The Rising Significance of Electric Vehicles
The electric car market is one of the most dynamic areas in clean energy, with recent years witnessing substantial growth in sales alongside improvements in range, model variety, and performance. We project that over one in five new cars sold in 2024 will be electric. Electric vehicles (EVs) are pivotal in decarbonizing road transport, a sector responsible for approximately one-sixth of global emissions. Ambitious policies remain critical to the continued growth of EV markets worldwide.
Current Trends and Future Projections
If the EV sales growth experienced in recent years is sustained, CO2 emissions from cars can be put on a path consistent with the Net Zero Emissions by 2050 Scenario. However, despite significant growth in China, some European countries, and U.S. states, electric vehicles are not yet a global phenomenon. Sales have been slow in some countries, particularly developing and emerging nations, due to higher purchase costs compared to conventional vehicles and a lack of charging infrastructure.
Electric car sales reached new records, nearing 14 million in 2023, with the share of electric cars in total sales increasing from around 4% in 2020 to 18% in 2023. Sales are expected to continue strongly through 2024, with over 3 million electric cars sold in the first quarter, representing a 25% increase from the same period last year. We anticipate around 17 million sales by the end of 2024, marking a more than 20% year-on-year increase.
Challenges and Opportunities
The pace of the transition to electric vehicles hinges on their affordability. While electric cars are becoming cheaper, particularly in China, they remain more expensive than their internal combustion engine counterparts in other markets. A rapid transition to EVs will require bringing more affordable models to market. In China, over 60% of electric cars sold in 2023 were already cheaper than their average combustion engine equivalent. However, in Europe and the United States, electric cars remain 10% to 50% more expensive, depending on the country and car segment.
Regional Highlights
Three major markets dominated global EV sales in 2023: China, Europe, and the United States. China led once again, accounting for around 60% of global electric car sales. In Europe, electric car sales increased by almost 20% in 2023, reaching a sales share of over 20%. The United States saw a 40% increase in electric car sales, achieving a sales share of around 10%.
Policy and Investment
Newly adopted and proposed GHG standards and zero-emission vehicle (ZEV) mandates will drive increased EV adoption. Examples include the EU’s stricter CO2 standards for heavy-duty vehicles and the U.S. EPA’s final rulemaking for Multi-Pollutant Emissions Standards. Global spending on electric cars continues to increase, with reported investment announcements exceeding USD 275 billion in EVs and USD 195 billion in batteries as of early 2024.
Future Directions
To accelerate EV adoption, governments should maintain and adapt support for electric cars, kickstart the heavy-duty market, promote adoption in emerging economies, expand EV infrastructure, and ensure secure and sustainable EV supply chains. International collaboration and pledges are also crucial, with initiatives like the Accelerating to Zero coalition and the Zero-Emission Government Fleet Declaration aiming to accelerate the transition to zero-emission transport.
