2023 Electric Vehicle Overview
Electric Vehicle Sales Set New Records with Strong Momentum Expected to Carry into 2023
The electric car industry continues to break records, and the momentum is expected to carry on throughout 2023. In 2022, sales of electric cars surpassed 10 million units, with 14% of all new cars sold being electric. This marks a significant increase from around 9% in 2021 and less than 5% in 2020. Three key markets dominated the global sales landscape.
China remains the frontrunner, accounting for approximately 60% of global electric car sales. Over half of the electric cars on the world's roads can now be found in China, and the country has already exceeded its 2025 target for new energy vehicle sales. Europe, the second-largest market, witnessed an increase of over 15% in electric car sales in 2022, meaning that more than one in every five cars sold in Europe was electric. In the United States, the third-largest market, electric car sales experienced a 55% increase in 2022, reaching an 8% sales share.
The electric car industry continues to break records, and the momentum is expected to carry on throughout 2023. In 2022, sales of electric cars surpassed 10 million units, with 14% of all new cars sold being electric. This marks a significant increase from around 9% in 2021 and less than 5% in 2020. Three key markets dominated the global sales landscape.
China remains the frontrunner, accounting for approximately 60% of global electric car sales. Over half of the electric cars on the world's roads can now be found in China, and the country has already exceeded its 2025 target for new energy vehicle sales. Europe, the second-largest market, witnessed an increase of over 15% in electric car sales in 2022, meaning that more than one in every five cars sold in Europe was electric. In the United States, the third-largest market, electric car sales experienced a 55% increase in 2022, reaching an 8% sales share.
The strong sales performance of electric cars is projected to continue throughout 2023. In the first quarter alone, over 2.3 million electric cars were sold, representing a 25% increase compared to the same period last year. It is expected that by the end of 2023, a total of 14 million electric cars will be sold, reflecting a 35% year-on-year growth rate. The second half of this year is anticipated to witness accelerated new purchases. Consequently, electric cars could account for 18% of total car sales for the entire calendar year. National policies and incentives will play a crucial role in boosting sales, while the possibility of high oil prices, similar to those experienced last year, may further motivate prospective buyers.
Promising signs are emerging in the electric vehicle (EV) markets, albeit from a smaller base. While electric car sales outside of major markets have generally been low, 2022 marked a growth year for India, Thailand, and Indonesia. Combined, these countries saw electric car sales more than triple compared to 2021, reaching a total of 80,000 units. In Thailand, electric cars accounted for slightly over 3% of total sales in 2022, while both India and Indonesia averaged around 1.5% throughout the year. India is witnessing a ramp-up in EV and component manufacturing, supported by a USD 3.2 billion incentive program from the government, attracting investments totaling USD 8.3 billion. Thailand and Indonesia are also strengthening their policy support schemes, potentially serving as valuable examples for other emerging market economies aiming to promote EV adoption.
Bold EV Policies Accelerate Progress towards Climate Ambitions
Landmark policies related to electric vehicles (EVs) are shaping the future outlook, bringing it closer to climate ambitions. Both market trends and policy efforts in major car markets are contributing to a positive trajectory for EV sales. According to the IEA Stated Policies Scenario (STEPS), the global share of electric car sales, based on existing policies and firm objectives, is projected to reach 35% by 2030, surpassing the previous outlook of less than 25%. China remains the largest market for electric cars, with a projected 40% share of total sales by 2030 in the STEPS. The United States is expected to double its market share to 20% by the end of the decade due to recent policy announcements driving demand, while Europe maintains its current 25% share.
The projected demand for electric cars in major car markets has significant implications for energy markets and climate goals, considering the existing policy environment. Under the STEPS, oil demand from road transport is anticipated to peak around 2025, with electric vehicles displacing over 5 million barrels per day of oil by 2030. Furthermore, the use of electric cars is projected to avoid approximately 700 Mt CO2-equivalents of emissions in 2030.
