2025 Electric vehicles middle-market outlook

With the advancements in technology, power, and availability, electric vehicles (EVs) have long since broken through their reputation as niche and become a mainstream part of the global vehicle fleet. With adoption speeds varying from region to region, there is, on balance, an ongoing shift towards more sustainability-friendly vehicles as more regulations and consumer demands push for them across the globe.

The shift is offering some significant implications for suppliers, fleet operators, manufacturers, and stakeholders across the value chain. As is the case with many industries, opportunity is often met with challenge and with EVs sitting in pole position for the automotive industry’s global transformation, navigating their ever-growing landscape is key to understanding where the industry is headed.

Building from our insights in our 2025 automotive industry outlook, some of RSM’s leading automotive specialists share their expertise and perspectives on how the EV landscape will play out in 2025.

The EV snapshot

Globally, EV sales have seen a prominent uptick in the last year. The latest EV Outlook from the International Energy Agency (IEA), global EV sales reached over 17 million in 2024, marking a 25% increase from the previous year. China led the market, with EVs accounting for nearly half of all car sales, while Europe saw stagnation due to reduced subsidies. The U.S. experienced a 10% growth, with EVs making up over 10% of car sales. Emerging markets like Southeast Asia and Latin America showed significant growth, with sales increasing by over 60% in 2024. Projections for 2025 suggest global EV sales will exceed 20 million, representing more than 25% of total car sales, with China and Europe driving growth alongside emerging economies. By 2030, EVs are expected to account for over 40% of global car sales under current policies.

In the first quarter of 2025, according to recent report by Rho Motion, sales surged by 29% in March 2025 compared to the previous year, with 4.1 million units sold in Q1 2025. China led the growth with a 36% increase, followed by Europe at 22%, North America at 16%, and the rest of the world at 27%. In Europe, the UK achieved record-breaking sales in March, whereas France saw a decline due to reduced subsidies. Across the pond, in the U.S., new tariffs on automobile imports are expected to raise prices, impacting both EV and internal combustion engine (ICE) markets. Meanwhile, China’s EV market continues to thrive despite ongoing US-China trade complications.

Batteries

An EV is only as good as its battery and the ability to charge. This has been a key concern for potential drivers and critics alike since the inception of electric vehicles. While the charging infrastructure can vary quite dramatically from country to country, the technology behind the batteries that EVs use improves every year, with some exciting developments in store for the years ahead.

The mass-market introduction of solid state batteries (SSBs) would be revolutionary for the EV industry. With big names such as Toyota, BYD, Panasonic, Samsung, and more behind their development, these batteries would represent a significant advancement in battery technology, offering improved safety, faster charging, longer service life, and higher energy density compared to traditional lithium-ion batteries.

“Solid-state batteries offer higher energy density compared to traditional lithium-ion batteries, which means they can store more energy in a smaller space,” says Larry Keyler, Partner and Global Automotive Leader at RSM US. “Replacing liquid electrolytes with solid or semi-solid alternatives reduces risks like overheating and short circuits while enhancing performance and durability, not to mention faster recharge times.”

Although large-scale, cost-effective production of solid-state batteries is not expected until 2027-2028 at the earliest, former British automaker MG (now owned by SAIC), has announced that the first new MG car to launch in 2025 will have a semi-solid battery as standard, promising a transitional solution with many of the same benefits. Challenges like high production costs and scalability remain; however, the introduction of this innovative technology has the potential to reshape industries beyond just automotive.

Infrastructure

The infrastructure to support battery advancements is equally paramount. Forrest Wu, Partner at RSM in China, highlights the critical need for widespread charging availability, sharing that while China is adding charging stations at a staggering pace, the supply still falls short of demand. “According to the China Charging Alliance, it is expected that 4.657 million new charging stations will be added by 2025, a year-on-year increase of 10.3%. It is expected that the number of charging piles will reach 17.47 million by the end of 2025, with a vehicle-to-pile ratio of 2.5:1. There is still a significant gap from the Ministry of Industry and Information Technology's previous goal of achieving a vehicle-to-pile ratio of 2:1 by 2025 and 1:1 by 2030.” he notes.

Such gaps in charging infrastructure are even more pronounced in regions like Latin America. Saúl Villarreal, Office Managing Partner at RSM in Mexico, points out that middle-market businesses across Mexico face major challenges due to insufficient charging facilities, particularly outside urban hubs. “Infrastructure inadequacies pose significant barriers for the uptake of EVs,” he says, “However, the rise in EV consumer interest presents opportunities for middle-market players in charging, maintenance, and fleet services.”

Adapting to policy shifts

Regulation has long been a catalyst for the EV revolution. From emissions standards to government incentives, policies continue to shape the growth trajectories for businesses entering the EV space. While robust incentives in regions like Europe, China, and the U.S. have encouraged an initial wave of adoption, changing regulations are beginning to introduce new complexities.

Keyler advises middle-market companies to stay agile and innovative in the face of these policy shifts. “Diversifying supply chains, enhancing operational efficiency, and leveraging cutting-edge technologies like renewable energy sources can help offset challenges wrought by changing tariffs or reduced subsidies,” he says.

Villarreal adds that nearshoring presents an opportunity for Latin American businesses seeking resilience amid global disruptions. “For Latin American companies, aligning with regional assembly goals while investing in workforce upskilling for EV maintenance can help to mitigate long-term risks.”

Meanwhile, Wu emphasises the importance of diversifying market strategies. “Middle-market companies can expand beyond dependencies on single markets like the U.S. market by leveraging partnerships and programs like the 'Belt and Road' initiative to target economies like ASEAN and Europe, which offer promising opportunities. Businesses that diversify their global market layout also diversify their trade risks.”

The ripple effects of market leaders

Market shifts driven by players like Tesla and BYD inevitably affect middle-market businesses. As Keyler observes, “What big market players do at the top sends waves through the entire industry, forcing middle-market players to adapt. The key for these players is resilience despite any external forces that can shake up the landscape.”

Wu adds, “A good example of this ripple effect is Tesla’s factory in Shanghai, which has improved the quality and efficiency of its energy storage products by optimising its supply chain and manufacturing processes.” He continues, “This creates big challenges for domestic car companies, forcing them to accelerate their pace of technological innovation and product upgrades.”

In Latin America, changes in the dynamics of dominant players are reshaping competition, pushing middle-market firms to localise supply chains or target new market niches. “BYD’s strategy to localise production (with new plants in Brazil and regional assembly plans) could affect component suppliers and logistics providers by shifting demand toward local sourcing. Meanwhile, Tesla’s declining sales and investor uncertainty open the door for new players in the region,” says Villarreal. “Middle-market firms must adapt quickly, either by aligning with dominant players' supply networks or by targeting emerging segments underserved by large OEMs - like affordable fleet electrification solutions.”

Amidst all of the influences and ripple effects through the value chain, middle-market automotive players need to stay resilient, Keyler emphasises.

The takeaway

Despite challenges, middle-market businesses have immense opportunities to thrive within the EV ecosystem. Strong growth trajectories, innovation in battery technology, and increasing regional support for sustainability create a fertile environment for progress. While innovations like solid-state batteries promise improved performance and efficiency, obstacles such as production costs and scalability remain.

Policy changes and the strategies of market leaders will continue to reshape the competitive landscape. Middle-market players can thrive by keeping their fingers on the pulse, adapting to these changes, and targeting emerging market needs and opportunities. The EV ecosystem is advancing quickly, and success will depend on the ability to anticipate and respond to its ongoing transformation.