Electric vehicle sales are expected to reach an all-time high globally in 2023, increasing their market share to around one-fifth and bringing about a significant change in the automotive sector that will have an impact on the energy industry, particularly oil. The IEA’s new Global Electric Vehicle Outlook reports show that last year, more than 10 million EVs were offered for sale globally, that number that is projected to increase by 35% in 2023 and hit 14 million EV units.
According to Fatih Birol, electric cars are among the main forces behind a new energy economy globally, which is experiencing rapid growth and bringing with it a historic change in the auto industry across the globe; these current trends are having a big impact on the world’s demand for oil. Electric cars are challenging the status quo after more than a century of dominance by ICE vehicles on the roads. They are going to save at least five million gallons of oil per day by the year 2030.
The vast bulk of all electric vehicle sales at this point are in the Chinese, European and American markets. Today, China has more than 50% of the world’s vehicles that run on electricity. In 2022, sales in the country increased by 15%, with sales in Europe and the United States growing more than 50%, making those countries the second and third largest markets, respectively.
It is expected that by the end of this decade and beyond, radical policy initiatives in large economies, such as the Fit for 55 program in the European Union or the IRA in the United States, will significantly raise the electric vehicle’s market share. A positive influence on the production and supply chain of electric batteries is also resulting from these promising trends.
According to the IEA’s Net Zero CO2 Emissions by 2050 scenario, an announcement of many geographically dispersed battery production projects would suffice to meet electric vehicle demand until 2030. China, nevertheless, continues to dominate the market for batteries and their components, and production remains extremely centralized.
Other nations have made plans to support local sectors that will increase their ability to compete in the electric vehicle market in the coming years. Almost 90% of the demand for batteries annually is expected to be satisfied by local battery producers, according to the European Union’s Net-Zero Industry Act (NZIA). Similarly, the American IRA emphasizes the development of local supply networks for electric vehicles and batteries, as well as for minerals.
Given the fact that production and sales of electric vehicles are concentrated in a small number of major markets, other areas are also showing promise. Despite starting from a low base, the sales of electric vehicles in India, Indonesia and Thailand increased by more than three times in 2022.
This bullish outlook for the electric vehicle industry gives startups such as Rivian Automotive Inc. (NASDAQ: RIVN) hope that there is a huge market waiting to be tapped if automakers address the expectations of consumers at prices buyers can afford.
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