The European Union and the United States have taken legislative measures to align with their electrification ambitions. The European Union has adopted new CO2 standards for cars and vans that align with the 2030 goals outlined in the Fit for 55 package. In the United States, the Inflation Reduction Act (IRA) and the adoption of California's Advanced Clean Cars II rule by several states could lead to a 50% market share for electric cars by 2030, in line with the national target. The implementation of recently proposed emissions standards by the US Environmental Protection Agency is expected to further increase this share.
Battery manufacturing is experiencing continuous expansion, driven by the optimistic outlook for EVs. As of March 2023, the capacity announcements for battery manufacturing until 2030 are more than sufficient to meet the demand indicated by government commitments and could even exceed the requirements for electric vehicles in the Net Zero Emissions by 2050 Scenario. This suggests that higher shares of sales for electric cars are attainable than what is currently anticipated based on government policies and national targets.
Promising signs are emerging in the electric vehicle (EV) markets, albeit from a smaller base. While electric car sales outside of major markets have generally been low, 2022 marked a growth year for India, Thailand, and Indonesia. Combined, these countries saw electric car sales more than triple compared to 2021, reaching a total of 80,000 units. In Thailand, electric cars accounted for slightly over 3% of total sales in 2022, while both India and Indonesia averaged around 1.5% throughout the year. India is witnessing a ramp-up in EV and component manufacturing, supported by a USD 3.2 billion incentive program from the government, attracting investments totaling USD 8.3 billion. Thailand and Indonesia are also strengthening their policy support schemes, potentially serving as valuable examples for other emerging market economies aiming to promote EV adoption.
Bold EV Policies Accelerate Progress towards Climate Ambitions
Landmark policies related to electric vehicles (EVs) are shaping the future outlook, bringing it closer to climate ambitions. Both market trends and policy efforts in major car markets are contributing to a positive trajectory for EV sales. According to the IEA Stated Policies Scenario (STEPS), the global share of electric car sales, based on existing policies and firm objectives, is projected to reach 35% by 2030, surpassing the previous outlook of less than 25%. China remains the largest market for electric cars, with a projected 40% share of total sales by 2030 in the STEPS. The United States is expected to double its market share to 20% by the end of the decade due to recent policy announcements driving demand, while Europe maintains its current 25% share.
The projected demand for electric cars in major car markets has significant implications for energy markets and climate goals, considering the existing policy environment. Under the STEPS, oil demand from road transport is anticipated to peak around 2025, with electric vehicles displacing over 5 million barrels per day of oil by 2030. Furthermore, the use of electric cars is projected to avoid approximately 700 Mt CO2-equivalents of emissions in 2030.
The European Union and the United States have taken legislative measures to align with their electrification ambitions. The European Union has adopted new CO2 standards for cars and vans that align with the 2030 goals outlined in the Fit for 55 package. In the United States, the Inflation Reduction Act (IRA) and the adoption of California's Advanced Clean Cars II rule by several states could lead to a 50% market share for electric cars by 2030, in line with the national target. The implementation of recently proposed emissions standards by the US Environmental Protection Agency is expected to further increase this share.
Battery manufacturing is experiencing continuous expansion, driven by the optimistic outlook for EVs. As of March 2023, the capacity announcements for battery manufacturing until 2030 are more than sufficient to meet the demand indicated by government commitments and could even exceed the requirements for electric vehicles in the Net Zero Emissions by 2050 Scenario. This suggests that higher shares of sales for electric cars are attainable than what is currently anticipated based on government policies and national targets.
Rising Competition and Increased Investment Result in a Wider Range of Affordable Electric Models
With growing spending and intensified competition, the electric car market is witnessing the arrival of an increasing number of more affordable models. Global spending on electric cars surpassed USD 425 billion in 2022, marking a 50% increase compared to 2021. While only 10% of this spending can be attributed to government support, the majority comes from consumer investments. Investors have shown consistent confidence in the electric vehicle (EV) sector, as stocks of EV-related companies have consistently outperformed traditional automakers since 2019. Additionally, venture capital investments in start-up firms focused on EV and battery technologies reached nearly USD 2.1 billion in 2022, representing a 30% increase from 2021, with a particular emphasis on investments in batteries and critical minerals.
