Electric car sales are one of the most dynamic markets in the clean energy world. Around 130,000 electric vehicles were sold in the world during 2012. In a single week, this many electric cars are sold.
The growth of electric cars has been impressive in the past three years despite the fact that the pandemic affected the conventional car market, and manufacturers began to struggle with supply-chain bottlenecks. In 2019, only 2.5% of all cars sold were electric. Electric car sales rose to 3 million in 2020 and represented 4.1% of the total car market. Electric car sales in 2021 more than tripled from 6.6 million to close to 9%, and their share of the global market has more than tripled since two years ago. Electric cars accounted for the entire net increase in global car sales by 2021.
Electric cars helped reduce oil consumption and COsub>2/sub> emissions in 2021. However, these benefits were canceled out by the parallel increase in the sales of SUVs. Electric cars have helped reduce oil consumption, CO2 emissions, and greenhouse gasses in 2021. However, these benefits have been offset by the simultaneous increase in SUV sales.
In 2021, sales of electric cars will reach 6.6 million units, more than doubling their market share compared to two years ago.
Electric car sales worldwide and market share, 2010-2021
- IEA. Licence: CC-BY 4.0Other
- United States
- Global market share
In general, electric car sales tend to be higher in the second half of the year. In 2021, sales in December were two-and-a-half times higher than sales in January in the three largest markets. Even so, the monthly sales of electric cars in 2021 were consistently higher by at least 50% than those for the same month in 2020.
Monthly sales of electric vehicles in major auto markets, 2021 as compared to 2020
- IEA. Licence: CC-BY-4.0China
- United States
The People’s Republic of China (hereafter ‘China’) led global growth in electric car markets in 2021, as sales nearly tripled to 3.4 million. In other words, more electric cars were sold in 2021 in China alone than were sold in the entire world in 2020. The annual increase is the fastest electric car market growth in China since 2015, significantly outpacing the more gradual recovery of the country’s overall car market. Electric cars’ share of the overall market on a monthly basis leaped from 7.2% in January to around 20% in December. The Chinese government’s official target is for electric cars to reach a market share of 20% for the full year in 2025, and their performance in 2021 suggests they are well on track to do so.
The market’s dynamic is a result of several factors. After the outbreak of the pandemic, the government extended subsidies for electric cars for two more years. However, they will be reduced by 10% in 2021 and 30% in 2020. China’s electric vehicle market could be maturing if sales in 2021 continue to grow despite decreasing subsidies. It could also be a sign of a rush by customers to lock in contributions at levels from 2021 before they drop at the beginning of 2022. The expanded selection of small cars is another important factor. Wuling Hongguang Mini EV, a tiny electric vehicle that is not subsidized but is still one of the most popular models in China for last year’s sales, offers a low-cost entry to the market. The Chinese electric car market is expected to grow further in 2022 due to the combination of consumer preference for new models, residual subsidies at the national level, and the continued preferential treatment given EVs locally (local subsidies, exemption from city-level purchasing limitations).
In Europe in 2021, sales of electric cars increased by almost 70% to 2.3 million. About half were plug-in hybrids. The annual growth rate was lower than in 2020, when sales had more than doubled. However, the European automotive market as a whole has not recovered since the pandemic. In 2021, total car sales will be 25% less than they were in 2019. In Europe, the surge in EV sales last year was partly driven by new CO2 emission standards. In most of the major European markets, purchase subsidies for EVs have also been increased and expanded. In 2021, the highest monthly sales were recorded in the fourth quarter. This was when European electric car sales surpassed diesel cars for the first time with a market share of 21%.
In absolute terms, the biggest electric car market in Europe by 2021 will be Germany. More than one-third of new cars sold between November and December were electric. Electric vehicles made up 17% of all European sales by 2021. However, there were differences between markets. Norway, Sweden, and the Netherlands topped the global rankings with 72% and 45%, respectively. Germany, with a market share of 25%, was the largest European market, followed by the United Kingdom, France, Italy, and Spain.
In 2021, the United States made a remarkable return to electric cars. Sales more than doubled and exceeded half a million. Electric vehicles grew their market share from 4.5% to 4,5%. Tesla still dominates the US electric car industry, accounting for over half of all units sold. Tesla’s share of the US electric car market has declined since 2020, when it was 65%. This is due to new electric models being offered by other automakers. The federal incentive programs have not been renewed. However, consumers can still take advantage of generous tax credits.
The sales of electric vehicles are not growing at the same rate in all major markets despite impressive growth. China, Europe, and America account for around two-thirds of the total car market. However, electric car sales are about 90%. Electric cars are less than 2% in most markets. In large developing economies like Brazil, India, and Indonesia, the share of electric cars is still under 1%. Electric scooters and buses have been growing in popularity, but the slow uptake of electric cars is due to the high price and lack of charging infrastructure. Japan also saw a slight increase in electric car sales, but their market share remained below 1% for the last three years. Korea and Australia are the two smaller markets that show the most dynamism. After two years of stagnation, the sales of electric cars in Korea more than doubled by 2021, increasing their share to 8%. Australia also saw a more than threefold increase in electric car sales by 2021.
