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IEA: electric vehicles sales remain strong but risks of price rises must be reduced

Electric car sales powered through 2021 and have remained strong so far in 2022, but ensuring future growth will demand greater efforts to diversify battery manufacturing and critical mineral supplies to reduce the risks of bottlenecks and price rises, according to the International Energy Agency (IEA).

As reported in the latest edition of the annual Global Electric Vehicle Outlook, sales of electric cars (including fully electric and plug-in hybrids) doubled in 2021 to a new record of 6.6 million, with more now sold each week than in the whole of 2012. Despite strains along global supply chains, sales kept rising strongly into 2022, with 2 million electric cars sold worldwide in the first quarter, up by three-quarters from the same period a year earlier. Overall, the number of electric cars on the world’s roads by the end of 2021 was about 16.5 million, triple the amount in 2018.

In China, electric car sales nearly tripled in 2021 to 3.3 million, accounting for about half of the global total. Sales also grew strongly in Europe (increasing by 65 per cent to 2.3 million). By contrast, electric car sales are lagging in most emerging and developing economies where only a few models are often available and at prices that are unaffordable for mass-market consumers.

Sustained policy support has been one of the main reasons for strong electric car sales in many markets, with overall public spending on subsidies and incentives doubling in 2021 to nearly 30 billion US dollars. A growing number of countries have ambitious vehicle electrification targets for the coming decades, and many carmakers have plans to electrify their fleets that go beyond policy targets.

“Few areas of the new global energy economy are as dynamic as electric vehicles. The success of the sector in setting new sales records is extremely encouraging, but there is no room for complacency,” said IEA Executive Director Fatih Birol. “Policymakers, industry executives and investors need to be highly vigilant and resourceful in order to reduce the risks of supply disruptions and ensure sustainable supplies of critical minerals. Under its new Ministerial mandate, the IEA is working with governments around the world on how to strategically manage resources of critical minerals that are needed for electric vehicles and other key clean energy technologies.”

In the short term, the greatest obstacles to continued strong EV sales are soaring prices for some critical minerals essential for battery manufacturing, as well as supply chain disruptions caused by Russia’s attack on Ukraine and by continued COVID-19 lockdowns in some parts of China. Prices for lithium, a crucial mineral for car batteries, were over seven times higher in May 2022 than at the start of 2021 and prices for cobalt and nickel also rose. Russia’s invasion of Ukraine has created further pressures since Russia supplies 20 per cent of global battery-grade nickel.

In the longer term, greater efforts are needed to roll out enough charging infrastructure to service the expected growth in electric car sales, the report says.

Other recommendations include using stringent vehicle efficiency and carbon dioxide emission standards to underpin demand for EVs; prioritising two- and three-wheelers and urban buses to kick-start EVs in emerging and developing markets; and promoting more investment in critical mineral extraction while respecting environmentally and socially sustainable practices to ensure sufficient supplies to power the clean energy transition. 

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