries declined for the first time in over a decade. India crossed 100 thousand passenger BEVs for the first time, Brazil ran near 175 thousand plug ins driven by BYD imports, and Southeast Asia cleared 350 thousand units led by Thailand and Indonesia. The 2024 story is a Chinese surge, a Western pause, and emerging markets entering on low priced Chinese imports.

OEM walk backs and the writedown cycle #

Ford disclosed a 1.5 billion dollar non cash impairment on its Model e segment in its 2024 10-K filing, reduced F-150 Lightning production at the Rouge Electric Vehicle Center, and pushed its next generation electric pickup from 2025 into 2027. Model e segment EBIT loss for 2024 was 5.1 billion dollars on roughly 97 thousand wholesale units. General Motors cancelled the Buick Velite, delayed the Cadillac Optiq launch, and reset 2025 North American EV production guidance to a 200 to 250 thousand unit band, well below the prior 1 million by 2025 ambition. GM also delayed a second Ultium Cells plant in Lansing and exited a 5 billion dollar Honda partnership on affordable EVs in October 2023. Stellantis closed 2024 with the Fiat 500e under 10 thousand US units. Volvo, the most public OEM on a 2030 all electric target, formally retreated in September 2024 and now guides 90 to 100 percent electrified, including hybrids, by 2030.

Tesla is its own column. Price cuts that began in January 2023 continued through 2025. The Model Y Long Range AWD baseline US price moved from 65,990 dollars at the 2022 peak to 52,490, then to roughly 44,000, and after the refreshed Juniper trim crossed below 36,000 dollars in early 2026 in select markets. Tesla automotive gross margin, excluding regulatory credits, compressed from 28.5 percent in Q1 2022 to about 17.9 percent in 2024 per the 10-K filing. Operating margin fell from a 2022 peak above 16 percent to about 7 percent in 2024. The price war Tesla started squeezed every traditional OEM that had bet on a higher transaction price for an electric variant of the same nameplate.

China and BYD #

BYD reported 4.27 million vehicle sales in 2024 in its Hong Kong Stock Exchange filing, a 41 percent increase, of which roughly 1.76 million were pure battery electrics and 2.49 million were plug in hybrids under DM-i and DM-p. CPCA tallies put BYD at 32 percent of Chinese plug in passenger sales. Export volume crossed 417 thousand units, with gains in Brazil, Thailand, the United Kingdom, and Australia. BYD aggressively used the Blade LFP cell to set price floors, and the Seagull hatchback at 69,800 yuan or roughly 9,600 dollars became the reference for entry compacts in Asia.

The ecosystem behind BYD matters. CATL retained roughly 38 percent of global EV battery installations, with BYD second at about 17 percent on vertical integration. The national NEV subsidy ended at the close of 2022, but trade in scrappage incentives announced in April 2024 and extended in 2025 added roughly 20 thousand yuan per qualifying NEV swap, with the State Council disclosing more than 6.6 million applications by year end. The Chinese cost curve is no longer set by subsidy. It is set by scale, vertical integration, and a supplier base that runs at thinner gross margins than Detroit, Wolfsburg, or Stuttgart can match without structural change.

Policy whiplash, IRA 30D and the 2025 tariff layer #

The Inflation Reduction Act Section 30D clean vehicle credit, worth up to 7,500 dollars for qualifying new vehicles plus a 4,000 dollar used vehicle credit under Section 25E, drove a step change in 2024 when IRS allowed the credit to transfer at point of sale. IRS data released in October 2024 showed roughly 250 thousand point of sale transfers in the first nine months, with average credit value near 7,000 dollars. Treasury Foreign Entity of Concern rules tightened qualifying battery sourcing through 2025 and 2026, knocking the Ford Mustang Mach-E and certain Volkswagen ID.4 trims off the qualifying list at the start of 2024.

Executive Order 14213 on January 20, 2025 directed agencies to revoke or suspend regulations and credits associated with the previous administration EV mandate. Treasury paused new qualifying determinations and Congress moved to repeal Section 30D and 25E. By April 2025 the credits were on track to phase out for sales after September 30, 2025, with the used credit terminating earlier. Cox Automotive estimated the reversal would shift 200 to 350 thousand units of 2026 demand into 2025, then drop the 2026 line by a similar magnitude. Layered on top, the April 2025 reciprocal tariff order applied a 25 percent duty on imported finished automobiles, capturing the BMW iX, Mercedes EQS, Audi Q4 e-tron, and Volvo EX30. The combination removes 7,500 dollars of demand support and adds 10 to 20 thousand dollars to the import price of European premium electrics, a double squeeze that narrows the addressable US EV consumer pool to roughly the income segment buying above 60 thousand dollar vehicles.

