EVs may account for 45% of PHL car sales by 2035 — IEA

ELECTRIC VEHICLES (EVs) could account for nearly half of all car sales in the Philippines by 2035 if the government sustains incentives and follows through on planned policies, according to the International Energy Agency (IEA), signaling a potential shift in the country’s automotive and energy sectors despite current affordability constraints.

In its Global EV Outlook 2026, the IEA said EVs could account for as much as 45% of car sales in the Philippines by 2035 under its Stated Policies Scenario (STEPS), up from an estimated 10% market share in 2025.

“In the Philippines, continued reliance on import duty and excise tax exemptions supports adoption in the near term,” the organization said.

The STEPS scenario assumes that governments will fully implement announced energy and transport policies and targets. Under this outlook, the Philippines would significantly outperform the Current Policies Scenario (CPS), which only factors in policies already in place and projects EVs accounting for around 15% of car sales by 2035.

“Despite limited affordability constraining wider adoption in the CPS, electric cars could reach around 45% of sales in the STEPS by 2035,” the IEA said.

Globally, EV sales are projected to reach 23 million units this year and account for nearly 30% of all cars sold worldwide, according to the report.

“Electric car sales set new records in close to 100 countries last year. The growing popularity of EVs has marked a major shift for car markets and the energy system as a whole,” IEA Executive Director Fatih Birol said in a statement.

“Looking ahead, the falls we have seen in battery prices and the potential policy responses to the current global energy crisis are set to provide further momentum in EV markets,” he added.

The IEA said Southeast Asia posted one of the fastest growth rates in EV deployment last year, with sales more than doubling to over one million units. However, the Philippines and Malaysia remained behind regional peers despite recording rapid growth.

EV sales in the Philippines reached nearly 10% of new car sales in 2025, supported by excise tax relief and import duty exemptions for electric vehicles.

The country has also rolled out the Electric Vehicle Incentive Strategy, which provides fiscal and non-fiscal incentives aimed at supporting domestic production of EVs, batteries, parts, charging infrastructure, and testing facilities.

While EV adoption is expected to continue rising across Southeast Asia, the IEA noted that incentives in several countries may gradually weaken as tariff exemptions expire.

“The Philippines is a notable exception, as its import duty exemptions are expected to remain in place through 2028 based on current policies,” the agency said.

Since the enactment of the Electric Vehicle Industry Development Act in 2022, the Philippines has pushed for wider EV adoption by requiring a higher share of EVs in corporate and government fleets.

Under the Comprehensive Roadmap for the Electric Vehicle Industry, the government targets a 10% EV fleet share by 2040 under its business-as-usual scenario, while its clean energy scenario targets at least 50%.

Patrick T. Aquino, director of the Department of Energy’s (DoE) Energy Utilization Management Bureau, earlier told BusinessWorld that EV sales are expected to grow by double digits to more than 40,000 units this year.

He said higher fuel prices linked to developments in the Middle East are expected to support stronger EV demand as consumers look for alternatives to conventional fuel-powered vehicles. — Sheldeen Joy Talavera