“Even though electric vehicle shipments are expected to grow 17% in 2025, the deepening trade conflict between China and the West will create significant uncertainty in the electric vehicle market.”

Gartner, which provides actionable, objective insights, has announced the major trends in the automotive market for 2025.

Gartner predicted that regulatory pressure on exhaust gas emissions and trade disputes between Western countries and China will be key factors driving trends in the automotive industry this year.

“Software and electric vehicles will continue to be the main drivers of innovation in the automotive industry,” said Pedro Pacheco, VP analyst at Gartner. “This year, automakers will face uncertainty from tightening emissions regulations and escalating trade tensions between China and the West, which will have a significant impact on the electric vehicle (EV) market in particular.”

Gartner forecasts that electric vehicle shipments, including buses, passenger cars, vans and large trucks, will grow 17% in 2025, and that by 2030, more than 50% of all vehicle models sold by automakers will be electric.

Meanwhile, uncertainty in the automobile industry is growing as discussions on vehicle emission regulations resume due to changes in the political environment in the United States and the European Union (EU). Accordingly, some original equipment manufacturers (OEMs) may reconsider their electric vehicle-first strategy.

It also forecasted that trade sanctions on Chinese electric vehicles by the US and EU would be a major issue. As Chinese electric vehicles currently have the most advanced performance in the areas of connectivity, autonomy, software, and electrification (CASE), it forecasted that if trade sanctions are implemented in earnest, it would have a negative impact on automakers’ adoption of Chinese CASE frameworks.

Currently, Chinese automakers have a competitive edge in software and electrification through vertical integration and efficient development, and this allows them to sell electric vehicles at lower prices than other companies. On the other hand, if trade barriers increase, these advantages may decrease, which may change the structure of the electric vehicle market.

“With drone manufacturers and Chinese telecom companies already feeling the impact of international sanctions, the robotics industry will not be immune,” predicted Bill Ray, senior vice president analyst at Gartner.

He added that “as updates and intelligent software, cameras that support remote access, and data collection in automotive business models become more widespread, geopolitical factors will further fragment the market and slow down CASE adoption.”

Traditional automakers have struggled to develop their own software development capabilities. Many have tried to solve the problem by signing contracts with Chinese OEMs and adopting their vehicle electrical/electronic (E/E) architectures, which has led to an increased reliance on Chinese EV manufacturers’ software and hardware capabilities.

In addition, many auto plants in Europe and North America have been facing overcapacity problems for several years. The recent increase in import tariffs on Chinese electric vehicles by the US and EU is expected to further exacerbate this problem. Accordingly, Chinese automakers are expected to set up factories in Europe, the United States, or countries with which the country has free trade agreements, such as Morocco and Turkey, to maintain price competitiveness.

Gartner predicted that if this situation continues, automobile factories with low operating rates will be closed or sold to other manufacturers, which will have a chain effect of closing supplier factories, ultimately reorganizing the automobile manufacturing landscape in the U.S. and Europe, and making low-cost countries the main hubs of automobile production and supply chains.