ELECTRIC VEHICLES (EVs) could account for nearly half of all vehicles sold in the Philippines by 2035 if the government keeps the incentive money and follows the planned policies, according to the International Energy Agency (IEA), showing the potential for change in the country’s automotive and energy sectors despite current affordability issues.
In the Global EV Outlook 2026, the IEA said EVs could account for 45% of vehicle sales in the Philippines by 2035 under the Stated Policies Scenario (STEPS), rising from 10% market share in 2025.
“In the Philippines, continued reliance on tax incentives and excise duty exemptions supports recovery in the near term,” the agency said.
The STEPS scenario assumes that governments will fully implement announced energy and transport policies and targets. Under this vision, the Philippines will significantly exceed the Current Policies Scenario (CPS), which is only a factor in existing policies and projects for EVs to account for approximately 15% of vehicle sales by 2035.
“Despite relative cost-effectiveness depressing widespread adoption in CPS, electric vehicles could reach around 45% of sales in STEPS by 2035,” the IEA said.
Globally, EV sales are expected to reach 23 million this year and account for about 30% of all vehicles sold worldwide, according to the report.
“Sales of electric vehicles set new records in nearly 100 countries last year. The growing popularity of EVs has marked a major change in the automotive market and the energy system as a whole,” IEA Executive Director Fatih Birol said in a statement.
“Looking ahead, the fall we’ve seen in battery prices and potential policy responses to the current global energy crisis are set to provide a boost to the EV market,” he added.
The IEA said Southeast Asia posted the fastest growth rate in EV consumption last year, with sales doubling to more than a million units. However, the Philippines and Malaysia lagged behind their regional peers despite recording rapid growth.
EV sales in the Philippines are expected to reach nearly 10% of new vehicle sales by 2025, supported by excise duty relief and exemptions from import duties for electric vehicles.
The country also introduced the Electric Vehicle Incentive Strategy, which provides financial and non-financial incentives aimed at supporting the domestic production of EVs, batteries, components, charging infrastructure, and testing facilities.
While EV adoption is expected to continue to rise across Southeast Asia, the IEA noted that incentives in several countries may gradually weaken as tax exemptions expire.
“The Philippines is very different, as the import exemption is expected to continue until 2028 based on current policies,” the agency said.
Since the enactment of the 2022 Electric Vehicle Industry Development Act, the Philippines has been pushing for wider EV adoption by requiring a higher share of EVs in corporate and government sectors.
Under the Comprehensive Guideline for the Electric Vehicle Industry, the government aims for an EV fleet share of 10% by 2040 under its business-as-usual scenario, while the clean energy scenario targets at least 50%.
Patrick T. Aquino, director of the Department of Energy’s (DoE) Energy Utilization Management Bureau, previously 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 associated with the Middle East’s development are expected to support strong demand for EVs as consumers seek alternatives to conventional gasoline-powered vehicles. – Sheldeen Joy Talavera
