IEA: Global sales of electric vehicles increase by 75%
In its Global EV Outlook 2022, the International Energy Agency (IEA) publishes record sales of electric cars worldwide. At the same time, the organization sees challenges looming in deploying charging infrastructure and sourcing minerals for battery production. Accordingly, it offers five recommendations needed to further drive the adoption of electric vehicles in the near future.
And the winner is… China. With electric vehicle sales in 2021 reaching 6.6 million vehicles worldwide, the People’s Republic absorbed half of that growth. After the Asian tiger comes Europe, where electric vehicle registrations rose 65% to 2.3 million last year. In addition, the US market has gained ground. While electric vehicle sales fell in the previous two years, the total number increased in 2021 to 630,000 zero-emission cars.
This global trend continues to grow. With 2 million electric cars sold in the first quarter of 2022, the increase reached a staggering 75% compared to year on year. One in ten cars purchased worldwide is now electric.
According to the IEA, this means that the main drivers in place are doing their job. As a first explanation for the growth, the expanded portfolios of car manufacturers, which in 2021 offered five times more models compared to 2015. There are now 450 different electric vehicle models available on the global market. More choice inevitably leads to more customers.
But also, the supporting effect of fiscal policies and incentives plays a crucial role. The agency calculated that authorities around the world spent double the amount of subsidies for electric vehicles over the previous year, or nearly $30 billion, successfully fueling the adoption of electric cars, which are too often criticized for their high purchase prices.
The way in which these prices still stigmatize the electric car is particularly illustrated by their unequaled popularity in China, where the price difference with a conventional ICE car is not more than 10%. According to the IEA, this difference reaches 40 to 45% in the other major markets. Note that the average BEV in China is also smaller than in the rest of the world.
But the dominance of the world’s largest automotive market cannot be overlooked. They have the fastest deployment of charging infrastructure, dominate electric scooter sales (95% of global registrations) and have grown to become the number one market for electric trucks and buses. Yet the global electric truck sales figure is only 0.3%.
The contrast with developing countries like Brazil, India and Indonesia, with an EV share of just 0.5%, is stark to say the least. As emerging markets struggle with electric mobility due to high prices, limited availability and poor infrastructure, and only account for 5% of total electric car sales, IEA sees positive signals . Sales of electric vehicles are not stagnating or declining in most developing countries, but are “rising”. Although the numbers are small, the outlook is promising.
However, it is not surprising that the road ahead for the adoption of electric vehicles remains strewn with obstacles. On a positive note, recent supply chain constraints could still be dismissed as temporary, but the necessary number of public charging stations, wider adoption of heavy-duty electric trucks and demand for critical minerals pose the most challenging challenges. more influential.
As far as charging infrastructure is concerned, the energy agency observes no acute shortage with EV per charger ratios evolving at a relatively flat rate over the period 2015-2021, which means that the speed of growth of the EV fleet is accompanied by the deployment of charging stations.
But regional differences are significant, with China performing well (7 EVs per charger) and the EU doubling that figure, well above the Alternative Fuel Infrastructure Directive (AFID) stipulating an average of 10 electric vehicles per charger. In the United States, the ratio rises to 18. As the adoption of electric vehicles grows, the use of public charging stations will increase, so appropriate policy at the local level remains essential.
Supply of raw materials
The IEA also advocates for additional investments in supply capacity. With – again – China accounting for more than half of the world’s processing and refining of lithium, cobalt and graphite, the region maintains its firm grip on the value chain. Now and for a decent time to come.
As the EU finds itself racing to catch up on rolling out a Gigafactory network, while US President Joe Biden is also ambitiously pursuing the goal of making the US the largest maker of electric vehicles , the two regions will not become independent of raw materials from China, at least until the end of the decade. Lithium demand is expected to increase sixfold by then.
With several roadblocks still in the windshield, the IEA makes five recommendations to accelerate the growing trend of electric vehicles:
1. Choose tax policies and incentives wisely
The current debate in the world’s leading electric vehicle country, Norway, illustrates that direct subsidies must and will decrease as the market for electric cars matures. The IEA advocates for smart subsidies where higher taxes on ICE are used to fund EV purchases. In addition, all countries should adopt strict CO2 standards.
2. Promote adoption in developing countries
CO2 standards, policy development and demonstration projects are needed. But the focus should be on electric two-wheelers and economical city buses.
3. Support zero-emission heavy-duty vehicles
With the growth of the market for electric trucks and buses, this is mainly happening in China. However, purchasing incentives and CO2 standards should help revive the sector elsewhere.
4. Develop charging infrastructure and smart grids
Government support for home and office charging, mandatory installation of charging stations in new buildings and two-way converters should help operators achieve even faster disruption, become self-sufficient and turn electric vehicles into stabilizers network.
5. Governing the electric vehicle supply chain
Incentives should focus on a sustainable, local and traceable supply chain, favoring solutions with less impact on raw materials and supply bottlenecks, such as innovative battery chemistries, recycling and small cars.
“Few areas of the new global energy economy are as dynamic as electric vehicles. The sector’s success in setting new sales records is extremely encouraging, but there is no room for complacency,” concludes Fatih Birol, Executive Director of the IEA.