Electric car sales have continued to rise this year amid “sustained policy support” from governments, as they focus on cutting emissions to reach net-zero targets, according to a report by the International Energy Agency.
Sales surged 75 per cent in the first quarter of this year to 2 million after breaking a record last year with total sales of 6.6 million, up 100 per cent from the previous year.
The growth in sales last year and this year was driven by higher sales in China, Europe and the US, the Paris-based agency said on Monday.
The number of electric cars on the world’s roads by the end of 2021 was about 16.5 million, triple the amount in 2018.
“Sustained policy support has been one of the main reasons for strong electric car sales in many markets, with overall public spending on subsidies and incentives doubling in 2021 to nearly $30 billion,” the agency said.
“A growing number of countries have ambitious vehicle electrification targets for the coming decades, and many car makers have plans to electrify their fleets that go beyond policy targets. Five times more electric car models were available globally in 2021 than in 2015, and the number of available models reached 450 by the end of 2021.”
Governments across the world are pivoting towards electrification and clean energy projects to cut emissions as they adopt net zero targets in the coming decades.
The US, the world’s largest economy, Canada, Britain and the 27-member EU plan to become carbon neutral by 2050, while China, the world’s second-largest economy, aims to reach the target by 2060.
Many countries are encouraging the adoption of electric cars as they seek to narrow emissions from the transport sector, which is a key emitter.
In 2021, electric car sales in China nearly tripled to 3.3 million, accounting for about half of the global total. There was also strong sales growth in Europe and the US during the period.
Tesla — the world's biggest EV manufacturer and considered to be the barometer for the health of the sector worldwide — delivered 936,172 vehicles in 2021, up 87.4 per cent annually, beating its previous record that it had already smashed in the third quarter of last year.
The first quarter of 2022 showed similar trends, with sales in China more than doubling, compared with the first quarter of 2021. Sales in the US and Europe rose by 60 per cent and 25 per cent, respectively, during the period.
Chinese electric cars are typically smaller in size and are cheaper to buy, which have boosted the country's sales figures.
The median price of an electric car in China was only 10 per cent more than that of conventional offerings, compared with 45 per cent to 50 per cent on average in other major markets.
“The success of the sector in setting new sales records is extremely encouraging, but there is no room for complacency,” said IEA executive director Fatih Birol.
“Policymakers, industry executives and investors need to be highly vigilant and resourceful in order to reduce the risks of supply disruptions and ensure sustainable supplies of critical minerals.”
EV sales in the Middle East, especially in the UAE and Saudi Arabia, are expected to rise as governments work towards implementing their pledges to become carbon neutral by the middle of the century.
"The net zero emission pledges in countries such as the UAE and in Saudi Arabia are likely to have a positive impact on EV deployment," Leonardo Paoli, energy analyst of clean energy technologies at the IEA, said during an online media briefing when asked by The National about the outlook for EV sales in the Middle East.
The UAE, which aims to reach net zero by 2050, plans to invest $160 billion over the next three decades to hasten clean energy development. Saudi Arabia, the Arab world's largest economy, aims to reach the target by 2060.
"There are also some specific targets, for example in Saudi Arabia, there is an aim to have 30 per cent of cars being electric by 2030 and in the UAE, there is a target of 42,000 electric vehicles by the end of the next decade," he said.
Rising prices of critical minerals required for battery manufacturing, supply chain disruptions caused by the Russia-Ukraine conflict and continued Covid-19 lockdowns in China could pose the “greatest obstacles” to continued EV sales growth in the short term.
The prices of lithium, a crucial mineral used to manufacture car batteries, were more than seven times higher in May 2022, compared to the start of 2021, while cobalt and nickel prices also increased.
The Ukraine war has mounted further pressure as Russia supplies 20 per cent of global battery-grade nickel, according to the report.
In January, Rystad Energy also said EV manufacturers face a potential roadblock as prices for battery-grade lithium are poised to “skyrocket” in 2022.
But governments in Europe and the US are promoting industrial policies to overcome EV supply chain issues, “as more than half of all lithium, cobalt and graphite processing and refining capacity is located in China”, the report said.
China also produces three quarters of all lithium-ion batteries and has 70 per cent of the production capacity for cathodes and 85 per cent for anodes, both of which are essential components of batteries.
China accounted for more than half of all electric cars assembled in 2021, and the country is poised to maintain its manufacturing dominance.
While about 10 per cent of all cars sold worldwide in 2021 were electric, the figure for global electric lorry sales was only 0.3 per cent, the report said.
Greater government support and planning for public charging infrastructure, and stringent vehicle efficiency and carbon dioxide emission standards are expected to increase EV sales further, said the IEA.