Authors and contributors
Pharoah Le Feuvre
IEA (2019), "Tracking Transport", IEA, Paris https://www.iea.org/reports/tracking-transport-2019
Although the global share of electric mobility is still small, the EV fleet is expanding quickly. Ambitious policy announcements have been critical in stimulating the electric mobility transition in major vehicle markets in the past two to three years.
2018 was marked by continuous policy and technology announcements in many countries and regions, and global electric car sales accelerated with regards to previous years.
The global stock passed the 5‑million mark in 2018, with 45% of electric cars on the road located in China, up from just 8% in 2013.
Despite rapid growth in electric car sales over the past decade, the penetration of electric cars is still limited to less than 1% of the global car fleet today. In the Sustainable Development Scenario (SDS), 15% of the global car fleet is electric by 2030, requiring annual average growth of 30% per year between 2018 and 2030.
Since PHEV models became widely available on the market around 2012, the share of BEVs in the total electric car stock has remained steady at close to 60%, increasing slightly to 64% in 2018.
BEVs make up 75% of electric cars in China and 57% in the United States, whereas PHEVs clearly dominate the market in several European countries, e.g. the United Kingdom and Sweden.
Electrification continues to expand in other road transport modes as well.
The stock of electric two-wheelers represents more than 25% of all two-wheelers on the road, and they are mostly in China (95%), India and ASEAN member countries. Electric micro-mobility is also becoming more popular in many large cities owing to shared bicycle and foot scooter schemes.
Electric bus sales declined slightly (by 12%) from 2017 to 2018, with 92 000 units sold, and total electric bus stock reached 460 000. The electric bus market is still driven mainly by China, which accounts for 99% of the market, but increasing numbers of electric buses are being procured in Europe, India and Latin America.
Most medium- and heavy-duty electric trucks on the road are in China, where truck sales for 2018 are estimated at 1 000 to 2 000. 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 progress on electrification, as multiple electric ships are in operation in Europe and China (Electrek, 2017; 2018) and several prototype electric planes are at an early development phase (Bloomberg, 2019).
Several key regions are ramping up policy efforts to electrify various transport modes, and policy action is also spreading to smaller markets.
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. In addition, an agreement for revising the Clean Vehicles Directive will accelerate the adoption of electric buses (and other publicly procured vehicles) in EU countries, setting specific targets for 2025 and 2030.
China is updating its fuel economy standard to 2025 and has announced a voluntary fuel economy standard for EVs. It is also scaling back subsidies for EV purchases and for battery manufacturers, but it maintains its zero-emissions vehicle mandate scheme, which sets a minimum production requirement for the car manufacturing industry. 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 2018, more than 90% of global car markets in terms of sales (representing over 50 countries) had EV incentives in place, whereas 80% had support policies for charging infrastructure. 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 2018, the average lithium battery price fell 18% from 2017, to USD 176 per kWh (BNEF, 2018).
With battery production expected to grow nearly thirty-fold by 2030 in the SDS, significant battery cost reductions can be expected through the conjunction of battery pack size increase, battery chemistry changes and economies of scale thanks to increasing manufacturing plant size.
The growing size of the Chinese and, more broadly, the global automotive battery market is instrumental to reap the benefits of economies of scale, as it prompts battery manufacturing capacity expansion.
While most production is currently still sourced from small plants (capacities of 3 GWh to 8 GWh per year), several recent announcements of production capacity expansions point to an increase in plant size as well as new entrants in the automotive battery market, adding to increases in the capacity utilisation rates of existing plants (Benchmark Minerals, 2018).
Each of the three largest battery factories currently in operation, all recently built, have a capacity of 20 GWh/year and account for roughly 21% of the total installed capacity (EV Volumes, 2019).
Original equipment manufacturers (OEMs) have set a wide range of targets to supply the vehicle market with EVs. The number of EV models is expanding rapidly: car makers have announced dozens of models in various size segments, most of them coming online in the first half of the next decade.
Overall, the production and sales targets that car makers have set place them on the SDS trajectory towards 2025.
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.
Foregone revenues from fuel taxation calls for alternative tax approaches, to be anticipated early and deployed as larger volumes of alternative powertrains enter circulation.
Taxation based on vehicle activity (e.g. distance-based pricing) is well suited to a context in which various powertrain technologies share the road space (vs. fuel-based taxation). This type of taxation can be effective in recovering funds needed for investing in and maintaining transport infrastructure, giving a price to the local pollutant emissions (based on their health and environmental impacts) and reducing traffic congestion.
Policy makers will also need to set 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 enable 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 identifying key industry participants and establishing a dialogue to understand what the main priorities are to enable them 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 give value to the sustainability of battery cell manufacturing 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 sustainable battery cell manufacturing (e.g. with respect to the transparency of supply chains).
Finally, academic institutions and training centres should be well equipped to close skill gaps to enable the timely formation, development and strengthening of the professional profiles needed for the entire battery value chain.
In 2017, the Electric Vehicles Initiative (EVI) launched the EV 30@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 EVI countries and 19 supporting companies and organisations.
The EV 30@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 (the 39 member cities of the Global EV Pilot City Programme currently include, for example, Beijing, Tokyo, London, Amsterdam and Santiago de Chile).
Innovation in EVs fundamentally needs to focus on continued improvements of the battery technology itself, including advancing alternative chemistries, to reach the cost, density and efficiency needed to reach the levels of deployment in the SDS.
These innovation efforts can also support more sustainable manufacturing and value chains for the large volumes of batteries produced under the SDS.
As the share of EVs increases, their impact on electricity networks, particularly on distribution grids, will become larger. If EV charging is deployed and managed smartly however, EVs can become a flexibility resource able to aid in their own integration and that of higher shares of variable renewables or other distributed energy resources into the grid.
In the SDS, annual EV battery deployment is 30 times higher by 2030. Reaching this level of deployment will require continued cost reductions, and battery efficiency and density improvements beyond what can be achieved with current technologies.
Electric cars currently cost more to purchase than similar-sized conventional cars, and even from a total cost of ownership perspective (including operational costs such as fuel), the economic advantages of electrification are limited to a relatively narrow range of cases. The cost challenges related to EVs are primarily linked to the battery, one of the major cost components. Technological advances allowing for more compact batteries with longer ranges, extra durability (the capacity to withstand a large number of charge/discharge cycles without performance being affected) and the capacity to charge at very high power (fast/ultra-fast charging, from 100 kW to 1 MW), will also influence level of EV adoption.
High EV uptake with unmanaged charging can pose a challenge for the power system if charging coincides with the high-demand periods of the main power system, resulting in greater peak demand and requiring additional peak generation capacity. Increasing EV uptake can also overload distribution networks and necessitate local power grid upgrades such as transformer replacements and cable reinforcement.
Conversely, if adequately managed, EVs can also provide demand-side response (DSR) solutions across a wide range of timescales. Unlocking DSR opportunities from the participation of EVs would help integrate a higher share of variable renewables such as wind and solar power as well as other distributed energy resources. This is a major opportunity given the challenges of electricity system operators to conciliate supply and demand while integrating greater shares of variable renewable energy and other distributed energy resources.