Electric Vehicles

On track
Shutterstock 515877400
In this report

Electric car sales topped 2.1 million globally in 2019, surpassing 2018 – which was already a record year. Sales rose 6% from 2018, following several years of over 40% annual electric car sales growth. The 2019 increase is embedded within the third year of global car market contraction, and the global electric car market share reached a new record of 2.6%, up from 2.4% in 2018 and 1% in 2017. The electric car stock therefore increased 40% year-on-year in 2019, indicating strong sustained EV sector development after annual successes since 2016 and a positive outlook for attaining the 36% average annual stock growth needed to reach the SDS target by 2030. China was the world's largest market (1.06 million electric cars sold in 2019), followed by Europe (560 000) and the United States (326 000); these three regions accounted for over 90% of all sales in 2019. Norway continues to have the highest market share for sales (56% in 2019), followed by Iceland (23%) and the Netherlands (15%). Battery electric cars (comprising battery electric cars and plug-in hybrid electric cars) made up a larger portion of electric car sales (almost three-quarters) in 2019. Progress in decarbonising the power sector will accelerate the CO2 emissions reduction benefits of EVs.

Electric car share in the Sustainable Development Scenario, 2000-2030

Openexpand
Tracking progress

With electric cars making up 2.6% of global car sales and about 1% of global car stock, and with market and technology progress being made in electrification in non-car modes, EV rollout is expanding quickly. Indeed, electric car stock increased 40% year-on year in 2019.

Although ambitious policy announcements have been critical in stimulating the transition to electric mobility in major vehicle markets in recent years, direct subsidy reductions and phase-outs in 2019 indicate a continuing shift to policy approaches that rely more on regulatory and fiscal measures to underpin the deployment of EVs – including increasing reliance on supply-side measures such as zero-emission vehicles mandates and fuel economy standards.

While 2019 was marked by continuous technology announcements in EV model diversification and battery performance progress, policy changes in key markets led to electric car sales stagnating in China (-2%, following a purchase subsidy reduction in June 2019 after which sales decreased); declining 10% in the United States; and accelerating in Europe (+50%) relative to 2018.

The global stock reached 7.2 million in 2019, with China claiming 47% of all electric cars on the road – up from just 8% in 2013.

Electric car stock by region and technology, 2013-2019

Openexpand

With rapid growth in electric car sales over the past decade, electric cars make up about 1% of the global car fleet today. In the Sustainable Development Scenario (SDS), 13% of the global car fleet is electric by 2030, requiring annual average growth of 36% per year between 2019 and 2030.

Battery electric vehicles, accounting for roughly three-quarters of electric car sales globally, were particularly successful in many markets in 2019, with rises of 80% across Europe as a whole and 43% in Canada, and stable sales in China and the United States, leading to global annual sales growth of 14% in 2019.

Meanwhile plug-in hybrid sales dropped 11%. Plug-in hybrid EV models became widely available on the market around 2012 and by 2019 they made up roughly one-third of the global electric car stock. The primary markets continue to be China (40% of global sales) and Europe (36%). Plug-in hybrids made up 36% of electric cars sold in Europe in 2019 and 21% China.

Electric car market share in selected countries, 2019

Openexpand

About 25% of all two-wheelers on the road are electric, and they are mostly in China (over 95%), India and ASEAN countries. Electric micro-mobility is also becoming more popular in many large cities owing to shared bicycle and foot-scooter schemes.

The global market for electric buses has declined since a spike in sales in 2016. In 2019, new electric bus registrations numbered around 75 000, down 20% from 93 000 units in 2018. There were about 513 000 electric buses worldwide in 2019, up 17% from 2018.

The primary electric bus market is still China, which accounts for 95% of the market and has a number of cities with fully or near-fully electrified bus fleets. But increasing numbers of electric buses are being procured in Europe, India and Latin America. In fact, the city of Santiago de Chile owns the largest electric bus fleet outside of China.

Most medium- and heavy-duty electric trucks on the road are in China, where the sales rose over 6 000 units in 2019. In Europe, a group of original equipment manufacturers (OEMs) has delivered electric medium-freight trucks to selected fleet operators for commercial testing.

