Electric car sales to jump 35% this year after record 2022: IEA

Paris: Global sales of electric cars are on track to reach yet another record high this year, with their share of the overall car market set to increase to almost one-fifth, leading to a significant transformation of the automotive industry with implications for the energy sector, particularly oil.

The latest edition of the International Energy Agency’s (IEA) annual Global Electric Vehicle Outlook has revealed that more than 10 million electric cars were sold worldwide in 2022, and sales are expected to increase by 35 per cent this year, reaching 14 million. This explosive growth has boosted electric cars' share of the overall car market from around 4 per cent in 2020 to 14 per cent in 2022 and is projected to further increase to 18 per cent this year, according to the latest IEA predictions.

IEA Executive Director, Fatih Birol, said, "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." He added that these trends have significant implications for global oil demand, as electric vehicles are changing the status quo, avoiding the need for at least 5 million barrels a day of oil by 2030. The majority of electric car sales to date have been concentrated in China, Europe, and the United States, with China leading the way, accounting for 60 per cent of global electric car sales in 2022. Europe and the United States saw robust growth, with sales increasing by 15 per cent and 55 per cent, respectively, in 2022.

Ambitious policy programmes in major economies, such as the Fit for 55 package in the European Union and the Inflation Reduction Act in the United States, are expected to further increase the market share for electric vehicles this decade and beyond. By 2030, the average share of electric cars in total sales across China, the EU, and the United States is set to rise to approximately 60 per cent.

These encouraging trends are also having positive knock-on effects on battery production and supply chains, with announced battery manufacturing projects more than enough to meet the demand for electric vehicles by 2030 in the IEA's Net Zero Emissions by 2050 Scenario. However, manufacturing remains highly concentrated, with China dominating the battery and component trade, increasing its share of global electric car exports to over 35 per cent last year.

Despite electric car sales and manufacturing being concentrated in only a few big markets, there are promising signs in other regions, with electric car sales more than tripling in India and Indonesia last year, albeit from a low base, and doubling in Thailand. The share of electric cars in total sales rose to 3 per cent in Thailand and to 1.5 per cent in India and Indonesia. In many developing economies, two- or three-wheelers are the most dynamic area of electric mobility, outnumbering cars. For example, over half of India’s three-wheeler registrations in 2022 were electric, demonstrating their growing popularity.