EV Market Growth: The Hype Cycle

Automakers are slashing EV investment. Insurance costs for electric cars are climbing. Media outlets are flooded with stories of early adopters ditching their EVs for petrol or diesel. Lamborghini delayed the Lanzador, their first EV, because “the market isn’t ready”.

If you’ve been following the EV market, you might think electric vehicles are hitting a dead end.

The reality is more complex. EVs aren’t failing. They’re moving through a natural phase of technological adoption—the Trough of Disillusionment, a term coined by research firm Gartner. Every new technology follows a similar path: a surge of excitement, a crash of disappointment, then slow and steady progress toward widespread adoption. Allow me to explain.

The Gartner Hype Cycle explains how new technologies evolve.

Despite recent slowdowns, the EV market is expanding. On the surface, it seems like we’ve seen a decline, but Global EV shipments are expected to hit 20.6 million in 2025. So the EV market isn’t falling flat on its face, but growth has shifted from a rapid climb to a more steady progression—a more sustainable growth.

A few factors explain why EV adoption isn’t growing as fast as expected:

• High initial costs: EVs are still more expensive than petrol or diesel cars upfront, despite claimed long-term savings.
• Charging infrastructure gaps: Some regions still lack sufficient charging networks, making ownership less convenient.
• Economic uncertainty: Consumers and businesses are delaying large purchases, including vehicles.
• Geopolitical influences: Elections and policy shifts can disrupt EV incentives, regulatory frameworks, and climate commitments, affecting rates of long-term adoption.

However, these hurdles are likely temporary. Growing pains.

As battery production scales up and government incentives shift toward infrastructure, growth will likely accelerate again.

Government policies are a vital piece of the puzzle in sustaining EV adoption and achieving climate goals. It’s the support network for those making the transition.

Strong regulatory backing has been behind EV sales, with mandates on fleet electrification, emissions reduction, and consumer incentives accelerating growth.

• The European Union’s Euro 7 emissions regulations push automakers toward EV production.
• The U.S. Inflation Reduction Act (IRA) provides tax credits and funding to promote clean vehicle adoption.
• China’s EV subsidies and production mandates have cemented its leadership in electric mobility.

If governments scale back their incentives or don’t enforce emissions targets, the EV industry could stagnate. EV market jitters become apparent. It’s the incentives that helped us get to where we are now.

Strong policy frameworks need to remain in place to ensure continued growth and meet international climate commitments. Customers outside of the regular EV buyer profile will struggle to adapt without strong incentives while costs are high.

Gartner predicts that by 2027, next-generation EVs will be cheaper to produce than petrol and diesel cars. This shift isn’t just about battery costs. Automakers are adopting centralised vehicle architectures and gigacastings—large, single-piece metal castings that simplify production. This strategy significantly reduces assembly time and material waste, making EVs cheaper to build. Volkswagen, Tesla, and a handful of other brands are already utilising this method.

Lower production costs don’t just help manufacturers, they close the price gap between EVs and internal combustion vehicles. When that happens, EV adoption will skyrocket.

Lower manufacturing costs don’t mean lower repair costs. Serious accident repairs for EVs could cost 30% more by 2027. This is down to advanced battery systems, high-voltage components, and structural changes like gigacastings making repairs harder and more expensive. Insurance companies are noticing. Some are raising premiums, others are declining coverage for certain models.

If manufacturers don’t address repairability, consumers may push back. Some EVs are quickly written off after minor crashes because battery damage makes repairs too expensive. This will affect customers’ buying habits, so automakers need to design for longevity, not just efficiency or it’s going to severely impact customers’ confidence in the product and the overall cost.

Governments around the world are pushing to localise EV production, of course, they want to secure supply chains and create jobs. However, prioritising domestic manufacturing over global decarbonisation efforts will have a knock-on effect. Protectionist policies could slow EV adoption dramatically if they lead to higher vehicle costs, supply shortages, or trade disputes.

• The U.S. IRA’s domestic content requirements limit which EVs qualify for tax incentives, potentially affecting affordability.
• The EU’s push for battery production independence could delay cost reductions.
• China’s dominance in battery supply chains gives it an edge in affordability, raising concerns for competitors.

Governments need to effectively balance local industry development with the urgency of reducing carbon emissions. After all, that’s the main argument for switching to EVs, isn’t it?

Strict localisation policies that increase EV prices or limit availability could delay climate goals rather than accelerate them.

China leads in EV adoption and manufacturing, with companies like BYD and CATL driving battery costs down, forcing competitors to innovate if they want a fighting chance.

Tesla still holds a significant share globally, but the traditional automakers like Volkswagen and GM are catching up. The long-term EV market leaders will be those that are affordable, reliable, and well-supported platforms.

EV adoption isn’t slowing down necessarily, the market is shifting toward sustainable, long-term growth. Success now depends on solving practical issues: affordability, repairability, and infrastructure. This is where some manufacturers will be affected, resulting in a decline in sales.

For automakers, the message is clear, cutting production costs isn’t enough. They need to make EVs cheaper to own and easier to repair. But it’s not all down to the manufacturers, governments need to ensure charging infrastructure keeps pace with demand. Consumers are becoming more informed about long-term ownership, resulting in increased hesitancy when making the switch.

The Trough of Disillusionment is temporary. The Slope of Enlightenment is coming. The only question is how fast the industry moves forward.

What are your EV adoption predictions? Let me know in the comments.

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