2025 Electric Vehicle Outlook According to Morgan Stanley By Investing.com

Investing.com — Morgan Stanley analysts signal a slowdown in global electric vehicle (EV) adoption 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, particularly those involving Chinese EV technology and local market access, will be crucial in overcoming these hurdles and reigniting EV momentum.

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

As a result, global battery electric vehicle (BEV) penetration growth is expected to slow, with the bank’s forecast for 2026 now down to 17%, down from its previous estimate of 20%.

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

Analysts predict that EV growth will begin to reaccelerate in 2027, with BEV penetration reaching 32% by 2030.

To meet these challenges, Morgan Stanley advocates “strategic linkages” between global and Chinese automakers. They believe the links could cut development time for global electric vehicles by 30 percent and cut costs by up to 40 percent over the next decade.

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

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