Electric vehicles (EVs) continue to improve at a rapid pace, with battery prices dropping and sales seeing double-digit growth. However, strong policy measures are still necessary to accelerate the shift towards carbon-neutral mobility, according to a report by BloombergNEF (BNEF).
The report highlights the crucial role policymakers play in driving the automotive market towards zero-emissions options, improving fuel efficiency, preparing the power system for EVs, and reducing overall car dependency. Achieving emissions-free road transport requires collaboration from various stakeholders including automakers, battery manufacturers, charging companies, grid operators, miners, fleet operators, and consumers.
Key takeaways from the report include increased EV sales across major markets worldwide. In India and Southeast Asia, sales increased by over 200% in 2022, making them the only markets where internal combustion engine (ICE) sales also rose year over year. EV sales also surged in Japan (100%), China (nearly 100%), Australia (90%), the United States (50%), and Europe (17%). These figures are impressive considering the overall flat growth of the global auto market, where car sales increased by just 2%.
Despite the surge in EV sales, they only accounted for 1.7% of passenger vehicle kilometers driven in the past year. In contrast, the energy sector has made significant strides, with 40% of global power generation already being sourced from zero-emission technologies such as hydropower, nuclear power, wind, and solar. As the power sector becomes even cleaner, EVs are expected to play an increasingly significant role in global driving.
Interestingly, the market for long-range EVs is dominated by China, which has seen a significant increase in the number of available long-range EV models. China went from having only six long-range EV models in 2018 to 141 today. Europe and North America have also seen a rise in long-range EVs, with 61 models in Europe and 56 models in North America. Although premium long-range EVs are currently priced around 30% higher than their ICE counterparts, it is anticipated that automakers will introduce more affordable options in the future.
While hydrogen-powered fuel cell vehicles have been available for years, they remain niche and have little impact on the passenger vehicle market. Additionally, synthetic fuels are not expected to reach scale or the necessary price point to significantly impact road transport emissions.
The report emphasizes the need for policymakers to prioritize heavy trucks’ decarbonization, as they currently lag behind the zero-emissions trajectory. It also suggests streamlining the process of deploying charging infrastructure and investing in the battery supply chain. At least $188 billion is required for battery cell and component plants by the end of the decade, assuming no new policies are implemented during that time.
The article highlights the economic opportunities associated with the EV transition. In an economic transition scenario, the cumulative value of EV sales could reach $8.8 trillion by 2030 and $57 trillion by 2050. In a net-zero scenario consistent with a global zero-emissions-capable fleet by 2050, this value increases to over $88 trillion by 2050. Many countries have made EVs and batteries a central part of their industrial policy, resulting in increased competition to attract investment.
A recent study emphasizes the role of technological advancements in driving EV adoption rather than consumer preferences. As EV technology evolves, offering improved features such as reduced prices and extended driving ranges, the demand for EVs is expected to continue rising. While challenges like inadequate charging infrastructure and limited vehicle options may hinder the transition, the overall growth of EV sales is expected to be fueled by continuous improvements in their performance.
In conclusion, the electrification of road transport is rapidly advancing, thanks to technological innovations and falling battery prices. However, strong policy measures are essential to accelerate the transition towards zero-emission mobility. Policymakers must collaborate with various stakeholders to improve fuel efficiency, prepare the power system for EVs, and reduce car dependency. Despite the surge in EV sales, they still represent a small percentage of total kilometers driven, highlighting the need for further growth. Long-range EVs are becoming more prevalent, with China leading the market. Policymakers should focus on addressing barriers to the last mile of market adoption, such as charging infrastructure. The transition presents significant economic opportunities, and countries are increasingly competing to attract investment in the EV sector. Technological advancements will continue to drive EV adoption, making them the leading option in the future.
