Electric cars are expected to make up nearly one-fifth of the global market this year, according to the International Energy Agency‘s (IEA) outlook report for the electric vehicle market.

In a report published on Wednesday, the agency said electric car sales are expected to continue strongly through 2023.

Over 2.3 million electric cars were sold in the first quarter, about 25 percent more than in the same period last year.

“We currently expect to see 14 million in sales by the end of 2023, representing a 35 percent year-on-year increase with new purchases accelerating in the second half of this year. As a result, electric cars could account for 18 percent of total car sales across the full calendar year,” the report wrote.

According to IEA, electric car markets are seeing exponential growth as sales exceeded 10 million in 2022.

“A total of 14 percent of all new cars sold were electric in 2022, up from around 9 percent in 2021 and less than 5 percent in 2020,” the report wrote.

Three markets dominated global sales, it said. China was the frontrunner once again, accounting for around 60 percent of global electric car sales.

More than half of the electric cars on roads worldwide are now in China and the country has already exceeded its 2025 target for new energy vehicle sales.

In Europe, the second largest market, electric car sales increased by over 15% in 2022, meaning that more than one in every five cars sold was electric. Electric car sales in the United States – the third largest market – increased 55 percent in 2022, reaching a sales share of 8 percent.

National policies and incentives will help bolster sales, while a return to the exceptionally high oil prices seen last year could further motivate prospective buyers, IEA added.
The agency also noted that there are promising signs for emerging electric vehicle (EV) markets, albeit from a small base.

Electric car sales are generally low outside major markets

Electric car sales are generally low outside the major markets, but 2022 was a growth year in India, Thailand and Indonesia. Collectively, sales of electric cars in these countries more than tripled compared to 2021, reaching 80,000.

For Thailand, the share of electric cars in total sales came in at slightly over 3 percent in 2022, while both India and Indonesia averaged around 1.5 percent last year.

In India, EV and component manufacturing is ramping up, supported by the government’s $3.2 billion incentive programme that has attracted investments totalling $8.3 billion.

Thailand and Indonesia are also strengthening their policy support schemes, potentially providing valuable experience for other emerging market economies seeking to foster EV adoption, the report added.

Global spending on electric cars exceeded $425 billion in 2022, up 50 percent relative to 2021. Only 10 percent of the spending can be attributed to government support, the remainder was from consumers. Investors have also maintained confidence in EVs, with the stocks of EV-related companies consistently.

Venture capital investments in EV, battery tech startups boomed

It is also worth noting that venture capital investments in start-up firms developing EV and battery technologies have also boomed, reaching nearly $2.1 billion in 2022, up 30 percent relative to 2021, with investments increasing in batteries and critical minerals.

According to the IEA, the shift from combustion engine to electric cars is expected reduce global demand for oil by at least five million barrels a day.

SUVs and large cars dominate available electric car options in 2022. They account for 60 percent of available battery electric vehicle (BEV) options in China and Europe and an even greater share in the United States, similar to the trend towards SUVs seen in internal combustion engine (ICE) car markets.

“Outside of China, there is a need for original equipment manufacturers (OEMs) to offer affordable, competitively priced options in order to enable mass adoption of EVs,” the report said.

The IEA noted that the electric car market is increasingly competitive.

“A growing number of new entrants, primarily from China but also from other emerging markets, are offering more affordable models. Major incumbent carmakers are increasing ambition as well, especially in Europe, and 2022-2023 saw another series of important EV announcements: fully electric fleets, cheaper cars, greater investment, and vertical integration with battery-making and critical minerals,” the report added.

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