Batteries and minerals #

BloombergNEF Lithium Ion Battery Price Survey 2024 reported a volume weighted average cell price of 78 dollars per kilowatt hour and a pack price of 115 dollars per kilowatt hour, the steepest single year drop since 2017. The cell price is bifurcated. Chinese LFP cells, dominated by CATL, BYD, EVE, and Gotion, came in near 53 dollars per kilowatt hour and packs near 80. NCM cells produced for Western markets, including Ultium Cells and SK On, ran at 100 to 110 dollars per cell and 130 to 140 per pack. The gap reflects scale, cathode cost, and Chinese energy and labor inputs, not subsidy. Lithium carbonate spot prices in China fell from a 575,000 yuan per metric ton peak in November 2022, equivalent to roughly 80,000 dollars per ton, to about 95,000 yuan in early 2024, or 13,500 dollars, and stabilized in a 70,000 to 100,000 yuan range through 2025 per Shanghai Metals Market and FastMarkets data.

The collapse passes through to vehicle bills of material with a lag. A 75 kilowatt hour pack at 80 dollars in China implies a 6,000 dollar pack cost. The same pack at 140 dollars in Western tier 1 supply implies 10,500. The 4,500 dollar delta is roughly the gap between a 36,000 dollar Model Y from Shanghai and a 40,000 dollar version from Austin before assembly labor, regulatory cost, and dealer margin. LFP rose from 36 percent of EV battery installations in 2022 to roughly 47 percent in 2024 per BNEF, displacing nickel rich chemistries below the 50 thousand dollar vehicle price band. IRA FEOC restrictions tried to redirect that supply chain through Korea, Japan, and North America, but cost competitive cell production outside China is still 20 to 35 percent more expensive at scale, and the policy reversal removes the sourcing incentive that justified the premium.

Second order effects: charging, used values, ICE capex, and copper #

The slowdown reshapes charging operator economics first. The National Electric Vehicle Infrastructure formula program, authorized at 5 billion dollars over five years through the Bipartisan Infrastructure Law, was paused in February 2025 by the Federal Highway Administration pending review of state plans, freezing roughly 3.3 billion dollars of unobligated funds. EVgo and ChargePoint cut growth capex guidance. The Tesla Supercharger network, opened to non Tesla EVs through the NACS transition, became the only fast charging network with credible utilization rates, with the DOE Alternative Fuels Data Center counting more than 30,000 NACS connectors in service by the end of 2025.

Used EV residuals collapsed earlier in the cycle and have begun to stabilize. Manheim Used Vehicle Value Index data showed three year old EV residuals at roughly 49 percent of original MSRP in mid 2024, against 61 percent for comparable ICE vehicles. The cause is new car price cuts, battery degradation visibility, and warranty uncertainty. Section 25E used credit usage ran near 90,000 vehicles by Q3 2024 per IRS data, lifting low end demand before scheduled removal. Once the credit ends, three to five year old electric residuals will likely settle 8 to 12 points below ICE comparables.

Internal combustion capex is being revisited at every Western OEM. Ford reaffirmed F-150 ICE production through at least 2030, GM extended Silverado and Sierra platform investment, and Stellantis confirmed Hemi V8 reintroduction in the 2026 Ram 1500. Tooling earmarked for EV migration is shifting back to refreshed ICE and hybrid platforms, with reallocation of 2 to 5 billion dollars per major OEM. The slowdown also moves the copper demand path. The IEA Critical Minerals Outlook 2024 had penciled 4.1 million tonnes per year of EV related copper demand by 2030 in the announced pledges scenario. A revised path consistent with 2024 to 2026 actuals shifts that toward 3.0 to 3.4 million tonnes, narrowing the projected supply deficit and giving Codelco, Freeport McMoRan, and First Quantum a softer demand backdrop. The transition is not cancelled, it is rephased. China is on track, the West is rebuilding the case for adoption at full sticker, and the next inflection waits on cell cost convergence outside China and on a credible policy reset that Treasury and Congress have not yet provided.

Sources #

• IEA Global EV Outlook 2025
• China Passenger Car Association monthly sales reports
• China Association of Automobile Manufacturers data
• ACEA passenger car registration releases for 2024
• US Department of Energy Alternative Fuels Data Center, electric vehicle sales
• Ford Motor Company Form 10-K for fiscal year 2024
• General Motors Form 10-K and Q4 2024 earnings release
• Tesla Form 10-K for fiscal year 2024
• BYD Company Limited 2024 annual report, Hong Kong Stock Exchange
• Volvo Cars September 2024 strategic update
• BloombergNEF Lithium Ion Battery Price Survey 2024
• IRS Section 30D clean vehicle credit dataset and statistics
• Executive Order 14213, January 20 2025, on energy and electric vehicle mandates
• Federal Highway Administration NEVI formula program
• EPA fuel economy and certification data, 2024 model year
• IEA Critical Minerals Outlook 2024
• Cox Automotive 2024 year end electric vehicle market report
• Manheim Used Vehicle Value Index
• Federal Reserve G.19 consumer credit and auto loan delinquency series