- The IEA urges lowering the upfront cost of Electric Vehicles (EVs) to boost mass-market adoption, especially in developing countries.
- China’s success with affordable, smaller EV models is driving global trends, with electric cars expected to account for half of total sales in the country by 2024.
The International Energy Agency (IEA) has emphasized the urgent need to make Electric Vehicles (EVs) more affordable to drive widespread adoption, particularly in developing countries. In its annual global EVs outlook report released on January 8, 2025, the IEA stressed that reducing the upfront cost of EVs is essential for increasing their market penetration.
While electric cars already offer lower total ownership costs over their lifetime due to savings on fuel and maintenance, high initial prices remain a significant barrier, especially for low- and middle-income households.
To address this challenge, the IEA called for greater collaboration between governments and manufacturers to lower production costs through economies of scale and investments in research and development. It also recommended expanding financing options, such as subsidies, incentives, and low-interest loans, to make EVs more accessible.
Additionally, the agency urged the development of robust charging infrastructure, including public charging networks and home charging solutions. The IEA highlighted that affordable EVs could lead to significant reductions in greenhouse gas emissions and air pollution, but the high cost of current models, particularly larger ones, has limited adoption in emerging economies.
In 2023, over half of EV sales in major emerging markets were concentrated in large, luxury models, which are often out of reach for mass-market consumers. However, the IEA pointed to a positive trend in China, where smaller and more affordable EVs have gained popularity, particularly in the ‘A’ and ‘A0’ categories.
These models now represent about 70% of the Chinese auto market. In the first half of 2024, nearly 95% of small cars sold in China were electric. These affordable vehicles also come equipped with advanced features, such as massage seats and heated steering wheels, at just over $10,000, making them attractive to a broader range of consumers.
Lang Xuehong, Deputy Secretary-General of the China Auto Dealers Association, noted that the success of affordable electric cars in China is driving global trends. She emphasized that hybrid plug-in vehicles from China are playing a key role in the global EV boom. The IEA reiterated the importance of cross-border cooperation to bridge the technology gap and further accelerate the transition to affordable electric mobility worldwide.