- Electric cars’ share of the overall car market is projected to increase from 14% in 2022 to 18% in 2023.
- Emerging markets are also seeing significant growth in electric vehicle sales, with countries like Thailand, India and Indonesia seeing substantial increases.
- The installation rate of charging points is falling behind the growing number of electric cars on the road, requiring swift action from policymakers.
The direction of travel certainly appears to be electric. There was a sense of jubilation in this year’s Global Electric Vehicle Outlook report from the Paris-based International Energy Agency (IEA), published at the end of April. After a record-breaking 2022, global sales of electric vehicles (EVs) are expected to surge to yet another record this year, expanding their share of the overall car market to 18%.
“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 IEA executive director Fatih Birol.
It is having a knock-on effect on the wider auto industry. Even stalwarts like Detroit-based General Motors (GM), the largest automotive manufacturer in the US and best-known for its iconic marques Buick, Cadillac and Chevrolet, have said that it wants to become a zero-tailpipe-emissions car manufacturer by 2035 and to become carbon-neutral in its global products and operations by 2040.
The refuseniks appear to be increasing oddities standing alone. At the weekend, Italian car manufacturer Ferrari said that it intended to continue to build cars with internal combustion engines until the end of the 2030s.
“I don’t want to be arrogant and impose a choice on our client,” chief executive Benedetto Vigna told the BBC. “It is the client who must choose if they want an internal combustion engine, a hybrid or an electric car.”
But there is a sense that he was calming a core base rather than speaking for company strategy. At Ferrari’s first quarter results at the beginning of May – which revealed a larger-than-expected 27% jump in first-quarter core profits and predicted a strong second quarter – the company said that it remains on track to launch its first electric supercar in 2025 and that it had signed an agreement with Italian power company Enel X to create a photovoltaic plant to serve the towns of Fiorano and Maranello from December this year with 1MW energy.
Tipping point in the auto sector
David Carlin, head of climate risk at The United Nations Environment Programme Finance Initiative in Geneva, said that the results of the IEA report showed “a tipping point in the auto sector”.
More than 10 million electric cars were sold globally last year, and sales are expected to grow by another 35% this year to reach 14 million. This means electric cars’ share of the overall car market has risen from around 4% in 2020 to 14% last year and is set to increase to 18% in 2023.
The overwhelming majority of EV sales so far have been in China, Europe and the US. China remains out in front, with its 60% share of global electric car sales last year. Put together with growth in Europe and the US of 15% and 55% respectively, they account for half of the market.
But figures are expected to grow by the end of the decade thanks to legislative pressure like the Fit for 55 decarbonisation roadmap in Europe, which aims to reduce carbon emissions by at least 55% by 2030, and the Inflation Reduction Act in the US.
The report reckons that the average share of electric cars in total sales across the three regions by 2030 could hit 60%. While the rest of the world has been slower to catch on, growth in emerging markets is significant too.
Although all of this is from a low base, the sale of EVs more than doubled in Thailand and tripled in India and Indonesia last year. The share of electric cars in terms of total sales hit 3% in Thailand and rose to 1.5% in India and Indonesia.
Here too government support is proving crucial. The Indian government, for example, is pushing ahead with carrots rather than sticks. “EV and component manufacturing is ramping up,” the report says thanks to the government’s $3.2bn incentive programme that has already attracted investments worth $8.3bn, especially in battery manufacturing.
A lack of public charging points for electric vehicles
All good news, but the elephant in the room remains charging points.
“To drive EVs forward as a viable path to a low carbon future, it is vital we have the infrastructure in place to keep up with current demand,” says David Hall, vice president of power systems at Schneider Electric UK & Ireland in Leeds.
A significant lag remains. In the UK, for example, according to the trade association the Society of Motor Manufacturers and Traders (SMMT), the number of public charge points fell from one in every 31 EVs in 2021 to one in every 36 in April this year. “The slowing installation rate of public charging points for EVs, compared with the rapidly growing number of electric cars on the road, is a worrying trend,” continues Hall.
No one is questioning the need for the infrastructure. “Deployment of infrastructure appropriate for commercial vehicles would energise uptake of the latest electric vehicles, accelerate fleet renewal to take older units off the road and help reduce the UK’s carbon footprint,” says the SMMT.
The investment in the rollout of EV infrastructure has been so rapid. Although many have been smaller-scale private equity deals, what is notable has been the large number of international deals in the past few months.
At the beginning of April, BP and ride-hailing company Uber inked a global partnership and charging deal. Although a figure has not been put on it, the deal covers all of BP’s Pulse EV 22,000 charging points in ten countries.
In mid-May, British EV power services company VivoPower International signed a deal to sell electric vehicle charging solutions group Vital EV products worldwide. Again, no figure was put on the deal, but VivoPower’s shares jumped 21% after the deal was announced.
And earlier this week (17 May), Singaporean EV charging provider Change+ – a subsidiary of Spanish renewable energy company EDP Renováveis – said it intended to develop a 5,000km EV charging highway with 45 direct current (DC) fast-charging stations across Singapore, Thailand, Cambodia, Malaysia and Vietnam.
Last week (12 May) in Berlin, ABB E-mobility, Traton, DHL Freight and Holland’s Milence jointly discussed the progress and challenges in the electrification of long-distance commercial vehicles and pushed for closer cooperation in megawatt charging.
“The technology for the transition to sustainable transportation is ready — for trucks, buses and for charging stations,” said Christian Levin, chief executive of Volkswagen subsidiary and commercial vehicle manufacturer Traton.
“We now need policymakers to act quickly and give us their widespread support so that we can build a high-performance European charging network at the required speed. This would pave the way for the European Union to reach its climate goals.”[Read more: Valeo’s landmark sustainability-linked bond sets auto sector pace]