Electric Vehicle Sales Surge, Expected to Transform Auto Industry and Slash Oil Consumption

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Electric car sales are projected to represent more than one in five vehicles sold globally this year, says Global Electric Vehicle Outlook from the International Energy Agency (IEA).

The report predicts a transformative impact on the global auto industry and a significant reduction in oil consumption for road transport.

Electric car sales are set to remain robust in 2024, with an estimated 17 million electric vehicles sold by year-end. The first-quarter sales in 2024 showed 25 percent increase compared to the same period in 2023. Notably, the number of electric cars sold globally in the first three months of 2024 is equivalent to the total sales for the entire year of 2020.

China emerges as a frontrunner in the electric vehicle market, with projections indicating around 10 million electric car sales in 2024, accounting for approximately 45 percent of all car sales in the country.

In the United States, roughly one in nine cars sold is expected to be electric, while in Europe, electric cars are anticipated to represent about one in four cars sold, despite challenges such as a weak outlook for passenger car sales and the phase-out of subsidies in some countries.

This surge builds upon the record-breaking growth observed in 2023 when global electric car sales soared by 35 percent to nearly 14 million. While traditional markets such as China, Europe, and the United States continue to drive demand, emerging markets like Vietnam and Thailand also witnessed significant growth, with electric cars accounting for 15 percent and 10 percent of total car sales, respectively.

The IEA report attributes this remarkable growth to substantial investment in the electric vehicle supply chain, ongoing policy support, and declines in the price of electric vehicles and their batteries. Under current policy settings, the Outlook suggests that every other car sold globally could be electric by 2035. However, if countries meet their energy and climate pledges, two in three cars sold would be electric by the same year, resulting in a substantial reduction in oil demand for road transport.

Fatih Birol, Executive Director of the IEA, highlighted the implications of this shift for both the auto industry and the energy sector, emphasizing the need for continued investment and policy support. Manufacturers have already made significant strides to meet the rising demand for electric vehicles, with battery production capacity well positioned to keep up with the expected surge in demand over the next decade.

While affordability remains a key factor influencing the pace of the transition to electric vehicles, the report notes that intensifying market competition and improving battery technologies are expected to drive down prices in the coming years. Additionally, the lower operating costs of electric vehicles make them an attractive long-term investment despite higher upfront costs.

However, ensuring that public charging infrastructure keeps pace with electric vehicle sales is crucial for sustained growth. While the number of public charging points increased by 40 percent in 2023 compared to 2022, substantial expansion is needed to meet the targets set by governments. Policy support and careful planning are essential to prevent strain on electricity grids as demand for charging increases.

Baburajan Kizhakedath

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