IEA: worldwide sales of EVs rise with 75%
In its Global EV Outlook 2022, the International Energy Agency (IEA) posts record-breaking sales for electric cars globally. At the same time, the organisation sees challenges looming in the roll-out of charging infrastructure and the mineral supply for battery production. Accordingly, it puts forward five necessary recommendations to further spur the EV uptake in the near future.
And the winner is... China. With EV sales in 2021 rising to 6.6 million vehicles globally, the People’s Republic absorbed half of that growth. Following the Asian tiger is Europe, where registrations of EVs last year rose by 65% to 2.3 million. Also, the US market gained traction. Whilst EV sales were sliding in the two previous years, the total number grew in 2021 to 630,000 zero-emission cars.
That global trend keeps swelling. With 2 million electric cars sold during the first quarter of 2022, the surge arrives at a staggering 75% in a year-to-year comparison. One out of ten cars purchased worldwide is now electric.
Factors for success
According to the IEA, it means that the key drivers put in place are doing their job. As a first explanation for the growth comes the expanded portfolios of car makers, which offered in 2021 five times more models compared to 2015. There are now 450 different EV models available on the worldwide market. More choice leads, inevitably, to more customers.
But also, the supportive effect of tax policies and incentives plays a crucial role. The agency calculated that authorities worldwide spent double the amount of subsidies on EVs than the year before, nearly USD 30 billion, successfully - well - fueling the adoption of electric cars, which are all too often criticised for their high purchase prices.
How these prices are still stigmatising the electric car is, in particular, illustrated by their unrivalled popularity in China, where the price gap with a conventional ICE car isn’t wider than 10%. According to the IEA, that difference rushes to 40-45% in 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 car market can’t be neglected. They have the fastest roll-out of charging infrastructure, reign over electric scooter sales (95% of worldwide registrations) and grew out to become the number one market for electric heavy-duty trucks and buses. Yet, the figure for global electric truck sales is only 0.3%.
The contrast with developing countries like Brazil, India and Indonesia, with an EV share of only 0.5%, is stark, to say the least. While 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, the IEA observes positive signals. EV sales aren’t stagnating or decreasing in most developing countries but “spiking”. Though the numbers may be small, the outlook is promising.
However, it is not a surprise that the path ahead for EV adoption remains full of hurdles. On a positive note, the recent supply chain constraints might still be discarded as temporary, but the necessary amount of public charging stations, the broader adoption of heavy-duty electric trucks and the demand for critical minerals pose the most influential challenges.
As for charging infrastructure, the energy agency observes no acute shortage with EV per charger ratios evolving at a relatively flat pace over the period 2015-2021, meaning that the speed of EV stock growth is matched by the deployment of charging stations.
But regional differences are wide, with China performing good (7 EVs per charger) and the EU doubling that figure, landing far above the Alternative Fuel Infrastructure Directive (AFID) stipulating an average of 10 EVs per charger. In the US, the ratio mounts to 18. As EV adoption grows further, the reliance on public charging stations will increase, so an appropriate policy at local level remains quintessential.
Raw materials supply
The IEA also pleads for additional investments in supply capacity. With - again - China accounting for over half of the worldwide lithium, cobalt and graphite processing and refining, 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 in the deployment of a Gigafactory network, whilst US President Joe Biden is likewise ambitiously chasing the goal of turning the USA into the biggest manufacturer of EVs, both regions will not become independent from raw materials originating from China, at least until the end of the decade. The demand for lithium is projected to increase six-fold by then.
With several roadblocks still in the windshield, the IEA makes five recommendations to accelerate the growing EV trend:
1. Choose policies and tax incentives wisely
The current debate in the world’s leading EV country, Norway, exemplifies that direct subsidies must and will decrease when the electric car market matures. The IEA pleads for intelligent subsidies where higher taxes on ICE are used to fund EV purchases. In addition, all countries should adopt stringent CO2 standards.
2. Promote adoption in developing countries
CO2 standards, policy development and demonstration projects are needed. But the focus should be on cost-effective electric two-wheelers and urban buses.
3. Support zero-emission heavy-duty vehicles
With the market for electric trucks and buses rising, it is predominantly happening in China. However, purchase incentives and CO2 standards must help kickstart the sector elsewhere.
4. Expand charging infrastructure and smart grids
Governmental support for domestic and office charging, mandatory installation of charging stations in new buildings and bidirectional converters must help operators reach break even more rapidly, become self-supportive and turn EVs into grid stabilisers.
5. Govern the EV supply chain
Incentives should focus on a sustainable, local and traceable supply chain, favouring solutions with less impact on raw materials and supply bottlenecks, like innovative battery chemistries, recycling and smaller 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 IEA Executive Director Fatih Birol.