The EV Transition: A Case of ‘Creative Destruction’

The transition from gas-powered vehicles to electric vehicles (EVs) is a clear example of “creative destruction,” a process where old industries and systems give way to new technologies and opportunities. As society shifts from internal combustion engine (ICE) vehicles to EVs, traditional sectors are being disrupted while entirely new ones emerge.

Creative destruction is an economic concept that describes how new innovations disrupt and replace older technologies, industries, and business models. Coined by economist Joseph Schumpeter in the 1940s, the term captures the dual nature of progress, where creation and destruction occur simultaneously.

Creative Aspects

The rise of EVs represents one of the most significant technological transformations of the 21st century. Advances in battery chemistry, energy management software, and manufacturing processes are driving innovation at an unprecedented pace. Automakers are investing billions into electric platforms, while startups are pioneering new battery and charging solutions. This transition is also creating a surge in jobs related to EV assembly, battery production, and charging infrastructure deployment, fueling economic growth in emerging clean-tech sectors.

Beyond technology and employment, the creative side of this shift includes environmental progress. EVs have the potential to dramatically reduce greenhouse gas emissions and radically improve urban air quality, aligning industrial growth with sustainability goals.

Destructive Aspects

At the same time, creative destruction comes with real costs. The decline of ICE vehicles threatens thousands of jobs tied to traditional engine and transmission manufacturing. Mechanics who once specialized in oil changes and exhaust systems face reduced demand. Auto parts suppliers and dealerships built around the old model are struggling to adapt to new technologies and sales structures.

This process isn’t without pain. Jobs and companies tied to old technologies often disappear, communities dependent on legacy industries may struggle, and workers must adapt to new skills and economic realities. Yet, creative destruction also sparks opportunity, fostering entrepreneurship, technological progress, and new industries that improve living standards over time.

Today, creative destruction is accelerating. The shift to electric vehicles, renewable energy, artificial intelligence, and automation exemplifies how rapidly innovation can transform entire economies. While the transition can be disruptive, it is also essential to long-term growth and sustainability.

Ultimately, creative destruction reminds us that progress comes with both loss and renewal, a cycle that continually reshapes the world, pushing society toward what’s next.

3 Won the Nobel Memorial Prize in Economics for Their Research Into the Impact of Innovation on “Creative Destruction.”

ABC News reported on October 12, 2025, that The Nobel Memorial Prize in Economic Sciences has been awarded to Joel Mokyr, Philippe Aghion, and Peter Howitt for their research on the role of innovation in economic growth and the concept of “creative destruction.” Mokyr, an economic historian from Northwestern University, focuses on long-term trends using historical analysis. Aghion, from the Collège de France and the London School of Economics, and Howitt, from Brown University, applied mathematical models to understand the mechanisms of creative destruction.

The prize recognizes their work in explaining how new technologies replace older ones, a process central to economic growth. Mokyr’s research demonstrates that innovations must be scientifically explained for progress to continue, while Aghion and Howitt developed a mathematical model for how sustained growth occurs through this process. Aghion has also played a role in shaping French economic policy and co-chaired a commission on artificial intelligence in 2024. Aghion is a believer in globalization, which is the increasing interdependence of the world’s economies, cultures, and populations, driven by cross-border trade, technology, and investment flows.

Asked about current trade wars and protectionism in the world, Aghion told ABC: “I am not welcoming the protectionist way in the US. That is not good for … world growth and innovation.”

The Nobel committee highlighted that economic growth is not guaranteed and requires mechanisms to avoid stagnation.

Electrified Vehicles Now Make Up 43% of Global Auto Sales in Q1 2025, a Significant Increase From Just 9% in 2019

Visual Capitalist reported that electrified vehicles (including battery electric, plug-in hybrid, and hybrid) now make up 43% of global auto sales in Q1 2025, a significant increase from just 9% in 2019, as an example of how creative destruction is dramatically reshaping the global auto industry.

Combustion engine vehicles, which accounted for over 90% of global sales in 2019, have seen a sharp decline to 56.7% by Q1 2025. This shift is largely driven by stricter emissions regulations, corporate commitments to phase out gasoline models, and growing consumer demand for cleaner alternatives.

China continues to lead global EV adoption, accounting for more than half of all battery electric vehicle (BEV) sales in Q1 2025. Europe and the U.S. follow, with 22% and 12% of global BEV sales, respectively. While full battery electric vehicles are grabbing most of the attention, hybrids have also seen substantial growth, making up 21% of global sales in 2025, compared to just 6% in 2019. Hybrids are increasingly seen as a practical middle ground for consumers seeking some electrification benefits without fully abandoning the internal combustion engine.

EVinfo.net’s Take: The U.S. Must Push Harder to Compete with China on EVs and Ditch Protectionist Policy

The race for leadership in electric vehicles (EVs) is no longer just about cleaner transportation; it is about economic competitiveness, technological dominance, and global influence. While the United States has made progress with policies like the Inflation Reduction Act and billions in clean energy investments, China continues to surge ahead, producing EVs at a pace and scale the U.S. has yet to match. If America wants to be a global leader in the automotive industry, it must move beyond protectionism and embrace a more open, globally connected approach to trade and innovation.

China’s head start is undeniable. Its government-backed industrial strategy, large-scale manufacturing capabilities, and control over critical mineral supply chains have positioned Chinese automakers like BYD, NIO, and XPeng as global powerhouses. Meanwhile, Chinese battery companies such as CATL dominate global production and are rapidly expanding overseas partnerships. By contrast, U.S. automakers face high production costs, a fragmented charging network, and slower production that delays deployment.

Protectionist policies, while designed to safeguard domestic jobs and industries, can backfire by isolating the U.S. from the global EV ecosystem. Limiting foreign trade or imposing strict sourcing requirements may slow innovation and drive up costs for both manufacturers and consumers. To compete effectively, the U.S. needs stronger international cooperation, freer trade in critical minerals, and deeper collaboration with allied nations on battery manufacturing, technology sharing, and supply chain resilience.

Winning the EV race will require ambition, openness, and a willingness to learn from global leaders. The U.S. can still lead in innovation, design, and sustainability, but it must act decisively, investing not only in domestic capacity but also in international partnerships that accelerate progress. A step in the right direction would be to restore the federal EV tax credit. A forward-looking trade policy, not protectionism, is the key to ensuring the U.S. becomes a driving force in the global electric transportation future.