Rumours of the demise of the EV market are greatly exaggerated! Breathless headlines around the world over the last few months have trumpeted an imminent collapse in the EV market. But that is far from the truth; in fact, EV sales are still rocketing.
The International Energy Agency (IEA) says 17m vehicles will be sold this year, up more than 20% compared with 2023. In any other global market, an increase of this size would be seen as a huge triumph. But when you look at the 31% growth in 2023 and 60% in 2022, it’s easy to draw negative conclusions.
Speaking to The Guardian in the UK, Fatih Birol, the energy economist who heads the IEA, said that there was clear momentum for the transition.
“Rather than tapering off, the global EV revolution appears to be gearing up for a new phase of growth,” he said.
“The wave of investment in battery manufacturing suggests the EV supply chain is advancing to meet automakers’ ambitious plans for expansion. As a result, the share of EVs on the roads is expected to continue to climb rapidly.”
In the first quarter of 2024 there were more sales of electric and plug-in hybrids (which combine a petrol engine with a battery) than in the whole of 2020, the IEA said.
Graph shows the proportion of cars sold that are electrified. Source Our World In Data.
Let’s look back at 2023. Nearly one in five cars sold during the year was electrified – either full EV or a hybrid.
There were, of course, large differences by country. In Norway, more than 90% of new cars were electric. In China, it was almost 40%; in the European Union, 22%; and in the United States, just 10%.
It is true that growth is more sluggish in certain countries, like the UK and Germany. This is due primarily to the withdrawal of subsidies, explains Dylan Khoo, Electric Vehicles Industry Analyst at ABI Research. This has contributed to the negative narrative around EVs as these are Europe’s largest car markets, but two-thirds of European countries’ growth was higher in 2023 than in the year prior.
Sales problems in the U.S. can be attributed to an unsustainable reliance on Tesla, which is faltering as the supply of early adopters dwindles and the market moves toward mass adoption.
In China, meanwhile, the market is now in a period of linear growth as EVs are expected to make up over half of all car sales by 2025. BYD has continued to drive down the price of EVs to the point that in many segments they are now the same price or cheaper than their Internal Combustion Engine (ICE) equivalents. The Chinese EV transition is in full swing, operating under its own steam and no longer dependent on government subsidies.
“China has set an example for the world to follow and demonstrated how to win over the public with EVs. If automakers can make a wide range of EVs at an attractive price, people will buy them. It is here that Europe and North America are failing, a situation unlikely to be rectified until new battery gigafactories become operational and more models become available in the latter half of the decade,” concludes Khoo.
Across the GCC, EVs are rapidly gaining market share, stimulated by exciting new vehicles coming to market and an expanding charging infrastructure.
