Everyone who follows electric vehicle news knows there is a certain amount of fear, uncertainty, and doubt (FUD) online. Consequently, it can sometimes be difficult to tell what portion of EV news is intentional or unintentional misinformation. (Additionally, there are a number of anti-EV trolls who make false claims in the comments section of various EV news articles, on social media platforms, and YouTube videos.) At CleanTechnica, fortunately, we have some writers who own and drive EVs regularly, so they have personal experiences with EVs and related knowledge.
Steve Hanley recently rebutted an attack on electric vehicles based on a huge winter traffic jam incident in Virginia, for example. When a New York Times journalist drove from the LA area to Las Vegas in an electric car and wrote what appeared to be an overly negative article about his trip’s problems, Kyle Field drove a similar route in a Tesla Model 3, proving that the NYT writer didn’t understand all the options available and nuances of EV driving. I don’t own an EV, but was able to interview a Tesla owner and a Chevy Bolt owner who tried to recreate the route the New York Times journalist drove from LA to Vegas to write that slanted piece. As individuals, the personal EV perspective is close to where we live, but we also need credible information about larger EV trends.
We also publish the most extensive EV sales reports in the world. Nonetheless, it’s always interesting to get other highly informed opinions on the market. So, it was a privilege to be able to interview Bloomberg New Energy Finance (BNEF) analyst Aleksandra O’Donovan about global EV sales trends. She has been working at BNEF since 2008 and is the Head of Electrified Transport. The below questions are based on her 2021 EV Sales report.
Global passenger EV sales increased by 94% year-on-year for 3Q 2021, to nearly 1.7 million units, which means that over one million EVs have been sold for 4 consecutive quarters.
What are some key EV growth drivers and what impediments remain that might be removed to accelerate it?
This increasing trend seems like a great success story, from both the environmental point of view and the business point of view, to be able to manufacture and sell so many units.
Do you expect this success to continue?
China and Europe are the two regions responsible for that growth. Both have very ambitious fuel economy targets in place, which put pressure on the supply side — the automakers — to produce and sell more EVs in order to comply. That drives increased model availability, expanding consumers’ choice, and therefore their interest in the market. I believe China, and most likely Europe as well, have now reached an inflection point in EV adoption, beyond which adoption is driven predominantly by organic consumer demand, rather than policy. The concerns around factors that can impede that growth will now evolve around charging infrastructure availability and supply chain constraints.
The US, for example, has been lagging behind China and Europe in EV adoption for a few years now, and the main reason for that were the rather relaxed fuel economy targets and limited model availability – but the two are closely related. Things can move quite quickly from now in the US, as the new CAFE standards are being introduced. Combined with provisions for charging in the Infrastructure Investment and Jobs Act, and hopefully tax credit cap extension in the Build Back Better Act — which we are hoping will pass in 2022 in some shape — should give the US the much needed nudge.
We believe 2022 will be another strong year in terms of EV sales. We expect more than 10 million will be sold globally, with vast majority of them being pure electric. China will lead the way again, followed by Europe, but we do expect EV sales in the US to nearly double in 2022.
European EV sales climbed by 43% year-on-year in 3Q 2021, to just under 571,000 units, and 21% of passenger vehicles sold in the region came with a plug, which was the highest level of adoption so far on record.
Was such high growth expected, and what is driving it? Do you expect continued growth at a similar rate?
High growth was expected in Europe, but most likely the region has passed an inflection point in EV adoption, and past that point things get tricky to predict. Right now we estimate Europe will account for 30% of global EV sales in 2022, with 3.2 million new EVs sold — a 37% increase compared with 2021. Tightening CO2 targets will no longer be the main driver, as they will not become more stringent until 2025. But, the European Commission is nearing the introduction of its phase-out target for ICE vehicle sales in the region, and some of the major European car markets — the UK, France, Spain and most recently Italy — have already committed to do so by 2035 or 2040. Hence, automakers will continue to prioritize investments in EVs to satisfy demand and to ensure they have the capacity to meet those long-term targets.
