A new report by the International Energy Agency (IEA), authored by Leonardo Paoli, Energy Analyst, and Timur Gül, Head of the Energy Technology Policy Division, has indicated the impressive sales of electric vehicles over the last three years, with the industry market share having more than tripled from 2.5% in 2019 to 9% in 2021. In 2021, 6.6 million EVs, specifically electric light-duty vehicles, were sold, doubling the previous year of 2020’s sale of 3 million units, and demonstrating the willingness of consumers to opt for an eco-friendlier alternative to traditional combustion engine vehicles.
This steady growth in sales has served to ramp up competition amongst global car manufacturers as they strive to capture the lucrative market share, despite facing numerous challenges including most recently a crunch in supply of semiconductors to international markets due to the Covid-19 pandemic.
“Growth has been particularly impressive over the last three years, even as the global pandemic shrank the market for conventional cars and as manufacturers started grappling with supply chain bottlenecks,” the IEA said in its statement.
Considered the barometer for the EV industry, American electric vehicle and clean energy company, Tesla, the world’s biggest EV manufacturer, saw a 760% surge in net profit for 2021, having delivered 936,172 vehicles and resulting in a profit of more than $2.3 billion.
According to a recent report by market research analyst, Research and Markets, at a compound annual growth of 17.1%, the global market for EV charging stations is expected to grow to $20.49 billion by 2025 at a compound annual growth rate of 31.8%, significantly higher than the current market rate of approximately $5.8 billion and today’s annual growth rate of 17.1%.
Despite the EV market having successfully navigated the way through net growth in global car sales, a number of challenges will determine the future of the transition to a carbon emission free industry. Governmental incentives to boost EV sales will play a large role in the future of the industry, with the implementation of policies to stimulate demand expected to put a strain on supply chains for the manufacturing of EV batteries. Another critical challenge is the development of infrastructure needed to increase the number of EV charging stations being made available to the public, particularly in less developed countries.
“Government policies remain the key driving force for global electric car markets, but their dynamism in 2021 also reflects a very active year on the part of the automotive industry,” the IEA stated in its report, adding, “Announcements, targets, and new model launches have helped strengthen the view that the future of cars is electric.”
Independent energy research and business intelligence company, Rystad Energy, in January 2022, noted that EV manufacturers will potentially reel from the projected skyrocketing of battery-grade lithium prices in the coming years while, conversely, research firm, Gartner, recently predicted that EV sales will rise by 35% in 2022, with the global shortage in semiconductors forcing car manufacturers to design, develop, and produce their own chips by 2025.
“The EV value chain proved to be robust in 2021 as it managed to deliver on higher-than-anticipated demand. But for EVs to continue their current growth trajectory, battery supply chains and EV production capacity will have to expand at a rapid rate,” the IEA warned.
While EV sales in developed nations, such as Japan, Germany, Norway, the U.S., and the UK have seen a surge in sales, developing nations have seen a significant lag. With the highest CO2 emission intensity in the G20 group, the coal-dependent country of South Africa’s transport industry will need to transition to cleaner forms of energy in order for EVs to assist in its commitments to mitigate emissions. Currently, there are only 1,000 EVs in South Africa, and their widespread adoption has been noted as potentially resulting in more emissions than their combustion engine counterparts due to coal comprising approximately 80% of the country’s energy mix.