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The automotive industry experienced significant shifts in 2024, from evolving consumer expectations to increased regulatory pressures. But what do these changes mean for 2025? We delve into the key trends shaping the market and what lies ahead.
2023 was a breakout year for EV adoption, but 2024 brought tempered growth. While sales continued to climb, the market showed signs of maturity, with slower growth rates and greater emphasis on affordability and sustainability.
One standout trend was the growing influence of Chinese EV brands like BYD. Their competitive pricing, innovative designs, and rapid entry into European markets reshaped the landscape.
“Chinese automakers like BYD are no longer just entering the market—they’re reshaping it.”
With their influence growing, the challenge for legacy automakers in 2025 will be to stay relevant in an increasingly competitive space.
The rise of salary sacrifice schemes made EV ownership more accessible in 2024, but the tax benefits didn’t translate to the secondhand market. This resulted in price disparities, with used EVs being up to 40% more expensive for retail buyers.
“The EV market’s affordability gap is becoming a roadblock—especially when secondhand buyers face prices 40% higher than salary sacrifice schemes.”
The introduction of the Zero Emissions Vehicle (ZEV) mandate pushed automakers to prioritize EV production to meet targets. While this spurred innovation, it also created end-of-year pressures to register vehicles. 2025’s stricter targets will test the industry’s ability to adapt.
In 2024, leasing companies began exploring ways to reintroduce used EVs into the market. Short-term leases and subscription models emerged as practical solutions, appealing to consumers looking for affordable options.
“The real growth opportunity lies in second-life vehicles—reimagining how used EVs are brought back into the market.”
Flexible subscription models gained traction, with providers leveraging second-life EVs to cater to consumers prioritizing affordability and adaptability. This trend is expected to grow in 2025 as more businesses embrace the subscription economy.
New entry Level EVs: Budget EVs, like the Dacia Spring, gained significant attention in 2024. These vehicles, with smaller batteries and simpler designs, are opening up the EV market to a wider audience, signalling a shift toward mass-market affordability.
New Market Entrants: Chinese automakers and other disruptors continued to challenge traditional OEMs. Their streamlined production methods and competitive pricing are reshaping the competitive landscape in Europe and beyond.
Digitisation and Flexibility: The push for digital transformation in the automotive sector accelerated in 2024. From streamlined booking systems to real-time fleet management, technology is playing a pivotal role in addressing consumer demands.
Stabilising Residual Values: While 2024 saw significant volatility, 2025 is expected to bring more stability to residual values as the market matures.
Adapting to Stricter Regulations: With ZEV mandates becoming more stringent, automakers will need to innovate to meet targets while maintaining profitability.
Focus on Subscription and Flexibility: Short-term leasing and subscription models will become central to automakers’ strategies, addressing the growing demand for convenience and adaptability.
2024 was a year of learning and adjustment for the industry. While challenges such as residual value disparities and regulatory pressures created hurdles, they also opened doors for innovation and transformation.
As we head into 2025, the focus will be on leveraging these opportunities to create a more dynamic, consumer-focused market.
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