In terms of available electric car options, SUVs and large cars dominate the market in 2022. They account for 60% of available battery electric vehicle (BEV) options in China and Europe, and an even higher proportion in the United States, reflecting a trend observed in the internal combustion engine (ICE) car market towards SUVs. In 2022, ICE SUVs emitted over 1 Gt CO2, significantly more than the 80 Mt net emissions reductions achieved by the electric vehicle fleet during the same period. Battery electric SUVs often require larger batteries, two to three times the size of those in small cars, leading to an increased demand for critical minerals. However, electric SUVs in the previous year contributed to displacing over 150,000 barrels of oil consumption per day and avoided associated tailpipe emissions that would have been generated by combustion engines.
The electric car market is experiencing heightened competitiveness. A growing number of new players, primarily from China but also from other emerging markets, are introducing more affordable EV models. Established automakers are also raising their ambitions, particularly in Europe, with significant EV-related announcements in 2022 and 2023, such as plans for fully electric fleets, cheaper cars, increased investment, and vertical integration with battery production and critical minerals.
Consumers now have a wider range of options to choose from in the electric car market. The number of available electric car models reached 500 in 2022, more than double the options available in 2018. However, outside of China, there is a need for original equipment manufacturers (OEMs) to offer affordable and competitively priced options to facilitate mass adoption of EVs. While the current number of available electric car models is still lower than the number of ICE options on the market, the availability of ICE models has been steadily declining since its peak in the mid-2010s.
With growing spending and intensified competition, the electric car market is witnessing the arrival of an increasing number of more affordable models. Global spending on electric cars surpassed USD 425 billion in 2022, marking a 50% increase compared to 2021. While only 10% of this spending can be attributed to government support, the majority comes from consumer investments. Investors have shown consistent confidence in the electric vehicle (EV) sector, as stocks of EV-related companies have consistently outperformed traditional automakers since 2019. Additionally, venture capital investments in start-up firms focused on EV and battery technologies reached nearly USD 2.1 billion in 2022, representing a 30% increase from 2021, with a particular emphasis on investments in batteries and critical minerals.
In terms of available electric car options, SUVs and large cars dominate the market in 2022. They account for 60% of available battery electric vehicle (BEV) options in China and Europe, and an even higher proportion in the United States, reflecting a trend observed in the internal combustion engine (ICE) car market towards SUVs. In 2022, ICE SUVs emitted over 1 Gt CO2, significantly more than the 80 Mt net emissions reductions achieved by the electric vehicle fleet during the same period. Battery electric SUVs often require larger batteries, two to three times the size of those in small cars, leading to an increased demand for critical minerals. However, electric SUVs in the previous year contributed to displacing over 150,000 barrels of oil consumption per day and avoided associated tailpipe emissions that would have been generated by combustion engines.
The electric car market is experiencing heightened competitiveness. A growing number of new players, primarily from China but also from other emerging markets, are introducing more affordable EV models. Established automakers are also raising their ambitions, particularly in Europe, with significant EV-related announcements in 2022 and 2023, such as plans for fully electric fleets, cheaper cars, increased investment, and vertical integration with battery production and critical minerals.
Consumers now have a wider range of options to choose from in the electric car market. The number of available electric car models reached 500 in 2022, more than double the options available in 2018. However, outside of China, there is a need for original equipment manufacturers (OEMs) to offer affordable and competitively priced options to facilitate mass adoption of EVs. While the current number of available electric car models is still lower than the number of ICE options on the market, the availability of ICE models has been steadily declining since its peak in the mid-2010s.
Electrification Efforts Extend Beyond Cars as Electric Vehicles Lead the Way in Various Vehicle Segments
As the electric car market continues to surge ahead, the focus on electrification is expanding to encompass a broader range of vehicle segments. Beyond cars, the electrification of two or three-wheelers has gained significant momentum, particularly in emerging markets and developing economies where they outnumber cars. In 2022, over half of India's three-wheeler registrations were electric, showcasing their increasing popularity driven by government incentives and lower lifecycle costs compared to conventional models, especially amidst rising fuel prices. Two/three-wheelers play a crucial role in providing affordable mobility solutions in many developing economies, making their electrification essential for supporting sustainable development efforts.
