In a report released Tuesday, the IEA predicted that “increasing demand for electric vehicles” over the next decade will be driven by “the drive to transform the global automotive industry and significantly reduce the consumption of petroleum products for road transport.”
If the infrastructure of charging points for electric cars continues to be rapidly developed, TEA expects that by 2035 half of all cars sold in the world will be electric.
This year, their sales make up a little more than a fifth of all cars sold.
The agency’s upbeat long-term forecast for electric cars – based on current government policies – comes just days after the world’s biggest electric car maker, Tesla, cut its prices in key markets to deal with falling sales and growing competition from Chinese automakers.
“Our data clearly shows that electric vehicle sales continue to grow rapidly, although they are not uniform across different markets,” TEA Executive Director Fatih Birol said in a statement. “Rather than slowing down, the global electric car revolution appears to be gearing up for a new phase of growth.”
Birol’s upbeat assessment contrasts with the financial pressures automakers are currently facing, with profit margins squeezed by price wars as competition heats up and demand slows.
Last year, global sales of electric cars grew by 35 percent. to almost 14 million
Over the past two days, Tesla and Chinese electric car maker Li Auto have cut prices on key models in China, the world’s biggest electric car market, while Tesla has also cut prices in Germany and the United States.
Earlier this month, Tesla reported its first annual sales decline in nearly four years. The company’s shares have fallen in price by more than 40 percent so far this year. Sales of China’s BYD also fell after briefly overtaking Tesla as the global market leader, with sales falling to around 300,000 in the first quarter of this year. compared to 525 thousand during the last three years of 2023 months.
Automakers may suffer from the price cuts, but they will be critical to increasing the use of electric cars worldwide, according to the IEA, which stressed that “the pace of the transition to electric cars … will depend on affordability.”
In China, more than 60 percent electric cars sold last year were cheaper than conventional cars, but in Europe and the United States, the purchase price of new cars with internal combustion engines is still lower than that of electric cars.
“Intensifying market competition and improving battery technology are expected to reduce electric car prices in the coming years,” TEA said.
“The growing export of electric cars by Chinese automakers, which in 2023 accounted for more than half of all electric vehicle sales, may contribute to downward pressure on purchase prices,” he added.
Concerns over China’s booming electric car exports prompted the European Union to launch an investigation late last year into Chinese state support for electric car manufacturers. The automotive industry is Europe’s largest job-creating market and is crucial to the region’s largest economy, Germany, which is home to car companies such as Volkswagen, Audi and BMW.
Electric car sales in China this year will make up almost 60 percent. of all global sales of such cars and about 45 percent. of all car sales in the country. According to the IEA, by 2030 almost every third car on China’s roads should be electric.
The agency predicts that by the beginning of the new decade, approximately one-fifth of all cars in the US and EU will be electric.
“This change will have major consequences for both the automotive industry and the energy sector,” said Birol.
According to current government policies, the number of public EV charging points worldwide is expected to reach 15 million by the end of the decade, which is almost four times the number last year.
“Policy support and careful planning are essential to ensure that higher electricity demand from charging does not overstretch electricity networks,” the IEA warned.
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