Transition to EVs may not be ‘consistent', IEA says as sales slow

Electric car sales projected to increase by 21 per cent to 17 million this year, agency says

Chinese EV maker Li Auto's cars inside a shopping mall in Beijing, China. Reuters

The International Energy Agency expects global electric car sales to grow at a slower pace this year, while maintaining that the transition to electric vehicles (EVs) may not be consistent and will hinge on affordability.

Electric car sales are projected to increase by about 21 per cent to 17 million this year, down from the 35 per cent expansion recorded in 2023, the Paris-based agency said in its annual Global EV Outlook on Tuesday.

“The continued momentum behind electric cars is clear in our data, although it is stronger in some markets than others,” said Fatih Birol, IEA’s executive director.

“Rather than tapering off, the global EV revolution appears to be gearing up for a new phase of growth. The wave of investment in battery manufacturing suggests the EV supply chain is advancing to meet automakers’ ambitious plans for expansion,” Mr Birol said.

The IEA said that in the first quarter of this year electric car sales surged by about 25 per cent, similar to the growth rate seen in the same period in 2023.

The report comes as car manufacturers and suppliers grapple with a global downturn that has resulted in bankruptcies, cancelled initial public offerings, and reduced production.

The rapid investment in production capacity and technological advancements has surpassed the current demand for electric vehicles, prompting the need for companies to reduce expenses.

This month, Tesla said it planned to reduce its global workforce by more than 10 per cent amid declining sales and increased competition in the electric vehicle market.

The Texas-based company lost its crown as the world’s largest EV seller to China's BYD in the fourth quarter of 2023, despite reporting record quarterly sales.

The IEA expects electric car sales in China to leap to about 10 million this year, accounting for about 45 per cent of all car sales in the country.

In the US, roughly one in nine cars sold are projected to be electric, while in Europe, despite a generally weak outlook for passenger car sales, electric cars are still on track to represent about one in four cars sold, the agency added.

Increased investment in EV infrastructure, continued policy backing, and dropping car and battery prices will drive major shifts in the future, the IEA said.

Under current policies, half of global car sales are projected to be electric by 2035, the report said.

However, if nations fulfil their energy and climate commitments, two thirds of car sales could be electric by the same year. This shift would spare up to 12 million barrels of oil per day, equivalent to the current road transport demand in China and Europe combined, it added.

“Manufacturers have taken major steps to deliver on the strengthening EV ambitions of governments, including by making significant financial commitments,” the IEA said.

“Thanks to high levels of investment over the past five years, the world’s capacity to produce batteries for EVs is well positioned to keep up with demand, even as it rises sharply over the next decade,” the agency added.

In China, more than 60 per cent of electric cars sold in 2023 were already less expensive to buy than conventional vehicles.

However, in Europe and the US, internal combustion engine cars still held a price advantage, the report said.