Electric car sales are expected to break another record this year, increasing their percentage of the global car market to about one-fifth and transforming the auto industry, which has repercussions for the energy sector, notably oil.
The IEA’s annual Global Electric Vehicle Outlook reports that more than 10 million electric cars were sold worldwide in 2022 and that sales are expected to climb 35% this year to 14 million. Based on IEA forecasts, electric cars’ proportion of the car market will jump to 18% this year from 14% in 2022.
“Electric vehicles are one of the driving forces in the new global energy economy that is rapidly emerging – and they are transforming the car manufacturing industry worldwide,” said IEA Executive Director Fatih Birol. Our trends affect global oil demand. Electric cars are challenging the century-old internal combustion engine. They will save 5 million barrels of oil per day by 2030. Electric buses and trucks will follow cars.
China, Europe, and the US have sold most electric cars. China led global electric car sales in 2022 by 60%. China has over half the world’s electric cars. Sales rose 15% and 55% in 2022 in Europe and the US, the second and third largest markets.
The Fit for 55 packages in the EU and the Inflation Reduction Act in the US is likely to boost the electric car market share this decade and beyond. China, the EU, and the US will sell 60% of electric automobiles by 2030.
Positive trends are also benefiting battery production and supply networks. The IEA’s Net Zero Emissions by 2050 Scenario shows that announced battery manufacturing facilities may meet electric car demand until 2030. China dominates the battery and component trade and exported over 35% of electric cars last year.
Other economies have pledged to support domestic EV industry growth. The EU’s Net Zero Industry Act requires domestic battery makers to meet 90% of yearly battery demand. The US Inflation Reduction Act prioritizes domestic EV, battery, and mineral supply chains. Between August 2022, when the Inflation Reduction Act was implemented, and March 2023, major EV and battery companies invested at least USD 52 billion in North American EV supply chains.
Despite a concentration of electric car sales and manufacturing in a few main markets, other regions show promise. Last year, electric car sales tripled in India and Indonesia and doubled in Thailand, albeit from a low foundation. Thailand had 3% electric car sales, India 1.5%, and Indonesia 1.5%. Effective policy and private sector investment may raise their shares. India’s USD 3.2 billion incentive package, which has attracted USD 8.3 billion in investments, is projected to boost battery manufacturing and EV rollout in the coming years.
Two- and three-wheel vehicles outnumber cars in emerging and developing economies, making electric transportation the most dynamic. In 2022, electric three-wheelers accounted for over half of India’s registrations. Two- and three-wheelers provide economical mobility in many developing countries, making their electrification crucial to sustainable development.
