Gartner has released its 2025 automotive forecast predicting a 17% increase in electric vehicle (EV) shipments for the year, despite mounting uncertainties surrounding emission regulations and geopolitical tensions. The report highlights transformations in the automotive industry, driven by software innovation and electrification, but tempered by trade barriers and regulatory ambiguity.
Pedro Pacheco, VP Analyst, Gartner, pointed to emission regulation discussions in the United States and European Union as a major source of uncertainty. These discussions, alongside growing trade tensions with China, have left automakers hesitant to fully commit to EV-centric strategies. While Gartner estimates that over 50% of vehicle models marketed by automakers will be electric by 2030, current geopolitical trends threaten to slow progress in the EV sector, especially in connectivity, autonomy, software, and electrification (CASE).
Trade barriers imposed by the U.S. and EU against Chinese EVs have slowed the adoption of advanced automotive technologies in these regions. Chinese EVs, known for their software sophistication and affordability, are finding their competitive edge reduced by sanctions and tariffs. Bill Ray, Distinguished VP at Gartner, commented on the broader implications, noting that 'geopolitics will fragment the market, slowing the adoption of intelligent and connected vehicles.'
Legacy automakers are increasingly reliant on partnerships with Chinese manufacturers to bolster their software and electronic architecture capabilities. However, these collaborations further entangle global supply chains amidst rising trade tensions. The efficiency and innovation of Chinese automakers, driven by vertical integration, are now partially offset by limited market access in the West.
Overcapacity in North American and European automotive factories remains a pressing issue, further strained by trade policies. Gartner predicts that several underutilised plants will face closure or sale, potentially leading to a ripple effect that could impact supplier factories. The report anticipates a shift in global manufacturing hubs, with low-cost countries like Morocco and Turkey likely to become pivotal in automotive production and supply chain operations.