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Close Look: April 2023

one year ago

Roadmap to electric vehicles: are we there yet?

In the run up to the COP26 climate change conference in 2021, major economies rushed to outdo each other on sustainability. Plans were announced to dramatically reduce the production of internal combustion engine (ICE) cars over the coming decade.  With transportation a major emitter of carbon, this was flagged as a key staging post on the road to achieving net zero targets by 2050. A couple of years down the track, we review the latest data on the transition to electric vehicles (EVs) or ‘sustainable mobility’.

Sales of EVs enjoyed 55% growth in 2022, despite a sluggish car market worldwide. With a 13% share of the global light vehicle market, EV sales are now roughly 75:25 split between battery only and plug-in hybrids. More than five hundred EV models were available last year; that’s double the number of five years ago, and sales exceeded 10 million cars for the first time. The International Energy Agency (IEA) forecasts that this year, boosted by incentives, almost one in five cars sold globally will be an EV.

US car manufacturers have pledged to make 40-50% of cars sold electric by 2030. But EVs can be expensive to buy and stimulating customer demand is critical. Despite subsidies of up to $7,500 per car under President Biden’s green economy legislation (Inflation Reduction Act), take up in the US is still off the pace. EVs represented only 7% of US light vehicle sales in 2022, whereas in Europe that figure was just over 20%. However, the European Commission’s proposed ban on ICE vehicle production by 2035 has been met by challenges. Germany has demanded an exception for combustion engine cars run on e-fuels, while Italy is seeking a similar deal for biofuels.

The emerging markets are currently leading the race, albeit from a low base, with Indonesia and India showing the fastest growth. The Chinese market has grown rapidly, with EVs now representing 27% of new vehicle sales. Chinese auto manufacturer BYD (Build Your Dreams) is the biggest EV producer in the world, having knocked Tesla into second place. And China is by far the world’s biggest EV market, with 57% of the global total sold in 2022. It is also the biggest EV producer with 6.7m vehicles, or 64% of global output, produced in China last year. Exports from China have exploded, and include not only Chinese, but also western brands, such as Tesla, Volvo and BMW.

The IEA has hiked its forecasts for electric cars, now looking for EVs to be 35% of global car sales in 2030. That compares to only 25% forecast a year ago. Despite these dazzling numbers, sticking points remain.  Longer journeys by EV can still be plagued by queues at public charging points. And insurance issues have recently arisen for vehicles whose battery life might end prematurely. Yet despite these bumps in the road, sustainable mobility will likely be the only way forward, if Paris Agreement climate targets are to be met.

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