Electric vehicles
Reviewed by Maria Coronado Robles, Sustainability Content Principal at xUnlocked · Last updated July 2026 Electric vehicles (EVs) are vehicles powered wholly or partly by electricity stored in an onboard battery, rather than relying solely on an internal combustion engine burning petrol or diesel. They're central to decarbonising road transport, which accounts for close to half of global oil demand, and adoption is accelerating fast: global electric car sales grew 20% to exceed 20 million in 2025, meaning one in four new cars sold worldwide was electric, according to the IEA. Growth isn't confined to a few markets either — more than 100 countries recorded EV sales growth in 2025, and in a third of them, EVs already made up at least 10% of new car sales.
What are the main types of electric vehicle?
Battery electric vehicles (BEVs). Powered entirely by an onboard battery and electric motor, with no internal combustion engine at all — charged externally and producing no tailpipe emissions.
Plug-in hybrid electric vehicles (PHEVs). Combine a smaller battery and electric motor with a conventional combustion engine, allowing limited electric-only range before switching to petrol or diesel.
Hybrid electric vehicles (HEVs). Use a small battery charged by the engine and regenerative braking rather than external charging — more fuel-efficient than a conventional car, but not a plug-in EV in the way BEVs and PHEVs are.
What's driving EV adoption?
Falling costs and price parity. In China, 70% of battery electric cars sold in 2025 were already cheaper than the average conventional car, and in several Southeast Asian markets the price premium for EVs has been shrinking sharply year over year — removing what has historically been the biggest barrier to mainstream adoption.
Running cost savings. EVs are generally cheaper to run than combustion vehicles thanks to higher efficiency, and rising oil prices widen that gap further — EU annual fuel cost savings from driving an EV grew 35% in early 2026 compared with the year before, according to the IEA.
Policy and emissions standards. Tightening CO2 and fuel economy standards, particularly in the EU, are pushing manufacturers to prioritise more affordable EV models to stay compliant, while government incentives continue to shape uptake in emerging markets.
Model availability. As more manufacturers compete for market share — including a growing wave of Chinese automakers, which supplied 60% of global EV sales in 2025 — the range of available models and price points keeps expanding.
What are the main challenges facing EV adoption?
Charging infrastructure. Fast, reliable public charging remains uneven across markets, and as charging speeds increase, growing EV demand could put more pressure on local grid capacity in some regions.
Battery supply chains. EV batteries depend on lithium, cobalt and nickel, and battery cell manufacturing remains heavily concentrated — China accounted for over 80% of global battery cell production in 2025 — creating supply chain concentration risk for other markets trying to scale up.
Policy sensitivity. Sales in some markets remain closely tied to subsidies and tax credits; the US saw sales dip when EV tax credits ended, showing how quickly policy changes can move demand even where the underlying technology and cost trends are favourable.
Heavier vehicle segments lag behind. Electric trucks and buses are electrifying more slowly than passenger cars — electric trucks reached 9% of global truck sales in 2025, still well behind the passenger car market, largely because purchase costs remain two to three times higher than diesel equivalents even as total cost of ownership improves.
For a wider view of how EVs fit alongside the other technologies driving the shift away from fossil fuels, see Why Clean Energy is Inevitable I, a video module presented by Richard Black, Renewable Energy Expert and Director of Policy and Strategy at Ember.
Frequently asked questions
Are electric vehicles actually cheaper to own than petrol or diesel cars?
It depends on the market and vehicle, but the gap is closing fast and has already reversed in some places. In China, most battery electric cars sold in 2025 cost less upfront than equivalent conventional cars, and EVs are generally cheaper to run everywhere thanks to lower "fuel" and maintenance costs — savings that grow when oil prices rise. In markets where EVs still carry a purchase price premium, that premium has been shrinking year over year as battery costs fall.
How much does EV charging add to electricity demand?
Globally, the impact is modest in aggregate but significant in some regions: EV charging could add up to 1,500 terawatt-hours of electricity demand by 2035, roughly a sixfold increase from 2025 levels, but that would only increase total global electricity demand by around 4%. The effect varies by region — in Europe, EV charging is projected to add more than 10% to total electricity demand by 2035, compared with under 6% in China — which is why grid planning and smart charging matter more in some markets than others.
What's the difference between a hybrid and a plug-in hybrid?
A standard hybrid (HEV) charges its small battery only through the engine and regenerative braking, and can't be plugged in — it's a more fuel-efficient combustion car rather than a true electric vehicle. A plug-in hybrid (PHEV) has a larger battery that can be charged externally, giving it a limited all-electric range before it switches to the combustion engine, making it a genuine (if partial) step toward electric driving.
