What Happened
- Global electric vehicle (EV) registrations declined 11% in February 2025 compared to the previous month, falling to approximately 1 million units — the lowest monthly total since February 2024.
- China, the world's largest EV market, recorded a 30–32% year-on-year decline in EV and hybrid vehicle registrations in February 2025, marking its sharpest retreat since early in the COVID-19 pandemic.
- The Chinese decline was triggered by the expiry of a government tax incentive programme at the end of 2024 and the cancellation of vehicle trade-in subsidies, which had previously propped up consumer demand.
- North America also contributed to the global decline, with EV sales falling for the fifth consecutive month — down approximately 35% — amid the rollback of federal EV tax credits under the new US administration's policy changes.
- Paradoxically, a "rest of the world" category saw a 78% surge in EV sales, largely driven by Chinese automakers expanding aggressively into Asian, South American, and European markets with competitively priced models.
Static Topic Bridges
Electric Vehicles — Technology and Types
Electric vehicles use one or more electric motors powered by rechargeable battery packs, eliminating or reducing internal combustion engine (ICE) use. They are a central technology in decarbonising road transport, which accounts for ~16% of global CO₂ emissions.
- BEV (Battery Electric Vehicle): Fully electric; zero direct tailpipe emissions; charged from grid
- HEV (Hybrid Electric Vehicle): Combines ICE with electric motor; battery recharged by regenerative braking, not plug-in
- PHEV (Plug-in Hybrid Electric Vehicle): Can be charged externally; operates on electricity for short ranges, ICE for longer
- FCEV (Fuel Cell Electric Vehicle): Uses hydrogen fuel cell to generate electricity onboard
- Key battery technologies: Lithium Iron Phosphate (LFP) — safer, cheaper, used widely in China; NMC (Nickel Manganese Cobalt) — higher energy density, used by many Western and Korean manufacturers
- EV adoption globally grew ~35% in 2023 and ~20% in 2024 before the February 2025 monthly dip
Connection to this news: The dip reflects how heavily EV adoption depends on government subsidies and incentive structures rather than pure market demand — a critical policy lever for any government pursuing EV transition goals.
China's EV Market and Industrial Policy
China has become the dominant force in global EV manufacturing and adoption through sustained state-directed industrial policy spanning two decades. It accounts for ~60% of global EV sales and is home to the world's largest EV manufacturers including BYD, SAIC, NIO, Li Auto, and CATL (the world's largest EV battery maker).
- China's EV policy tools have included: purchase subsidies (phased out end-2022), dual credit policy (mandating EV production quotas for automakers), NEV license plate preferences in major cities, battery swapping infrastructure mandates
- Trade-in subsidies (renewed 2024): offered consumers cash incentives to scrap old vehicles and buy new ones, including EVs — their expiry triggered the February 2025 drop
- BYD overtook Tesla as the world's top-selling EV brand in 2023; sells both BEVs and PHEVs
- China's "industrial overcapacity" in EVs is a major trade dispute: the EU imposed tariffs of up to 45% on Chinese EVs in 2024; the US has 100% tariffs on Chinese EVs
- CATL supplies battery cells to Tesla, BMW, Mercedes — its global market share in EV batteries: ~37% (2024)
Connection to this news: The February slump illustrates the "subsidy cliff" effect: when incentives expire simultaneously, demand craters. This is a cautionary note for countries designing their own EV transition policies.
India's EV Ecosystem and Policy
India's EV transition is progressing but at a slower pace than China, driven by government schemes, emerging domestic manufacturing, and a growing two-wheeler EV market.
- FAME India scheme: Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles; Phase II (2019–2024) provided demand subsidies for 2-wheelers, 3-wheelers, buses; total outlay ~₹10,000 crore
- PM E-DRIVE Scheme (2024): Successor to FAME II; ₹10,900 crore outlay; focuses on e-buses, e-trucks, charging infrastructure; removes 2-wheeler subsidies to nudge market self-sufficiency
- India's EV penetration (FY2024): ~6–7% for 2-wheelers; ~2% for passenger cars; <1% for commercial vehicles
- PLI scheme for Advanced Chemistry Cell (ACC) batteries: ₹18,100 crore to incentivise domestic battery manufacturing
- Key Indian players: Tata Motors (Nexon EV, Tiago EV), Mahindra & Mahindra (BE series), Ola Electric (2-wheelers), Ather Energy
- India's EV target: 30% of all vehicles sold to be electric by 2030 (NITI Aayog recommendation)
- Critical minerals challenge: India depends heavily on imports for lithium (Australia, Argentina, Chile), cobalt (DRC), and nickel — affecting battery supply chain security
Connection to this news: India is designing its incentive phase-out carefully, having studied the demand cliff in China. The PM E-DRIVE scheme deliberately excludes 2-wheeler subsidies to test market readiness before withdrawal.
Critical Minerals and Battery Supply Chains
The transition to EVs globally is constrained by access to critical minerals — lithium, cobalt, nickel, manganese, and rare earth elements — whose supply is geographically concentrated.
- Lithium: 55% of global production from Australia; largest reserves in Bolivia, Argentina, Chile (the "Lithium Triangle"); India discovered major deposits in J&K (Reasi district) in 2023
- Cobalt: ~70% of global production from the Democratic Republic of Congo (DRC)
- Nickel: Indonesia (~50% of global supply) and Philippines are dominant
- Rare earths (for EV motors): ~60% mined in China; China also dominates processing/refining
- Critical Minerals List (India, 2023): 30 minerals identified; India is exploring deals with Australia (MOCA), Argentina, and others for secure supply
- IEA projects that demand for lithium could increase 40-fold by 2040 under net-zero scenarios
Connection to this news: Chinese automakers' global expansion is partly a strategy to lock in demand and recoup investment in overcapacity — driven by the domestic slowdown exemplified by the February 2025 figures.
Key Facts & Data
- Global EV registrations February 2025: ~1 million units (down 11% month-on-month)
- China EV + hybrid decline February 2025: ~30–32% year-on-year
- North America EV sales decline February 2025: ~35% (5th consecutive monthly decline)
- "Rest of world" EV sales growth February 2025: +78%
- China's share of global EV market: ~60%
- BYD topped global EV sales rankings in 2023; CATL holds ~37% global EV battery market share
- EU tariffs on Chinese EVs: up to 45% (imposed 2024); US tariffs: 100%
- India's FAME II outlay: ₹10,000 crore; PM E-DRIVE scheme: ₹10,900 crore
- India's EV penetration (FY2024): ~6–7% for 2-wheelers; ~2% for passenger cars
- India's J&K lithium discovery (2023): estimated 5.9 million tonnes — potentially among the world's largest deposits
- IEA Global EV Outlook 2025: projects EVs to reach ~45% of global car sales by 2030 under announced pledges scenario