Electric Vehicles Adoption Slowdown

Investing.com — Morgan Stanley analysts have signaled a slowdown in the global adoption of electric vehicles (EVs) over the next 12-18 months due to economic uncertainties and geopolitical challenges.

In a note to clients on Tuesday, the bank suggests that global alliances, especially those involving Chinese EV technology and market access, will be crucial in overcoming these obstacles and reigniting EV momentum.

Morgan Stanley notes that the global EV market, after years of robust growth, has entered a new phase characterized by geopolitical tensions, China’s economic fragility, and AI tech-driven disruption.

Consequently, growth in global battery electric vehicle (BEV) penetration is expected to slow, with the bank’s forecasts for 2026 now reduced to 17%, down from the previous estimate of 20%.

In China, where EV adoption has been strong, Morgan Stanley has lowered its BEV penetration forecast for 2026 to 31%. This adjustment cites potential delays in reaching global EV-ICE (internal combustion engine) price parity due to trade barriers and localization requirements.

The analysts predict that EV growth will begin to reaccelerate in 2027, projecting BEV penetration to reach 32% by 2030.

To navigate these challenges, Morgan Stanley advocates for “strategic tie-ups” between global and Chinese automakers, believing that these alliances could reduce the development time for global EVs by 30% and cut costs by up to 40% over the next decade.

The firm sees a potential $150 billion investment opportunity in localizing Chinese EV production in global markets by 2030.

While current market sentiment reflects concerns about slowing EV sales, Morgan Stanley believes that future cross-border collaborations could significantly enhance the market share and profitability of early movers in the EV industry.