The electric car revolution is well underway, according to the IEA

London
CNN
—

Global sales of electric vehicles are expected to rise by more than a fifth to 17 million this year, powered by drivers in China, according to the International Energy Agency.

In a report released Tuesday, the IEA predicts that “growing demand” for electric vehicles over the next decade is expected to “reshape the global automobile industry and significantly reduce oil consumption for road transport.”

It predicts that half of all cars sold globally will be electric by 2035, up from more than one in five this year, provided charging infrastructure keeps pace. The IEA includes battery electric vehicles and plug-in hybrid vehicles in its definition of electric vehicles.

The agency’s optimistic long-term outlook for electric vehicles – based on current government policies – comes just days after that of the world’s largest battery electric vehicle maker, Tesla. reduced its prices in the main markets to counter declining sales and growing competition from Chinese newcomers and established automakers.

Recent negative headlines about slowing electric vehicle penetration are out of step with positive global trends, according to IEA Executive Director Fatih Birol. The data “does not show a reversal in electric car growth at all. It shows an extremely robust increase in global electric car sales,” he told reporters on Tuesday.

Growth is not solely driven by Chinese buyers. The number of new battery electric cars sold in the European Union pink nearly 4% in the first quarter of this year compared to the same period in 2023, according to the Association of European Automobile Manufacturers.

In a statement, Birol said: “Rather than running out of steam, the global electric vehicle revolution appears to be preparing for a new phase of growth. »

Despite optimistic trends, electric vehicle makers are grappling with challenges profit margins, squeezed by the price war as competition intensifies.

During the last Days later, Tesla and Chinese electric vehicle maker Li Auto cut prices for their main models in China, the world’s largest electric vehicle market, with Tesla also cutting prices in Germany and the United States.

Earlier this month, Tesla released its first annual decline in sales in almost four years. The company’s shares have plunged more than 40% so far this year. China’s BYD Group also stumbled after briefly overtaking Tesla as global market leader, with its sales falling to around 300,000 in the first quarter from more than 525,000 in the last three months of 2023.

Automakers may be hurt by price cuts, but they will be crucial to increasing the adoption of electric vehicles globally, according to the IEA, which emphasizes that “the pace of the transition to electric vehicles… will depend on affordability.”

In China, more than 60% of electric vehicles sold last year were cheaper than conventional cars, but in Europe and the United States, the purchase price of new cars with an internal combustion engine remains lower on average.

“Intensifying market competition and improving battery technologies are expected to reduce (EV) prices in the coming years,” the IEA said.

“Growing exports of electric cars from Chinese automakers, which accounted for more than half of all electric car sales in 2023, could put further downward pressure on purchase prices,” it adds.

Last year, Chinese automakers accounted for more than half of global electric car sales, compared to 10% of the conventional car market. “China is the de facto world leader in electric car manufacturing,” Birol said.

Concerns about soaring imports of Chinese electric vehicles have prompted the European Union to open a investigation late last year on Chinese state support for electric vehicle manufacturers. The auto industry is a major employer in Europe and crucial to the region’s largest economy, Germany, home to Volkswagen, Audi and BMW.

Electric vehicle sales in China will account for nearly 60% of the global total this year and around 45% of all car sales in the country.

By 2030, nearly one in three cars on the roads in China should be electric, compared to less than one in 10 last year, according to the IEA. This compares to forecasts of 17% in the United States and 18% in the European Union, up from just over 2% and almost 4% respectively last year.

“This change will have major consequences for both the automotive industry and the energy sector,” Birol said. The IEA predicts that global oil demand will peak in 2030, helped by the electrification of the transport sector.

Besides affordability, another barrier to mass adoption of electric cars is the lack of public charging infrastructure in Europe and the United States.

Under current government policies, the number of public EV charging points worldwide The number is expected to reach 15 million by the end of the decade, almost four times more than last year, according to the IEA.

Olesya Dmitracova contributed to this article, which has been updated with additional content.