Even shipping  and aviation are making electrification progress, as several electric ships are now in operation in Europe and China and the first all-electric commercial passenger aircraft flight took place in December 2019, when a retrofitted seaplane took a 15-minute flight from Vancouver, British Columbia. Cold-ironing and electric taxiing in particular are potential avenues for the gradual electrification of these two hard-to-abate sectors.

Several key regions are ramping up policy efforts to electrify various transport modes. The vast majority of car markets offer some form of subsidy or tax reduction for the purchase of an individual or company electric car, and 60% of global car sales are covered by China’s NEV mandate, the EU CO2 emissions standard or a ZEV mandate (in selected US states and Canada).

In April 2019, the European Union approved a new fuel economy standard for cars and vans for 2021‑30 and a CO2 emissions standard for heavy-duty vehicles (2020‑30), with specific requirements or bonuses for EVs. Previously, the standards targeted the year 2020 for compliance with emissions standards for light-duty vehicles of 95 gCO2/km, which has contributed to the success of EVs in Europe in recent years. Aggressive targets for the target year of 2030 will continue to favour the adoption of EVs. In addition, a revision of the Clean Vehicles Directive in 2019 aims at accelerating the adoption of electric buses (and other publicly procured vehicles) in EU countries, setting specific targets for 2025 and 2030.

China updated its fuel economy standard for light-duty vehicles for 2021-25 in January 2020. The standard, to be phased in gradually from 2021, sets a 4 l/100 km target for the country's new vehicle fleet in 2025. Through a fuel economy credit scheme, OEMs are obliged to reach that target, or cover any credit deficit through transfers, past carry-overs, or NEV credit surplus.1 A separate standard on EV efficiency sets a voluntary target on energy consumption based on weight classes. China has also scaled back subsidies for EV purchases and for battery manufacturers, but maintained its zero-emissions vehicle mandate scheme that sets minimum production requirements for the car manufacturing industry, tightening requirements for EVs to be able to access credits.

India is ramping up EV support through phase 2 of its Faster Adoption and Manufacturing of Electric Vehicles scheme, focusing on two-wheelers, fleet vehicles and buses. Other countries with increasing policy activity to support EVs are Canada, Costa Rica, Chile and New Zealand.

In 2019, more than 90% of global car markets in terms of sales (encompassing more than 50 countries) had EV incentives in place, although gradual phase-out at the national level has begun in key markets such as China and the United States. Support policies for charging infrastructure were in place for 80% of the market. However, other policies also impact the EV market, such as building codes for the installation of charging infrastructure and demand-response policies for grid services.

Given the strategic relevance of batteries for industrial development and the clean-energy transition, governments are supporting investments in battery manufacturing facilities and innovation in battery technology.

Automotive batteries are a major cost component of EVs. In 2019, the average sales-weighted lithium battery price fell 13% from 2018, to USD 156/kWh, down from more than USD 1 100/kWh in 2010.

With battery production required to increase about eighteen-fold by 2030 in the SDS, significant battery cost reductions can be expected through the conjunction of increasing battery pack size, battery chemistry changes and economies of scale thanks to larger manufacturing plants.

Growth of the Chinese – and global – automotive battery market is instrumental to prompt battery manufacturing capacity expansion and reap the benefits of economies of scale.

While most production is currently still sourced from relatively small plants (capacities of 3-10 GWh per year), several recent production capacity expansion announcements point to an increase in plant size as well as to new entrants in the automotive battery market, adding to rising capacity utilisation rates of existing plants.

OEMs have set a wide range of targets to supply the vehicle market with EVs. The number of EV models is expanding rapidly, with carmakers having announced dozens of models in various sizes, most of them coming online in the first half of the 2020 decade.

EV policy actions depend on the status of the EV market or technology. Setting vehicle and charger standards is a prerequisite for EV adoption.

In the early stages of EV deployment and diffusion, public procurement schemes (for buses and municipal vehicles, for instance) have the double benefit of demonstrating the technology to the public and providing the opportunity for public authorities to lead by example. Importantly, they also allow the industry to produce and deliver bulk orders to initiate economies of scale. Emerging economies can scale up their policy efforts both for new vehicles and second-hand imports.