China and Europe lead global sales of electric cars.
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. Announcements, targets, and new model launches have helped strengthen the view that the future of cars is electric. At the same time, the huge success of electric vehicles was challenged by tight supplies of components and increases in the prices of bulk materials, bringing supply-side concerns to the top of the agenda for government and industry alike.
Many governments and car manufacturers have set goals to phase out the sale of cars with internal combustion engines by 2020 or 2021. Many governments and automobile manufacturers have chosen electric vehicles as the preferred road transport technology. In November 2021, the US government announced an ambitious 50% electrification goal by 2030 for new cars. This was backed up by the announcement that 500,000 charging stations would be installed to increase consumer confidence. EU Commission has proposed that the CO2 emissions standard for new cars be reduced to zero by the year 2035. Several automakers also announced their electrification goals. Volkswagen, for example, said half of its sales by 2030 would be electric. The manufacturers’ increasing expertise in electric vehicle design was a benefit to these models. They typically had longer ranges and vehicle designs that were optimized for electric motors.
Stellantis introduced new smaller EV models in Europe. Volkswagen launched the ID series. Ford launched the MachE in the United States. Stellantis, Toyota, and Stellantis each introduced a plug-in hybrid. Many of the new models in the United States and Europe have contributed to the higher EV sales of premium vehicles. In China, 300,000 premium EVs produced by Chinese start-ups accounted for the vehicles sold. The Wuling Hongguang Mini-EV was China’s best-selling electric car in 2021, with sales of just over 400,000 units. The introduction of new electric cars in different segments of the auto market will likely continue to stimulate the demand. Ford F150 Lighting, for example, received more than 200000 orders. This led to the company increasing production targets.
The future looks bright for electric cars, but warning signals are coming from their supply chain, with bulk material prices increasing for the entire auto industry. In 2021, the cost of steel rose by as much as 100%, aluminum by around 70%, and copper by more than 33%, affecting both conventional and electric cars. For electric vehicles, additional challenges were posed by increased prices for materials needed to manufacture batteries: the cost of lithium carbonate increased by 150% year on year, graphite by 15%, and nickel by 25%, to name just a few.
Despite the fact that it may seem surprising, battery prices haven’t increased in volume-weighted average since 2020. The steady price is due to three factors:
- Battery prices have been on a downward trend for a long time, and technological advancements have helped to offset higher raw material costs.
- It takes time for costs to move up the value chain and affect battery prices.
- Battery chemistries based on lithium ferrophosphate have increased in use, which has reduced the impact of price increases.
Battery prices will rise if metal prices for batteries continue to increase.
A number of automakers were also affected by microchip shortages, which hampered production. The background to the microchip shortage is complex. Still, in general, a faster-than-anticipated rebound of automobile sales and other microchip-reliant products was met by a tight supply of microchips. This shortage is particularly problematic for electric vehicles (EVs), which need twice as many microchips than equivalent conventional cars, mainly due to the additional power electronics components. Electric car sales in 2021 could have been higher if these disruptions had not occurred. Several EV factories were shut down for several weeks, causing delays in the delivery of EVs.
Some of the supply restrictions of 2021 may ease with the rebalancing of the market, but others could linger. The EV value chain proved to be robust in 2021 as it managed to deliver on higher-than-anticipated demand. For EVs’ growth to continue, the battery supply chain and EV production capacities will need to grow at a rapid pace. The short-term and long-term ambitions of EVs have both skyrocketed in the past two years. However, supply chains have been unable to keep up.
According to the IEA’s special report on Critical Minerals and Clean Energy Transitions published last year, there could be a shortage of cobalt and lithium as early as 2025 if sufficient investments are not made to increase production. The EV industry’s growth will require not only a greater extraction of critical minerals but also an expansion of all the EV value chains. The value chain includes the processing of battery metals, anode and cathode production, separator manufacture, cell manufacturing, battery assembly, and finally, the group of electric cars. These industries, many of which are still in their infancy, must expand quickly to avoid bottlenecks, which would slow the transition to electric mobility.
The EV industry is about to enter a phase where raw materials and component supplies will be at the forefront of policymaking, as they are critical to the clean energy transformation. First-time supply bottlenecks have become a real problem for the electrification and modernization of road transport. They are also adding to the traditional challenges on the demand side. The policy action must be adapted and give the market clear signals for long-term investments to further expand supply. This new focus is evident in the US Infrastructure Bill, which aims to stimulate investments in raw materials for batteries. Or, in the Important European Projects, which focuses on batteries. The Global Electric Vehicle Outlook for Spring will analyze these and other important aspects.