IEA Predicts Electric Vehicle Sales Will Rise 35% This Year
Every year, the International Energy Agency surveys the electric car market and the state of EV charging infrastructure and distills its findings into its Global Electric Vehicle Outlook, a publication that identifies and discusses recent developments in electric mobility across the globe. It is developed with the support of the members of the Electric Vehicles Initiative. In this year’s report, the IEA predicts global sales of electric cars are set to surge to another record this year, increasing their share of the overall car market to close to nearly 20% of all new car sales.
The data collected by the IEA shows more than 10 million electric vehicle sales worldwide in 2022 and that sales are expected to grow by another 35% this year to reach 14 million. This explosive growth means electric vehicle share of the overall car market has risen from around 4% in 2020 to 14% in 2022 and is likely to increase to 18% this year, based on the latest IEA projections.
“Electric vehicles are one of the driving forces in the new global energy economy that is rapidly emerging — and they are bringing about a historic transformation of the car manufacturing industry worldwide,” said IEA Executive Director Fatih Birol. “The trends we are witnessing have significant implications for global oil demand. The internal combustion engine has gone unrivalled for over a century, but electric vehicles are changing the status quo. By 2030, they will avoid the need for at least 5 million barrels a day of oil. Cars are just the first wave. Electric buses and trucks will follow soon.”
The majority of electric car sales to date are mainly concentrated in three markets — China, Europe, and the United States. China is the frontrunner, with 60% of global electric car sales in 2022. Today, more than half of all electric cars on the road worldwide are in China. Europe and the United States, the second and third largest markets, both saw strong growth in 2022, with sales increasing 15% and 55% respectively.
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Electric Vehicle Policies Matter
Ambitious policy programs in major economies, such as the Fit for 55 package in the European Union and the Inflation Reduction Act in the United States, are expected to further increase electric vehicle market share for the remainder of this decade and beyond. By 2030, the average share of electric cars in total sales across China, the EU, and the United States is expected to increase to around 60%.
The encouraging trends are also having positive knock-on effects for battery production and supply chains. The new report highlights that announced battery manufacturing projects would be more than enough to meet demand for electric vehicles to 2030 in the IEA’s Net Zero Emissions by 2050 Scenario. However, manufacturing remains highly concentrated, with China dominating the battery and component trade. It also increased its share of global electric car exports to more than 35% last year.
Other economies have announced policies to foster domestic industries that will improve their competitiveness in the electric vehicle market in the near future. The EU’s Net Zero Industry Act aims for nearly 90% of annual battery demand to be met by domestic battery manufacturers. Similarly, the US Inflation Reduction Act emphasizes strengthening domestic supply chains for EVs, batteries, and minerals. Between August 2022, when the Inflation Reduction Act was passed, and March 2023, major EV and battery makers announced investments totaling at least $52 billion in EV supply chains in North America.
Despite a concentration of electric car sales and manufacturing in only a few big markets, there are promising signs in other regions. Electric car sales more than tripled in India and Indonesia last year and more than doubled in Thailand, albeit from very low starting numbers. A combination of effective policies and private sector investment is likely to increase these shares in the future. In India, the government’s $3.2 billion incentive program has attracted investments worth $8.3 billion and is expected to increasing battery manufacturing and EV rollout substantially in the coming years.
In emerging and developing economies, the most dynamic area of electric mobility is two- and three-wheel vehicles, which far outnumber cars. More than half of India’s three-wheeler registrations in 2022 were electric, demonstrating their growing popularity. In many developing economies, two- or three-wheel vehicles offer an affordable way to get access to mobility, meaning their electrification is important to support sustainable development.
Different Strokes For Different Folks
While the IEA report is good news for those of us rooting for the EV revolution to succeed, it does not illuminate the differences in driver preferences in various markets. GM announced this week that it is ending production of the Chevy Bolt EV and Bolt EUV by the end of this year. Chevrolet sold nearly 20,000 of them in the first quarter of 2023, so that’s 80,000 affordable electric vehicle sales a year that won’t be happening in the US soon.
By contrast, my colleague Remeredzai Joseph Kuhudzai wrote recently that the most popular car segments in the UK remain super-minis and small family models, which account for nearly 6 in 10 cars in service — cars that most manufacturers believe Americans won’t buy. One might argue that the Bolt sales record proves exactly the opposite. Not everyone wants a 9,000 lb vehicle. Some may actually prefer something smaller, lighter, and more nimble — that costs a lot less, too.
Polls are always tricky to interpret, but a recent survey by MINI USA found about half of all American drivers would consider an electric vehicle (car or truck) for their next ride. But more than half of those who participated in the survey said they would only consider an electric vehicle if it cost the same or less than a conventional car.
The Bolt today is precisely the compact, affordable electric car people tell pollsters they want, yet soon it will go out of production with no comparably priced model from General Motors to take its place. Tesla may or may not be working on a new model that will start at around $25,000, but if so, it is years away from production.
Then there is the advent of battery-powered medium- and heavy-duty trucks on the horizon. While their total numbers are much lower than passenger cars and two-wheeled vehicles, they contribute a disproportionate amount of the atmospheric pollution from the transportation sector because they are in constant use daily while most passenger vehicles sit idle most of the time, and because they are so big and heavy. New rules in California — which may influence policies in other states — require significantly more medium and heavy trucks to be electric starting next year.
There is no guarantee the predictions by the IEA are accurate, but the trend toward electric vehicles is definitely accelerating, thanks in large measure to substantial government support. The transition is not a choice, it is a necessity. A significant percentage of the pollution associated with global heating comes from the transportation sector. If the IEA is correct, transportation emissions will soon be trending down as sales of electric vehicles increase.
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