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Investing.com -- China’s dominance in the electric vehicle (EV) sector is widening as policy headwinds and cooling demand continue to weigh in on the market in the U.S. and Europe, according to Barclays (LON:BARC), citing BloombergNEF’s (BNEF) latest EV Outlook.
BNEF revised its 2030 EV penetration forecast for China up to 80%, from 71% a year ago, driven by strong consumer demand, competitive pricing, and a deeply integrated EV supply chain.
In contrast, the U.S. forecast was cut sharply to 27%, down from 48% in June 2024 and 33% in November, with Barclays attributing the drop to policy rollbacks such as the potential revocation of the California waiver and the phasing out of EV tax credits.
“The EV Winter in the West,” Barclays said, is offset by “continued EV inflection and leadership in China,” especially as U.S. political developments under President Trump point toward dismantling the federal EV mandate.
Europe also saw its 2030 penetration outlook lowered to 52% from 56%, reflecting regulatory adjustments and shifting compliance timelines.
Battery costs remain a major differentiator. BNEF estimates the average EV battery pack cost in China at $94/kWh in 2024, compared to $123/kWh in North America and $139/kWh in Europe.
China’s cost edge stems from its commanding position in battery material refining—accounting for roughly 95% of graphite, 92% of rare earths, and over 70% of cobalt and lithium—as well as dominance in battery component manufacturing.
Battery overcapacity is another factor contributing to China’s pricing advantage. Barclays notes that China had 201% battery cell overcapacity in 2024 and is expected to reach nearly 300% by the decade’s end.
On the other hand, the U.S. is only starting to shift into modest overcapacity, with uncertainty over the future of the $45/kWh production tax credit under the IRA.
“While the U.S. may see more overcapacity given weaker EV demand dynamics, it is still modest vs. the overcapacity in China - and thus implying relatively greater downward pressure on battery prices in China,” Barclays analyst Dan Levy said in a note.
China’s focus on lower-cost chemistries such as lithium iron phosphate (LFP) also helps reduce average pack prices. Levy highlights that a Chinese LFP pack likely costs less than 60% of a Western NMC pack, helping the country to scale EVs more affordably.
As of 2025, China is expected to account for nearly two-thirds of global EV sales, with Europe at 17% and the U.S. at just 7%, underscoring the accelerating divergence in the global EV landscape.
BNEF raised its global EV penetration forecasts for 2025 and 2026 but trimmed projections beyond that, cutting the 2030 estimate to 42% from 45%.
The near-term lift reflects stronger growth in China, while longer-term reductions are due to weaker outlooks for the U.S. and Europe.