Generation: Global EV Race Tilts to China

The global sustainability landscape in 2025 has been marked by sharp contradictions, with clean technology deployment accelerating even as political headwinds intensify.

Generation, a sustainable investment management firm, has released its 2025 Sustainability Trends Report, highlighting the year's most significant developments in climate action and technology.

Among the report's key findings, the electric vehicle sector emerges as a particularly striking example of how market forces and policy decisions are pulling in opposite directions, creating both opportunities and challenges for the automotive industry's transformation.

China dominates EV markets

The report positions 2025 as a critical test of whether global climate progress can continue without robust US leadership.

US President Donald Trump's second administration has withdrawn from the Paris Agreement and moved to remove federal authority to regulate greenhouse gases, a development that could constrain future climate action if upheld in court.

Generation estimates that policy reversals have already triggered cancellations of nearly US$30bn of prospective clean-industry investment in the US, with modelling suggesting lost investment could reach US$500bn over 10 years.

This policy retreat has created space for China to consolidate its position as the world's leading force in sustainability technology. The report describes China as a future "electrostate", driven by aggressive industrial policy and expanding exports of renewable energy technology and electric vehicles.

EVs already represent close to 60% of new car sales in China, versus around 10% in the US in 2024, underlining the widening gap between the two markets.

According to International Energy Agency data, electric cars are expected to account for 25% of global auto sales this year, with cars with plugs already constituting well over half of new sales in China and around a quarter across Europe.

US electric vehicle adoption stalls

The contrast with the US could not be starker. The report notes that EVs made up only about 10% of US car sales in 2024, with a modest increase expected in 2025 as buyers rush to capture expiring subsidies before federal support is dismantled.

Tesla's once-dominant position began to erode this year, particularly in Europe where the company has suffered double-digit sales declines in several markets after people began boycotting the company due to Elon Musk's political activities. The fact that Chinese brands now offer very affordable models is not helping this situation.

Beyond passenger vehicles, decarbonisation in heavy-duty transport is finally beginning to gain traction, with electric lorry sales rising from a small base.

However, the report stresses that infrastructure for the kinds of high-power charging necessary to sustain electric heavy goods vehicles is at a "barely-started" stage in most countries.

Aviation and shipping, by contrast, remain way off course for net zero, despite Europe's ambitious mandates for e-kerosene and other sustainable aviation fuel, which still face financing hurdles and would cover only a small portion of demand, even if all planned projects were built.

Clean technology investment accelerates

While the political landscape has grown more hostile to climate action in some regions, the underlying economics continue to favour electrification. Global electricity generation from solar rose 28.3% last year, with China adding more solar capacity to its grid in a single month than any other country has ever built in an entire year.

Battery deployment is also fundamentally changing grid profiles in some advanced markets. In California, batteries already meet about 20% of peak evening demand on some days, rising to roughly 30% in parts of Australia, effectively displacing gas-fired generation during critical hours.

Benchmark data suggest clean energy is attracting around twice as much investment globally as fossil fuels, with solar costs plummeting year-on-year since 2009. Conversely, gas-fired power costs have barely moved, reinforcing the case for private capital to continue reallocating towards low-carbon infrastructure.

For corporate and financial audiences, the report's core message is that the physics and economics of the transition are pulling in one direction while politics pushes in another, creating both execution risk and competitive opportunity.

Companies that treat 2025's turbulence as an excuse to pause decarbonisation efforts risk finding themselves on the wrong side of what the report calls "the race for the future".