Forecast shows worldwide demand for battery-powered models has risen to record levels
Almost one in five cars sold worldwide this year will be an electric vehicle, the International Energy Agency has forecast, after sales already passed the 10mn mark for the first time globally.
The remarkable surge in demand for battery-powered models means electric vehicles will account for 18 per cent of global car sales compared with just 4 per cent of global car sales in 2020, according to the agency’s annual outlook.
This year sales are projected to rise to 14mn vehicles, including both battery-only models and hybrids that plug in to charge.
“They are no longer marginal or niche at all,” said Timur Gül, head of energy at the IEA.
China accounted for almost two-thirds of all electric car sales in 2022, mainly because of a subsidy programme. Europe and the US, which both also offer incentives, are the second and third-largest markets for the cars.
Decarbonising car sales is one of the pillars of reducing global greenhouse gas emissions. The EU aims to phase out almost all combustion engine-driven car sales by 2035, and the US wants half of sales to be electric by the end of this decade.
Tightening rules have prompted every major carmaker to invest heavily in zero-emission vehicles, whether electric cars or hydrogen-powered models.
Manufacturers such as Ford, Stellantis, General Motors and Mercedes-Benz are among those that have set out multibillion-dollar plans to sell only zero-emission vehicles within the coming two decades.
At the same time, new entrants such as Tesla and Chinese players including BYD are increasing competition in the electric segments, are pushing prices lower and potentially driving demand further.
This has led to an ever-widening range of electric models available in major markets, with 60 per cent of the electric options in China being large cars or sports utility vehicles, the most popular segment among motorists globally.
In total, more than 500 models of electric cars were on sale last year, more than double the number available just five years ago.
The IEA also raised its expectations for electric car sales globally, now projecting that 35 per cent of global sales will be electric in 2030, compared to a forecast just 25 per cent a year ago.
Most of the change is due to increased government EV targets introduced in the last year, particularly the US Inflation Reduction Act.
Many governments have brought in targets in order to protect their own car making industries, as well as concerns about the planet, said IEA executive director Fatih Birol.
The agency now expects 60 per cent of the sales in China, the US and Europe will be fully electric by 2030.
“The internal combustion engine has gone unrivalled for over a century, but electric vehicles are changing the status quo,” said Birol. “By 2030, they will avoid the need for at least 5mn barrels a day of oil.”
The report also highlighted the dependence of the industry on Chinese technology. About 35 per cent of exported electric vehicles came from China last year, while Europe is the country’s largest trading partner for electric cars and batteries.
The sharp rise in sales has also spurred investment in battery factories. Demand for EV batteries rose last year by 65 per cent to 550 gigawatt hours.
Despite concerns in the industry about battery manufacturing keeping pace with sales, the IEA projected the number of announced new projects meant the battery industry was on track to meet the expected needs of carmakers throughout this decade.
Smaller markets also had high growth in electric vehicle sales from a low base. Battery car sales tripled in India and Indonesia, and doubled in Thailand, where more than 3 per cent of sales are now electric. More than half of the three-wheel models sold in India last year were electric.