Despite electric car sales remaining strong this year, future growth will demand greater efforts to diversify battery manufacturing and critical mineral supply to reduce the risk of bottlenecks and price increases, says the International Energy Agency (IEA).
Sales of electric cars (including fully electric and plug-in hybrids) doubled in 2021 to a new record of 6.6-million units, with more now sold each week than in the whole of 2012 – this according to the latest edition of the IEA Global Electric Vehicle Outlook report.
The report shows that electric car sales kept rising strongly into this year, despite strains along global supply chains, with 2-million electric cars sold worldwide in the first quarter, up by three-quarters from the same period a year earlier.
The number of electric cars on the world’s roads by the end of 2021 was about 16.5-million – triple the amount in 2018.
In China, electric-car sales nearly tripled last year, to 3.3-million, accounting for about half of the global total.
Sales also grew strongly in Europe, where it increased by 65%, to 2.3-million units, and in the US, where it more than doubled, to 630 000 units.
Chinese electric cars are typically smaller than in other markets.
Alongside lower manufacturing costs, this has significantly reduced the price gap with traditional cars, notes the 2022 IEA Global Electric Vehicle Outlook report.
The median price of an electric car in China was only 10% more than that of conventional offerings, compared with 45% to 50% on average in other major markets.
By contrast, electric car sales are lagging in most emerging and developing economies, where only a few models are often available and at prices that are unaffordable for mass-market consumers.
Sustained policy support has been one of the main reasons for strong electric car sales in many markets, with overall public spending on subsidies and incentives doubling in 2021 to nearly $30-billion, says the IEA.
A growing number of countries have ambitious vehicle electrification targets for the coming decades, and many carmakers have plans to electrify their fleets that go beyond policy targets, adds the agency.
Five times more electric car models were available globally in 2021 than in 2015, and the number of available models reached 450 by the end of last year.
“Few areas of the new global energy economy are as dynamic as electric vehicles,” says IEA executive director Fatih Birol.
“The success of the sector in setting new sales records is extremely encouraging, but there is no room for complacency.
“Policy makers, industry executives and investors need to be highly vigilant and resourceful in order to reduce the risks of supply disruptions and to ensure sustainable supplies of critical minerals.”
Birol says the IEA is working with governments around the world on how to strategically manage resources of critical minerals that are needed for electric vehicles and other key clean energy technologies.
In the short term, the greatest obstacles to continued strong electric car sales are soaring prices for some critical minerals essential for battery manufacturing, as well as supply-chain disruptions caused by Russia’s attack on Ukraine and by continued Covid-19 lockdowns in some parts of China, notes the 2022 Global Electric Vehicle Outlook report.
In the longer term, greater efforts are needed to roll out enough charging infrastructure to service the expected growth in electric car sales.
Prices for lithium, a crucial mineral for car batteries, were more than seven times higher in May this year than at the start of 2021, while the prices for cobalt and nickel also increased.
All else being equal, the cost of battery packs could increase by 15% if these prices stay around current levels, which would reverse several years of improvement, notes the report.
Russia’s invasion of Ukraine has created further pressures, since Russia supplies 20% of global battery-grade nickel.
Governments in Europe and in the US have been promoting industrial policies aimed at domestic development of electric car supply chains, as more than half of all lithium, cobalt and graphite processing and refining capacity is located in China, states the report.
“In addition, China produces three-quarters of all lithium-ion batteries and has 70% of the production capacity for cathodes and 85% for anodes, both of which are essential components of batteries. More than half of all electric cars in 2021 were assembled in China, and the country is poised to maintain its manufacturing dominance.”
While nearly 10% of all cars sold worldwide in 2021 were electric, the IEA report shows that the figure for global truck sales was just 0.3%.
This share would need to increase to around 10% by 2030 in a scenario aligned with the climate pledges and targets announced to date by countries worldwide.
Electric trucks have so far been substantially deployed only in China, thanks to strong government support.
Other countries have, however, announced plans for heavy truck electrification, and manufacturers are widening their choice of models.
Long-range trucks require high-power charges that are currently expensive and often require grid upgrades.
The new IEA report recommends greater government support and planning to roll out the required public charging infrastructure.