Eric Ng Shing and Roy Santana

Electric vehicles (EVs) are radically transforming the transport sector, redefining the automotive market, and reshaping global trade in transport equipment. By the end of 2023, EVs accounted for more than a third of all car imports in value terms.

Recent years have seen a dramatic increase in sales of various types of EVs — including hybrid electric vehicles (HEV), plug-in hybrid electric vehicles (PHEV) and battery electric vehicles (BEV), but they were not separately considered in the trade statistics. As a result, in 2017 the World Customs Organization implemented an amendment to the classification system for traded goods — the Harmonized System (HS) introduced new categories to differentiate between traditional internal combustion engine (ICE) vehicles and their electrified alternatives.

Prior to this, the HS classified passenger vehicles by the number of passengers they could carry and the type and size of their internal combustion engine.(1)

The classification of hybrids and plug-in hybrids was not straightforward due to the fact that they are a combination of an internal combustion engine and an electric motor used for propulsion. The exact classification could depend on the primary source of power for the vehicle and specific features. In some economies, certain cars were classified together with traditional internal combustion engine vehicles, making it impossible to derive internationally comparable statistics.

The 2017 amendment to the HS resolved these problems by creating subcategories for vehicles with exclusively an internal combustion gasoline engine, and other subheadings for vehicles with exclusively diesel- or semi-diesel-engines (i.e. with no electric motor used for propulsion). More importantly, new subheadings were created to classify and monitor the following:

• Vehicles that have both a gasoline engine and an electric motor used for propulsion, and that do not charge by being plugged in to an external electric charging source (gasoline hybrids)
• Vehicles with both a diesel or semi-diesel engine and electric motor used for propulsion that do not charge by being plugged in to an external electric charging source (diesel hybrids)
• Vehicles that have both a gasoline engine and an electric motor used for propulsion, and that can be charged by being plugged in to an external electric charging source (gasoline plug-in hybrid)
• Vehicles that have both a diesel or semi-diesel engine and an electric motor used for propulsion, and that can be charged by being plugged in to an external electric charging source (diesel plug-in hybrids)
• Vehicles equipped solely with electric motors for propulsion, that are primarily powered by batteries or other sources, such as fuel cells (battery electric vehicles)

As a result of these amendments to the HS, the international community now has a detailed breakdown in the trade statistics that allows it to monitor trade in various types of EVs.

A graphical representation of the change in these HS headings and sub-headings can be found in the HSTracker, a toolset developed by the WTO with the support of the WCO.

Imports

Import data between 2017 and 2023 show a dramatic shift towards electric vehicles in general (see Figure 1). Initially, hybrid, plug-in hybrid and battery electric vehicles represented a modest fraction of total car imports by value, starting at about 2.5 per cent, 0.8 per cent and 1 per cent, respectively. However, trade in EVs has grown significantly since then.

Hybrids and plug-in hybrids have shown consistent growth, with hybrids initially experiencing more dynamic growth post-2020. However, battery EVs exhibited the highest growth, with a steep increase in import share post-2020, bringing the value of imports close to that of hybrids and indicating a significant shift towards fully electric models.

By the end of 2023, EVs accounted for more than a third of all car imports in value terms. Although the growth rate appeared to slow down in 2023, the pronounced upward trend for EVs, particularly battery EVs, signifies a substantial change in demand and could suggest the direction in which the global automotive industry may go in the future.

Figure 2 reveals significant growth in the value of EV imports overall.

By 2023, the United States was the leading global importer of EVs, with battery, hybrid and plug-in hybrid EVs recording imports of US$ 19 billion, nearly US$ 17.8 billion and US$ 6.9 billion, respectively. These figures represent more than one-fifth of total US car imports by value and signal an increasing adoption of electric mobility.

Imports of EVs also grew considerably in some European countries and in the Republic of Korea. In particular, Belgium, the Netherlands, Sweden and Switzerland have reached a tipping point at which the import value of electric cars has overtaken that of traditional internal combustion engine vehicles. As Belgium and the Netherlands are home to the two busiest ports in Europe, they may act as a transit point into other European countries.

Exports

Figure 3 highlights significant growth once again in the number of EV exports.

While the total number of vehicles exported remained relatively stable, with over 40 million units exported in 2017, compared to over 43 million units exported in 2023, the types of vehicles exported underwent a dramatic change.

In 2017, Germany and Japan were the top exporters of passenger vehicles, but the proportion of EVs they exported was negligible. In contrast, in 2023 approximately one-third of the car exports from these countries were EVs. By increasing its emphasis on the export of hybrids, Japan has become the top global exporter of these vehicles.

In 2023, China has become the leading exporter of passenger vehicles overall, with over 5.4 million units exported, of which roughly 1.8 million units — or roughly a third — were EVs. It exported over 1.5 million battery EVs, meaning that one out of every four battery EVs exported in 2023 originated in China.

Import duties

Figure 4 suggests that some WTO members use most-favoured-nation (MFN) tariffs as a tool to expedite the availability of EVs, but often differentiating by the type of EV. If the 27 members of the European Union are counted as one WTO member, the data available reveal that one in three WTO members allow battery EVs to be imported duty-free.

In comparison, hybrids and plug-in hybrid receive duty-free treatment in one out of four WTO members, while internal combustion engine vehicles receive MFN duty-free treatment in only one out of six.

If only fully finished new cars are considered, and ambulances and hearses are excluded, the data suggest that 40 economies out of 123 apply lower duties on battery EVs than on internal combustion engine vehicles, and that the remaining economies apply equal duties on both types of cars.

This tariff structure suggests that some WTO members are orienting policies to promote the adoption of battery and hybrid EVs in preference to internal combustion engine cars, while other members do not differentiate in their tariff treatment and may instead be using other types of policies, such as subsidies or technical regulations to promote such adoption.

Note

1. For example, passenger vehicles designed for the transport of less than 10 persons and a gasoline engine (“with spark ignition internal combustion reciprocating piston engine”) used to be classified under HS subheadings 8703.21-.24, and those with a diesel engine (“with compression-ignition internal combustion piston engine (diesel or semi-diesel)”) under HS subheadings 8703.31-.33. Passenger vehicles with other types of engines, including fully electric vehicles were classified under the residual “other” category of subheading 8703.90. back to text