Think back a decade. In 2012, the nascent electric vehicle (EV) market was starting to gain momentum, with global sales of 130,000 cars. Today, that number of electric cars is sold every week.
While the market for petrol and diesel cars has been dampened by the economic fallout from COVID-19, demand for EVs continues to increase.
Factors like climate change and commitments to reach net-zero are helping drive the global shift to emissions-free motoring.
Global sales of electric cars reached 2.2 million in 2019. A year later, while demand for conventional cars contracted, sales of electric cars rose to 3 million, accounting for 4.1% of the world market, according to the International Energy Agency (IEA).
Total monthly car sales tend to follow an upward trend as a year unfolds. That said, 2021’s sales in the top-three global markets – China, the US and Europe – were more than 50% higher for each month of the year than in 2020.
In China, the world’s fastest-growing EV market, sales doubled in each month of 2021 compared with a year earlier. Overall in 2021, more electric cars were sold in China than were sold throughout the world in 2020.
Europe experienced 70% market growth, selling 2.3 million fully electric and hybrid electric vehicles in 2021, while US sales more than doubled to beyond half a million vehicles.
The numbers look positive for continued market growth across major markets, but the road ahead for electric vehicles may contain some hidden bumps.
Auto manufacturers must contend with looming supply-side challenges, including increasing bulk material costs. Steel prices doubled in 2021, with aluminium prices spiking by up to 70% and copper up by more than a third.
EV manufacturers could face supply-side shortages in the coming years. While these additional costs impacted both conventional and electric vehicle production, EVs also faced specific price challenges associated with battery manufacture, including year-on-year increases for essential materials like lithium carbon (up by 150%), graphite (up by 15%) and nickel (up by 25%). And while there may be a lag before material price hikes hit consumers, the trend is a cause for concern when it comes to market growth.
Another challenge facing the industry is a global shortage of microchips, which has slowed and at times halted production of cars and other products. It’s a shortage that particularly impacts EV’s. as their electronic components mean they need 2-3 times more microchips than cars with an internal combustion engine.
Compounding the woes of EV manufacturers, in demand critical minerals such as lithium and cobalt could be in short supply as early as 2025 unless significant new investment is channelled into expanding production capacity, the IEA says.
Winning the confidence of consumers has been a key part of boosting EV adoption worldwide. The challenge now for car manufacturers and policymakers will be getting new capacity set up to resolve looming supply disruptions, if they are to ensure that electric vehicles continue charging forwards.