Global EV Outlook 2023 projects yet another record-break year for global electric car sales
Electric cars have finally made inroads into the global auto industry.
Constituting nearly one-fifth of the global car market, the share of electric cars will reach 18% in 2023 from a meager 2.5% in 2019, projects the latest edition of IEA's (International Energy Agency) annual Global Electric Vehicle Outlook 2023.
The Global EV Outlook 2023 forecasts yet another year of explosive growth for the electric car market building on the momentum set last year. It states that more than 10 million electric cars were sold worldwide in 2022 and sales are expected to grow by another 35% this year to reach 14 million. The bulk of the demand will come from three regions: China, Europe, and the United States.
"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 Fatih Birol, Executive Director, IEA.
"The trends we are witnessing have significant implications for global oil demand. The internal combustion engine has gone unrivaled 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."
Electric car sales remain concentrated in China, the EU, and the U.S.
As per the report, China leads the global electric car sales, comprising more than 50% of electric cars on the road worldwide followed by Europe and the U.S. Supportive policy push in major economies such as Fit for 55 Package in the European Union and the Inflation Reduction Act in the U.S. are anticipated to further bolster the market share of EVs by the end of 2030.
The growing demand for electric cars, the report states, is also having a "positive knock-on effect" on EV battery production and supply chain. It also added that the announced battery manufacturing projects would be more than enough to meet the global demand for EVs up to 2030.
The report underscored that while EV supply chains are expanding, at present, manufacturing remains highly concentrated in China – with the country dominating both the battery and battery component trade. The diversification of EV supply chains remains a big priority of EV policy-making in several nations around the world and these measures are expected to help improve the competitiveness of the EV market in the coming years. For example, the Net Zero Industry Act, proposed by the European Union in March 2023, has set a target that 90% of the European Union's annual battery demand is to be met by EU battery manufacturers, with a manufacturing capacity of at least 550 GWh in 2030. In India, the Production Linked Incentive (PLI) scheme aims to boost domestic manufacturing of electric vehicles and batteries. In the United States, the Inflation Reduction Act emphasizes the strengthening of domestic supply chains for EVs, EV batteries, and battery minerals, laid out in the criteria to qualify for clean vehicle tax credits.
Beyond China, Europe, and the U.S.
Beyond China, the EU, and the U.S. the report suggests there are promising signs of growth for electric vehicles. In India and Indonesia, electric car sales have more than tripled last year and more than doubled in Thailand.
"A combination of effective policies and private sector investment is likely to increase these shares in the future," IEA states.
It noted that in India, the government's USD 3.2 billion incentive programme for battery manufacturing has attracted investment worth USD 8.3 billion will augment both battery manufacturing and EV rollout significantly in the next few years.
In emerging and developing economies, electric two- and electric three-wheelers present affordable access to mobility and therefore they outnumber the sales of electric cars. For example: over half of India's three-wheeler registrations in 2022 were electric, demonstrating their growing popularity. Acknowledging these trends the report states electrification of two- and three-wheelers remains important to support sustainable developments in these regions.
Access the complete report here - Global EV Outlook 2023.