The electrification of vehicles is expected to eliminate the demand for 5 million barrels of oil a day by 2030, causing a seismic shift in the global car industry that will have an impact on the energy sector.
Electric car sales are expected to reach yet another record level globally this year, increasing their market share to close to one-fifth and bringing about a significant change in the auto industry that will have an impact on the energy sector, particularly oil.
More than 10 million electric vehicles were sold globally in 2022, according to the latest edition of the (International Energy Agency) IEA's annual Global Electric Vehicle Outlook, and sales are projected to increase by another 35% this year to reach 14 million. According to the most recent IEA predictions, this fast growth has resulted in an increase in the share of electric cars in the entire auto market from 4% in 2020 to 14% in 2022 and is expected to reach 18% this year.
Electric vehicles are one of the driving forces in the new global energy economy that is emerging rapidly - and they are bringing about a historic transformation of the car manufacturing industry worldwide, said IEA Executive Director Fatih Birol. The trends we are seeing have a big impact on the world's demand for oil. Electric vehicles are challenging the dominance of the internal combustion engine, which has been unmatched for more than a century. They will save at least 5 million barrels of oil per day by 2030. Electric buses and trucks will soon follow cars as the next wave.
Three markets—China, Europe, and the United States—have seen the vast bulk of electric car sales to date. China is the market leader, accounting for 60% of all electric vehicle sales worldwide in 2022. China currently has more electric vehicles on the road than any other country. The second- and third-largest markets, Europe and the United States, both had rapid growth in 2022, with sales rising by 15% and 55%, respectively.
This decade and beyond, it is anticipated that ambitious governmental initiatives in major economies, like as the Fit for 55 package in the European Union and the Inflation Reduction Act in the United States, will significantly raise the market share for electric vehicles. Around 60% of all new automobiles sold in China, the EU, and the US are expected to be electric by the year 2030.
The promising developments are also having positive spillover effects on supply chains and battery manufacturing. According to the IEA's Net Zero Emissions by 2050 Scenario, the announced battery manufacturing projects would produce more than enough batteries to meet demand for electric vehicles until 2030. China dominates the battery and component trade and increased its share of the world's exports of electric cars to more than 35% last year, but production remains heavily concentrated.
Other nations have made plans to support local sectors that will increase their ability to compete in the (Electric Vehicle) EV market in the coming years. Nearly 90% of the annual battery demand is expected to be satisfied by domestic battery producers, according to the EU's Net Zero Industry Act. Similar to this, the US Inflation Reduction Act emphases the development of domestic supply chains for minerals, EVs, and batteries. The Inflation Reduction Act was passed in August 2022, and between that time and March 2023, major EV and battery producers announced investments in North American EV supply chains worth at least USD 52 billion.
Despite the fact that manufacturing and sales of electric vehicles are concentrated in a small number of major markets, other areas are showing promise. Despite starting from a low basis, electric car sales more than tripled in India, Indonesia, and Thailand last year. In Thailand, it increased to 3% of all sales, while it increased to 1.5% in India and Indonesia. Future increases in these shares are probably due to a combination of efficient policy and private sector investment. In India, the government's USD 3.2 billion incentive plan, which has drawn USD 8.3 billion in investments, is anticipated to significantly increase battery manufacturing and EV rollout in the upcoming years.
In emerging and developing economies, two- or three-wheel vehicles, which outnumber cars, are the most dynamic form of electric mobility. For instance, the registration of more than half of three-wheelers in India in 2022 was an electric vehicle, indicating their rising popularity. Two- or three-wheelers provide a reasonably priced means of accessing transportation in many developing economies, making its electrification crucial to promoting sustainable development.
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