The electrification trend is also extending to the commercial vehicle sector. Electric light commercial vehicle (LCV) sales witnessed a remarkable increase of over 90% in 2022, surpassing 310,000 vehicles, even as overall LCV sales declined by nearly 15%. Furthermore, approximately 66,000 electric buses and 60,000 medium- and heavy-duty trucks were sold globally in 2022, accounting for around 4.5% of all bus sales and 1.2% of truck sales. In areas where governments have committed to reducing emissions in public transport, such as dense urban regions, the share of electric bus sales reached even higher levels. For instance, in Finland, electric bus sales constituted over 65% of total bus sales in 2022.
There is a growing ambition to electrify heavy-duty vehicles as well. In 2022, more than 220 models of electric heavy-duty vehicles were introduced to the market, bringing the total number of available models to over 800, offered by over 100 original equipment manufacturers (OEMs). 27 governments have committed to achieving 100% zero-emission vehicle (ZEV) bus and truck sales by 2040, and both the United States and European Union have proposed stronger emissions standards for heavy-duty vehicles, emphasizing the importance of decarbonizing this sector.
As the electric car market continues to surge ahead, the focus on electrification is expanding to encompass a broader range of vehicle segments. Beyond cars, the electrification of two or three-wheelers has gained significant momentum, particularly in emerging markets and developing economies where they outnumber cars. In 2022, over half of India's three-wheeler registrations were electric, showcasing their increasing popularity driven by government incentives and lower lifecycle costs compared to conventional models, especially amidst rising fuel prices. Two/three-wheelers play a crucial role in providing affordable mobility solutions in many developing economies, making their electrification essential for supporting sustainable development efforts.
The electrification trend is also extending to the commercial vehicle sector. Electric light commercial vehicle (LCV) sales witnessed a remarkable increase of over 90% in 2022, surpassing 310,000 vehicles, even as overall LCV sales declined by nearly 15%. Furthermore, approximately 66,000 electric buses and 60,000 medium- and heavy-duty trucks were sold globally in 2022, accounting for around 4.5% of all bus sales and 1.2% of truck sales. In areas where governments have committed to reducing emissions in public transport, such as dense urban regions, the share of electric bus sales reached even higher levels. For instance, in Finland, electric bus sales constituted over 65% of total bus sales in 2022.
There is a growing ambition to electrify heavy-duty vehicles as well. In 2022, more than 220 models of electric heavy-duty vehicles were introduced to the market, bringing the total number of available models to over 800, offered by over 100 original equipment manufacturers (OEMs). 27 governments have committed to achieving 100% zero-emission vehicle (ZEV) bus and truck sales by 2040, and both the United States and European Union have proposed stronger emissions standards for heavy-duty vehicles, emphasizing the importance of decarbonizing this sector.
Elevated Emphasis on EV Supply Chains and Batteries in Policy-Making
The growing demand for electric vehicles (EVs) is placing greater importance on EV supply chains and batteries within policy-making discussions. The surge in EV adoption has led to an increased demand for batteries and critical minerals. In 2022, automotive lithium-ion (Li-ion) battery demand rose by approximately 65% to reach 550 GWh, primarily driven by the growth in electric passenger car sales. EV batteries accounted for about 60% of lithium demand, 30% of cobalt demand, and 10% of nickel demand in 2022, a significant increase compared to just five years prior. Reducing the reliance on critical materials will be crucial for achieving supply chain sustainability, resilience, and security, particularly in light of recent fluctuations in battery material prices.
Alternative battery chemistries are also gaining traction. The share of lithium-iron-phosphate (LFP) batteries reached its highest point ever, largely driven by China, where approximately 95% of LFP batteries for electric light-duty vehicles (LDVs) were installed. Furthermore, supply chains for lithium-free sodium-ion batteries are being established, with over 100 GWh of manufacturing capacity either currently operating or announced, predominantly in China.
