Tracking Progress: Electric Vehicles
With over 2 million electric cars on the road and over 750 000 EVs sold worldwide in 2016, a new historic record has been achieved in the electrification of individual transportation. The 2016 sales show a slowdown in market growth rate compared with the previous year – 40% in 2016 versus 70% in 2015 – suggesting an increasing risk to diverge from a 2DS trajectory.
Globally, 753 000 plug-in EVs were sold in 2016, 60% of which were battery-electric cars (BEVs). These sales were the highest ever registered and allowed the global EV stock to hit the threshold of 2 million units in circulation. China remained the largest EV market for the second consecutive year and, in 2016, accounted for close to half of global EV sales. Europe represented the second-largest global EV market (215 000 EVs sold), followed by the United States (160 000 EVs sold). Plug-in hybrid electric cars (PHEVs) gained ground compared with BEVs both in Europe and in the United States. Norway, with a 29% market share, and the Netherlands, with 6%, have the highest EV market penetrations globally. Sizeable drops in EV sales and market share took place in the Netherlands and Denmark, primarily reflecting changes in policy support. Overall, EVs are still a minor fraction (0.2%) of all cars in circulation.
Despite the slowdown in growth rates, the increase in EV production continues to favour technology learning and economies of scale. Battery costs kept declining between 2015 and 2016, and energy density continued to increase (EVI, 2017). This, combined with the improvements expected from battery chemistries that are currently being researched, gives encouraging signs on the possibility to meet the targets set by carmakers and the US DoE for the early 2020s (EVI, 2017). Battery technology improvements will enable longer ranges to be achieved at lower costs, increasing the cost-competitiveness of EVs and lowering barriers to adoption.
Publicly accessible charging infrastructure attained 320 000 chargers globally. Fast chargers, which use high-power alternating current, direct current or induction, and can fully recharge a BEV in less than an hour, are mostly located in China and make up a third of all chargers operating globally. In 2016, on a global average and with the exception of China, the deployment of fast chargers was slower than the deployment of chargers overall. This trend may reflect difficulties in their economic viability.
EV sales growth remained strong, with a 40% increase in 2016 over the previous year, but declined significantly from the 70% growth of 2015. The 2016 sales still allow for the 2DS sales and stock objectives to be attained by 2025 under the condition that the 2016 growth rate is maintained in future years: meeting the 2025 target implies an annual sales growth of 35% every year from 2017 to 2025. Thus recent manufacturers' announcements regarding ambitious EV production plans must be followed by concrete investment decisions.
Financial incentives, EV performance and the availability of charging infrastructure emerged as factors positively correlated with the growth of EV sales. Public policies aiming to reduce the purchase cost gap between EVs and conventional cars and to improve the value proposition of EVs, including, for instance, public procurement programmes and awareness campaigns, are, therefore, well suited to stimulate EV adoption. Furthermore, a supportive policy environment also reduces risks for investors.
Policy support needs to be comprehensive by taking place at different administrative levels, from national to local, under different forms: direct support for research, vehicle purchase subsidies, zero-emission mandates, fiscal advantages for charger deployment, tightened fuel economy standards, and differentiated taxes, fees and restrictions on the basis of vehicle emissions performance, such as regulations on access to urban centres (e.g. zero-emission zones). The cost-attractiveness of EVs can also be enhanced as conventional fuels become more expensive, via fuel taxes that include carbon pricing, which needs to be implemented in parallel with grid decarbonisation efforts.
As EVs become more popular, securing affordable raw material supplies will become increasingly critical to ensure that improvements achieved in battery costs can be sustained. This task can be simplified through the early development of regulatory requirements for second life of batteries and material recycling.
Published: 16 May 2017Download Full Report