(Reuters) - Global sales of fully electric and plug-in hybrid vehicles will rise by at least 17% this year to over 20 million cars, helped by an extension of China's auto trade-in subsidies, research firm Rho Motion forecast on Tuesday.

Europe, the world's second-biggest EV market, will return to sales growth as CO2 emission targets come into effect and cheaper models become available, but the pace will remain slower than in 2023, Rho Motion Head of Research, Iola Hughes, said.

WHY IT'S IMPORTANT

Car makers look to 2025 as a transformative year as Europe introduces new targets to encourage EV adoption and China extends subsidies, while the U.S. rolls back its electrification targets under the administration of President Donald Trump.

BY THE NUMBERS

EV sales in China will likely rise more than a previous forecast for 17% growth in 2025 and boost its market dominance thanks to the extension of subsidies, Rho Motion estimates. In 2024, they jumped by a record 40% to 11 million.

Sales of Chinese-made EVs will confirm 2024 trends in Latin America, where they reached a market share of over 80%, and will continue to rise in the Asia-Pacific region and emerging markets, the firm forecasts.

For Europe, it forecasts overall sales growth of 15% from the 3 million EVs sold last year.

Carmakers still risk around 10 billion euros ($10.51 billion) in fines for missing EU emission targets, despite buying credits from EV makers through pools, it said.

That compares with 15 billion euros in previous estimates, which excluded industry developments and new emission pools.

Rho Motion sees EV sales growth of 16% in the U.S. in 2025 with limited impact from Trump's policy changes, but expects them to have long-term consequences including a worst-case-scenario 47% drop in EV battery demand by 2040.

KEY QUOTES

"In the US market, a lot of uncertainty has obviously hit the market in the last year or so, and we are expecting reduced EV forecasts," Hughes told Reuters.

"However, the shift to electric vehicles is still very much happening and we will still see growth over the next decade."

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