The growing demand for electric vehicles (EVs) is placing greater importance on EV supply chains and batteries within policy-making discussions. The surge in EV adoption has led to an increased demand for batteries and critical minerals. In 2022, automotive lithium-ion (Li-ion) battery demand rose by approximately 65% to reach 550 GWh, primarily driven by the growth in electric passenger car sales. EV batteries accounted for about 60% of lithium demand, 30% of cobalt demand, and 10% of nickel demand in 2022, a significant increase compared to just five years prior. Reducing the reliance on critical materials will be crucial for achieving supply chain sustainability, resilience, and security, particularly in light of recent fluctuations in battery material prices.
Alternative battery chemistries are also gaining traction. The share of lithium-iron-phosphate (LFP) batteries reached its highest point ever, largely driven by China, where approximately 95% of LFP batteries for electric light-duty vehicles (LDVs) were installed. Furthermore, supply chains for lithium-free sodium-ion batteries are being established, with over 100 GWh of manufacturing capacity either currently operating or announced, predominantly in China.
While the EV supply chain is expanding, manufacturing remains highly concentrated in specific regions, with China playing a dominant role in battery and EV component trade. In 2022, China accounted for 35% of exported electric cars, compared to 25% in 2021. Europe stands as China's largest trade partner for both electric cars and batteries. The share of electric cars manufactured in China and sold in the European market increased to 16% in 2022, up from around 11% in 2021.
EV supply chains have become a focal point in EV-related policy-making efforts, aiming to enhance resilience through diversification. The European Union's proposed Net Zero Industry Act aims for nearly 90% of the EU's annual battery demand to be met by EU manufacturers, with a manufacturing capacity of at least 550 GWh by 2030. Similarly, India is focused on boosting domestic manufacturing of EVs and batteries through Production Linked Incentive (PLI) schemes. In the United States, the Inflation Reduction Act highlights the need to strengthen domestic supply chains for EVs, EV batteries, and battery minerals, as outlined in the criteria for qualifying for clean vehicle tax credits. As a result, major EV and battery manufacturers have announced substantial investments in North American EV supply chains, totaling at least USD 52 billion between August 2022 and March 2023, with a significant portion allocated to battery manufacturing.
In summary, the electric vehicle market has experienced unprecedented growth, with record-breaking sales and strong momentum projected to continue into 2023. China, Europe, and the United States have emerged as the dominant markets, driving the adoption of electric cars and contributing to the decarbonization of transportation. The electrification trend extends beyond cars to include two/three-wheelers and commercial vehicles, further enhancing sustainability efforts. The focus on EV supply chains and batteries has intensified, as the demand for these components increases. With policies, investments, and technological advancements supporting the sector, the future of electric vehicles appears promising, offering a pathway towards achieving climate goals and reducing carbon emissions.
EV supply chains have become a focal point in EV-related policy-making efforts, aiming to enhance resilience through diversification. The European Union's proposed Net Zero Industry Act aims for nearly 90% of the EU's annual battery demand to be met by EU manufacturers, with a manufacturing capacity of at least 550 GWh by 2030. Similarly, India is focused on boosting domestic manufacturing of EVs and batteries through Production Linked Incentive (PLI) schemes. In the United States, the Inflation Reduction Act highlights the need to strengthen domestic supply chains for EVs, EV batteries, and battery minerals, as outlined in the criteria for qualifying for clean vehicle tax credits. As a result, major EV and battery manufacturers have announced substantial investments in North American EV supply chains, totaling at least USD 52 billion between August 2022 and March 2023, with a significant portion allocated to battery manufacturing.
In summary, the electric vehicle market has experienced unprecedented growth, with record-breaking sales and strong momentum projected to continue into 2023. China, Europe, and the United States have emerged as the dominant markets, driving the adoption of electric cars and contributing to the decarbonization of transportation. The electrification trend extends beyond cars to include two/three-wheelers and commercial vehicles, further enhancing sustainability efforts. The focus on EV supply chains and batteries has intensified, as the demand for these components increases. With policies, investments, and technological advancements supporting the sector, the future of electric vehicles appears promising, offering a pathway towards achieving climate goals and reducing carbon emissions.