Tax rates adapted to the tailpipe CO2 emissions of vehicles are important to ensure that the policy environment is conducive to increased EV uptake.

Fiscal incentives at vehicle purchase, as well as complementary measures that enhance the value of driving electric on a daily basis (e.g. preferential parking rates, road toll rebates and low-emission zones) are pivotal to attract consumers and businesses to EVs at an early market stage.

More comprehensive policies are critical to lay the foundation for a transition to electrification and to assuage stakeholder uncertainties. Increasingly stringent regulations on tailpipe CO2 emissions and mandates requiring that automakers sell a minimum share of zero- or low-emission vehicles are well suited to this purpose.

To replace lost fuel tax revenues, governments must anticipate alternative taxation approaches early and deploy them as larger numbers of non-ICE powertrains enter into circulation and increased diversity of fuels becomes available.

Taxation based on vehicle activity (e.g. distance-based pricing), rather than fuel-based taxation, is well suited to a context in which various powertrain technologies are sharing the road. This type of taxation can be effective in recovering funds needed for investing in and maintaining transport infrastructure, putting a price on local pollutant emissions (based on their health and environmental impacts) and reducing traffic congestion.

Policy makers will also need to send out appropriate signals for charging infrastructure and grid service businesses to enable viable business models to emerge and to facilitate smooth EV integration into power grid operations.

Environment, energy and resource ministers should facilitate the scale-up of battery manufacturing by creating a policy framework that reduces investment risks, e.g. by providing clear signals on the deployment of charging infrastructure, fuel economy standards and low- or zero-emission mandates.

They should also support the establishment of automotive battery production value chains (from raw material extraction, sourcing and processing, battery materials, cell production and battery systems to reuse and recycling) by consulting key industry participants to understand how to scale up capacity and investments to develop the value chain.

Governments should help create platforms to assess the critical impacts of new-generation lithium-ion (Li-ion) and other battery technologies, which might have unforeseen environmental consequences (e.g. lithium or nanomaterial dispersion). These policy frameworks should assign value to the sustainability of batteries over their lifecycle, from cell manufacturing to disposal and recycling, to ensure that all stakeholders have an interest in developing the battery value chain with the smallest possible environmental footprint.

Multilateral development agencies should strengthen funding for battery manufacturing, coupling it with requirements for sustainability (e.g. with respect to the transparency of supply chains).

Finally, academic institutions and training centres should be well equipped to rapidly form, develop and strengthen the professional skills needed across the entire battery value chain.

In 2017, the Electric Vehicles Initiative (EVI) launched the EV30@30 campaign, which set a collective goal of a 30% market share for EVs by 2030 (including cars, buses and trucks) to help meet the Paris Agreement targets. The campaign is currently supported by 11 countries and 22 supporting companies and organisations.

The EV30@30 campaign details several implementing actions to help achieve the goal in accordance with the priorities and programmes of each EVI country, including:

  • Supporting the deployment of EV chargers and tracking progress.
  • Galvanising public and private sector commitments for EV uptake in company and supplier fleets.
  • Scaling up policy research, including policy efficacy analysis, and information and experience sharing.
  • Supporting governments in need of policy and technical assistance through training and capacity building.
  • Establishing the Global EV Pilot City Programme, a global co‑operative programme that aims to facilitate the exchange of experiences and the replication of best practices for the promotion of EVs in cities (among the 41 member cities of the Global EV Pilot City Programme are Beijing, Tokyo, London, Amsterdam and Santiago de Chile).
Resources
References
  1. Transfers allow OEMs to freely transfer surplus credits to related parties, mostly to other subsidiaries owned by the OEM. Carry-overs refer to applying fuel economy credit surplus an OEM has accrued (and carried over at a discount) in previous years. The NEV surplus refers to the fact that OEMs are also required to meet a separate NEV credit scheme. If they receive surplus credits for extra NEVs produced/imported, they can use them to offset the fuel economy credit deficit (but not vice-versa). The penalty for non-compliance is that OEMs will be unable to obtain type approvals for any new models that do not meet the fuel economy standard.