Which European countries are the primary EV adopters, and why are they leading?
Germany, France, and the UK accounted for 58% of all EV sales in 3Q 2021. In Norway, EV share of sales reached a record high of 91%, followed by Sweden at 49% and Denmark at 39%. But, in 3Q there were 15 countries in Europe with an EV share of sales greater than 10%, out of which, 12 countries – including the biggest car markets in the region, like Germany and the UK — exceeded 20% EV share of sales. Germany continued to pull ahead, with EV sales in the country being at least two times higher in the third quarter than any other country in Europe.
Chinese EV sales increased to record high levels in 3Q 2021, almost tripling year-on-year to 882,000 units.
Is this increase due to consumer interest and government incentives, or other factors? Do you expect Chinese EVs to continue growing at a similar rate?
China was the biggest surprise in 2021, with EV sales quickly moving beyond compliance. China’s 2021 sales tally was more than the global sales total for 2020. Rapid fleet electrification, growing consumer demand and expansion of charging infrastructure helped drive up EV sales. We expect China to account for over half of global EV sales in 2022, with some 5.7 million being sold there, as domestic automakers continue to ramp up their EV model offerings to meet soaring demand. Additionally, Chinese purchase subsidies are set to expire at the end of 2022, so sales in the final quarter of this year will likely be very strong.
North American EV sales increased by 63% year-on-year in 3Q 2021 to 179,000 units.
Do you expect that with the White House’s much greater support of EVs than by former president Donald Trump, US EV sales will continue to grow and begin to catch up to EV sales in China and Europe?
Yes, the main reason for US EV sales lagging behind China or Europe, is the lack of that supply side pressure in the form of stringent fuel economy targets. Biden’s new CAFE standards, combined with the support for charging infrastructure build out, are a much needed first step in pushing the US closer to the two regions. The last thing pending is the EV tax credit provisions in the Build Back Better Act, so hopefully this will also pass in 2022.
We expect EV sales in the US to nearly double in 2022 to reach 1.2 million. Tesla’s Gigafactory in Texas will add significant manufacturing capacity, freeing up the company to meet growing domestic demand. And electric pickup truck and SUV releases from other automakers — such as Ford, GM, and Rivian — will also contribute to record EV sales in the country in 2022.
What might be holding US EV sales back?
Historically, lack of stringent fuel economy targets and limited model availability — especially in those very important for the US consumers segments, like SUV and pickup trucks. Right now, failing to pass the Back Better Act left some $20 billion (according to the Joint Committee on Taxation) in EV tax incentives in legislative limbo. This is a challenge for the US EV market for two reasons. First, without these incentives it will be harder for consumers to afford EVs in the short term. Second, it may ultimately prompt automakers to push back harder on new fuel economy requirements — the centerpiece of Biden’s electrification agenda — which they argue may be too difficult to meet without more support for buyers.
What is happening in the smaller EV markets, such as India, Africa, and South America?
EV adoption is still negligible in those markets, but India has become a much more interesting story lately. India’s electric vehicle sales more than tripled in 3Q 2021 when compared to a year earlier and crossed 4,100 units. Nearly all EVs sold in India were battery-electric in 3Q 2021, and the demand for compact SUV models from Tata Motors or MG Motor is picking up.
Additionally, back in September 2021, India announced a $3.5 billion ‘production-linked incentive’ (PLI) scheme to support the domestic manufacturing of battery electric and fuel cell vehicles. This policy will likely benefit large domestic manufacturers that are planning to increase their investment in EVs.
With India’s huge population and severe air pollution in some Indian cities, would you expect there will be more EV adoption soon?
There are a few factors driving that recent uptick in EV sales in India — strong consumer interest in electric SUVs, policy support — both on federal and state level — and increasing demand from ride-hailing companies. But, even though more automakers are set to introduce new models in 2022, these will still be primarily SUVs and luxury cars. For India to really accelerate, more mass market, cheaper EVs need to be available to consumers.