International Energy Agency Gives Insight into the EV Market
According to the International Energy Agency's Global Outlook Report 2024, the production of EV sales will continue their upward trajectory, with projections indicating that around 17 million units could be sold in 2024, accounting for more than one in five cars sold worldwide.
The growth signifies a significant shift towards EVs becoming a mass-market product across a growing number of countries. Despite challenges such as tight margins, volatile battery metal prices, high inflation and the phase-out of purchase incentives in some regions, global sales data remain robust. In the first quarter of 2024, electric car sales grew by approximately 25% compared to the same period in 2023, mirroring the year-on-year growth seen in early 2022.
Regional market shares and growth factors
The market share of electric cars is expected to reach up to 45% in China, 25% in Europe and over 11% in the United States by 2024. The growth is driven by competition among manufacturers, decreasing battery and car prices and ongoing policy support.
The year 2023 was a record year, with global sales nearing 14 million, representing 18% of all cars sold, up from 14% in 2022.
The 35% year-on-year increase demonstrates robust growth, indicating a transition from early adopters to the mass market. In 2023, over 250,000 electric cars were sold globally every week, starkly contrasting the annual sales a decade ago.
Emerging markets and policy support
China, Europe and the United States dominated the electric car market in 2023, accounting for 60%, 25% and 10% of global sales, respectively. However, emerging markets are starting to show significant growth. In countries like Vietnam and Thailand, electric car sales reached around 15% and 10% of all cars sold, respectively.
In larger emerging economies such as India, Brazil, Indonesia, Malaysia and Thailand, policy measures like purchase subsidies and EV and battery manufacturing incentives are crucial for growth.
For instance, India's Production Linked Incentives (PLI) Scheme supports domestic manufacturing, while the US Inflation Reduction Act (IRA) stimulates EV supply chains in Mexico.
The Oxford Business Group contends, "Several emerging markets, particularly in MENA, are aggressively expanding their EV manufacturing capabilities. Investments in local production and technological advancements are crucial to their strategy, supported by governmental policies and foreign direct investments."
Future projections and policy scenarios
The IEA predicts that by 2035, every other car sold globally will be electric, based on current energy, climate and industrial policy settings. By 2030, nearly one in three cars on Chinese roads and one in five in both the United States and European Union are expected to be electric.
The rapid uptake of EVs across various vehicle types could significantly reduce oil demand, avoiding 6 million barrels per day (mb/d) by 2030 and over 10 mb/d by 2035. Recent policy developments, such as new emissions standards in Canada, the EU and the US and industrial incentives like the US IRA and the EU Net Zero Industry Act, bolster the transition.
Investment and manufacturing capacity
Expectations of solid growth are driving substantial investment in the EV supply chain. From 2022 to 2023, investment announcements in EV and battery manufacturing totalled nearly US$500b, with around 40% already committed.
Over 20 major car manufacturers, representing more than 90% of global car sales in 2023, have set electrification targets, which could result in the sale of over 40 million electric cars by 2030.
Graham Evans, Director of Auto Supply Chain & Technology at S&P Global Mobility, noted that the shift toward in-house development of electrified propulsion components by original equipment manufacturers (OEMs) is becoming more pronounced.
Driving this move is the need for more control over the critical propulsion value chain, which presents both technical challenges and potential supply chain constraints. He further pointed out that OEMs are forming increased partnerships and alliances to mitigate these challenges and enhance their control over the supply chain.
Significant investment has been made in battery manufacturing capacity to ensure it can meet the growing demand. In 2023, global EV battery manufacturing capacity was about 2.2 terawatt-hours, well above the demand of 750 gigawatt-hours.
Affordability and market dynamics
While electric cars are becoming cheaper, especially in China, they remain more expensive than their internal combustion engine counterparts in other markets.
In China, over 60% of electric cars sold in 2023 were cheaper than their combustion engine equivalents. However, electric cars in Europe and the United States were still 10% to 50% more expensive, depending on the country and car segment. Achieving price parity by 2030 will depend on various market factors, including declining EV battery prices and introducing more affordable models.
Second-hand market and recycling
As the EV market matures, the availability of second-hand electric cars is increasing. In 2023, the demand for used electric cars included around 800,000 units in China, 400,000 in the United States and over 450,000 across major European countries.
The prices of used electric cars are falling, making them more competitive with combustion engine equivalents.
Ford's CEO, Jim Farley, remarked, "We are seeing a rapid increase in the demand for used electric vehicles, driven by a combination of increased supply and consumer awareness of the benefits of EVs."
Jim mentioned that Ford is investing in certified pre-owned programs to guarantee quality and reliability, aiming to bolster consumer confidence in second-hand EVs.
Additionally, the battery recycling industry is preparing for the 2030s, with global recycling capacity expected to exceed 1,500 gigawatt-hours by 2030 if all announced projects materialise.
The capacity is crucial for supply chain sustainability and security, as EV battery retirement is set to proliferate in the second half of the 2030s.
In conclusion, the electric car market is experiencing significant growth, supported by policy measures, investment in the supply chain and introducing more affordable models.
As EVs become more prevalent, their impact on the automotive industry and global oil demand will continue to grow, paving the way for a more sustainable transportation future.
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