Growth in the global electric-vehicle market is set to slow to 27.1% this year as a reduction in state subsidies makes the cars less appealing to buyers, according to research firm Canalys.
The figure follows an estimated growth of 29% in 2023 at 13.7 million units, when government incentives helped the adoption of EVs, Canalys said in its report.
The lower subsidies and higher borrowing costs have weighed on demand at companies, including U.S. market leader Tesla (TSLA.O), which slashed sticker prices last year.
"Despite a 20% drop in the ASP (average selling price) of EVs in 2023, insufficient product choices and inconvenient charging experience hampered demand, impacting the market growth of EVs," said Jason Low, principle analyst at Canalys.
In 2024, the North American EV market is expected to grow 26.8%, but with the lowest EV penetration rate of 12.5% compared with Greater China and Europe, the research firm said.
EV penetration in China will hit 40%, with Chinese brands commanding 78% of the market share, as a drop in battery costs drives sales of compact and subcompact vehicles.
China's BYD (002594.SZ) overtook Tesla as the top-selling EV maker in the last quarter of 2023.
The overall slowdown in the EV transition has, however, prompted several legacy automakers, such as Ford (F.N), to scale back their production expansion plans.
That, as well as lower prices, has made hybrid vehicles more appealing to buyers, according to auto research firm Edmunds.
Edmunds said the market for such cars grew to 9.7% in November, nearly twice the market share from a year earlier.
Canalys said "a solid fundamental will ensure a better position for carmakers to attain more growth in 2025 when EV growth is expected to accelerate."
"Chinese carmakers will be a force to be reckoned with as they will soon reap the fruits of their global investment in regional manufacturing."
