Sales of electric vehicles doubled in 2021 from the previous year and have kept rising in 2022, according to a recent report from the International Energy Agency.
Some 6.6 million EVs were sold in 2021 across the world, and 2 million were sold in the first quarter of this year, up 75 percent from the same period in 2021. However, continued growth of the EV market is going to require more efforts to improve battery manufacturing capability in some countries, including the U.S., as well as finding new sources of the critical minerals necessary for battery production.
China led the way in EV sales in 2021 at 3.3 million, followed by Europe at 2.3 million and the U.S. at 630,000. Because Chinese vehicles are usually smaller, they can be manufactured more economically with less of a price gap compared with gasoline-powered vehicles. In other developing countries, sales are lagging due to their unaffordability.
There are several reasons for the success of EVs, the report found. “Sustained policy support is the main pillar. Public spending on subsidies and incentives for EVs nearly doubled in 2021 to nearly USD 30 billion. A growing number of countries have pledged to phase out internal combustion engines or have ambitious vehicle electrification targets for the coming decades. Meanwhile, many carmakers have plans to electrify their fleets that go further than policy targets. Finally, five times more new EV models were available in 2021 than in 2015, increasing the attractiveness for consumers,” it states.
Challenges remain for continued growth in the EV market. Rising prices for critical minerals needed for battery production, supply chain disruptions from Russia’s attack on Ukraine, and the concentration of mining and battery production in a few countries are among them.
“Today’s battery supply chains are concentrated around China, which produces three-quarters of all lithium-ion batteries and is home to 70 percent of production capacity for cathodes and 85 percent of all production capacity for anodes (both are key components of batteries,” the report states. “Over half of lithium, cobalt, and graphite processing and refining capacity is located in China.” The IEA predicts the majority of the supply chain is likely to remain in that country through 2030.
In addition, the “prices of raw materials such as cobalt, lithium and nickel have surged. In May 2022, lithium prices were over seven times higher than at the start of 2021,” the report states. “Unprecedented battery demand and a lack of structural investment in new supply capacity are key factors. Russia’s invasion of Ukraine has created further pressures.”
The report also discusses the need to electrify the heavy-duty trucking industry, but noted that much investment needs to occur in that area, as well as a rapid buildout of EV charging infrastructure for passenger vehicles.
It makes five recommendations to accelerate the adoption of EVs worldwide, including maintaining and adapting public support; kick-starting the heavy-duty market through policy; promoting adoption of EVs in developing countries; and expanding the EV infrastructure and smart grid.