IHS Markit forecasts substantial growth in production of battery electric vehicles (EVs) from 2017 through 2027. Production of these vehicles is expected to favor China and Europe, in no small measure a result of the regulatory environment of each region. As a result, IHS Markit expects to see production of EVs account for a higher proportion of production in Europe than in China or North America. China will continue to produce more EVs than any other region.
In 2027, IHS Markit forecasts 43.8 percent of global EV production will be in China, 29.2 percent in Europe and only 11.6 percent in North America. Production of EVs in the Japan/Korea region will also increase in the coming years, and that region is expected to also produce about 11.6 percent of EVs in 2027.
For comparison on changes, in 2017 China accounted for 57 percent of global EV production, with North America nearly 15 percent. Europe was just under 14 percent of global production in that year, with the Japan/Korea region about the same as North America. In that year, global EV production reached only 966,000 units. IHS Markit forecasts that global EV production in 2027 will reach about 13.2 million units—about 13.7 percent of global light vehicle production.
Despite the volume increases in global production, China and North America will both see their respective shares of global EV production decline. In Europe, however, the shift to EV production is accelerated for several reasons, and Europe is forecast to increase both share and volume of EV production. On the back of stricter regulations and heftier fines and on Europe’s overall light-vehicle position, Europe will become the region with the second-highest production volume of EVs. In 2017, Europe, North America and Japan/Korea each produced a similar number of EVs. By 2027, however, Europe is forecast to see EV production increase to about 3.9 million units—higher EV production volume than North America and Japan/Korea combined.
Automakers: Build Where You Know
Another factor impacting EV production relates to which automakers are placing the most aggressive bets on shifting from the internal combustion engine (ICE) to EV propulsion systems. In 2027, the technology is expected to be still on the rise but not the dominant propulsion source; automakers are positioning production of EVs first in their home-base regions as well as in China.
For example, BMW is forecast to see nearly 52 percent of its EV production in Europe in 2027 and 44 percent in China; North American production is forecast to account for only 3.5 percent of BMW’s EV production that year. Some of BMW’s production choices are a result of BMW producing only large SUVs in its biggest North American plant.
On the other hand, General Motors’ reliance on the China market is underscored by the forecast that the company will see about 56 percent of its EV production in 2027 in China, and 43 percent in North America. Toyota Motor Corp. is forecast to see nearly 77 percent of its EV production in Japan and South Asia in 2027, and 15 percent in China. Volkswagen AG is expected to also concentrate more than half of its EV production in Europe through 2027, followed by 40 percent in China.
As the EV market is developing more slowly in North America, Volkswagen and BMW’s near-term production efforts will have the effect of laying the groundwork for future production in that region. Ford Motor Co. is an anomaly in this scenario, however. As a result of strategic relationships with Volkswagen in Europe and Zotye in China, by 2027 Ford is forecast to see a more balanced sourcing pattern for EVs. In 2027, Ford is forecast to produce about 36 percent of its EVs in North America, 46 percent in Europe and 18 percent in China.
China’s dominance in EV production is largely a result of government regulations, which heavily encourage both production and sales of electric vehicles in the market, as well as the large scale of the Chinese market. Light-vehicle production is higher in China than elsewhere, but it still accounts for a disproportionate share of EV production. China accounts for about 31 percent of global light-vehicle production but is forecast to deliver 44 percent of global EV production in 2027, down from 57 percent in 2017 as other regions see volume grow. In volume terms, China production of EVs reached nearly 552,000 units in 2017; this is forecast to reach 5.8 million units in 2027. China’s overall vehicle production is forecast to reach 30 million units in 2027.
Europe has been heavily dominated by diesel-powered ICEs, as governments pressured automakers to reduce emissions and encouraged diesel across the region with policies regarding fuel taxation. However, a series of accusations of misleading emissions tests regarding the fuel efficiency of diesel engines, changes to the testing system creating confusion for customers, and increasingly expensive after-treatment systems have knocked diesel powertrains off their perch as a go-to solution.
Further, European regulations continue to get stricter and fines for missing targets have increased. Against this backdrop, Volkswagen, Daimler AG and BMW have all aggressively stepped up levels of electrification and commitment to robust EV product lineups. The shift in attitude from these automakers is expected to result in a significant change for European light-vehicle production.
In 2017, Europe produced just under 14 percent of global EVs; by 2027, this is forecast to increase to 29 percent. In volume terms, this is a jump from about 132,000 units in 2017 to about 3.87 million units in 2027. Translating that to production in the region itself, IHS Markit forecasts that in 2027, 18 percent of Europe’s total production will be EVs, behind only China.
In North America, the prevailing climate resulted in relaxed fuel economy regulations through at least the 2026 model year under the SAFE rules finalized in April 2020. Though nearly all automakers are marching forward with increasing levels of electrification for North America as well as for Europe and China, the fluid situation in the U.S. contributed to automakers choosing to deploy electric vehicles in other markets first, delaying a U.S. launch. Among examples of this approach are the Mercedes-Benz EQC, which saw its planned U.S. launch delayed, and BMW’s decision in March to strike plans to offer the EV version of the BMW X3, badged iX3, in the U.S. Volkswagen’s ID family EV, the ID.3, is also not scheduled for US sale; U.S. buyers will have to wait for the ID.4.
In North America, production of EVs is forecast to grow from about 141,000 units in 2017 to 1.52 million units in 2027, and EVs will account for about 10 percent of North American light-vehicle production. While North America’s production is lower than that of China or Europe, it is also near the demand level IHS Markit forecasts for 2027.
Changes in Consumer Demand, Regulation
As automakers navigate the confluence of consumer demand and regulations and consider where to place large capital bets, several are doubling down on shifting to a predominantly electric vehicle environment, no matter how long it takes. In the 10-year span from 2017 to 2027, EV production is forecast to increase a whopping 1,272 percent—from 1 percent of global production to about 13.7 percent. Over this period, China will continue to produce the greatest number of EVs, but a combination of conditions in Europe and more aggressive activity in electrification from European automakers are driving that region to make a heavier bet on EVs than we are seeing in North American production.
Stephanie Brinley is the principal automotive analyst for IHS Markit, a London–based global information provider.