IEA: Electric vehicle sales will continue to rise despite Covid-19 crisis
While the overall passenger car market is set to contract by 15% this year, electric vehicle (EV) sales to both individual motorists and businesses are likely to remain steady, new International Energy Agency (IEA) analysis states.
The Agency’s 2020 EV Outlook, published today (23 June), charts the trends within the global EV and broader automotive markets throughout 2019. It also provides predictions for 2020 and beyond.
According to the Outlook, 2.1 million electric cars were sold globally in 2019 – up 6% on 2018 levels. This brought the global electric car stock to 7.2 million vehicles, of which 47% are located in China.
However, a year-on-year increase in sales of more than 30% would have been likely if the US and China had not weakened policy supports, the Outlook concludes. 2019 saw China halve its EV purchase subsidies for individual motorists and the Trump Administration end the federal tax credit programme for automakers producing EVs. In Europe, meanwhile, policies either remained steady or improved, leading to a 50% year-on-year sales increase for EVs.
Further barriers to EV adoption in 2019 noted in the Outlook are falling battery costs and technology improvements. This may seem counterintuitive, but, given than many automakers are promising new EV models either this year or on 2021, the IEA believes businesses and individuals alike are holding out for the “latest and greatest” technologies.
Looking ahead to 2020, the Outlook notes that the global contraction in the broader light vehicle market, first felt in 2019, is likely to be amplified in 2020, due to the financial and logistical challenges posed by the Covid-19 pandemic. Globally, car sales were down 30% year-on-year in the first quarter.
The IEA predicts that EVs will ultimately fare the best against this challenging background and will account for 3% of global vehicle sales this calendar year, up slightly from 2.6% in 2019. The fact that European nations and China both have national and local subsidy schemes which have been extended into the early or mid-2020s will buoy the EV market, while economic stimulus packages will likely provide further support, the IEA states.
“There are signals that recovery measures to tackle the Covid-19 crisis will continue to focus on vehicle efficiency in general and electrification in particular,” the Outlook overview concludes.
The publication of the EV Outlook comes less than a week after the IEA unveiled its special report on a sustainable recovery from the pandemic.
This report lays out a string of 30 policy mechanisms which should be enacted over the next three years if the “core issues of the global recession” are to be tackled in a way which also spurs significant progress towards key targets on issues such as climate change. It should serve as a guide to policymakers, rather than a one-size-fits-all solution or the only possible pathway to a green and just recovery, the IEA stated.
In the “transport” section of the special report, the IEA recommends that consumer incentives for replacing old, polluting vehicles should contain strict requirements around which new models they can be put towards, in order to spur progress towards climate targets while incentivising automakers to make technological improvements.
Commercial vehicles such as trucks, meanwhile, should receive decarbonisation support in the form of tax breaks.
“In addition to job retention, these incentive schemes can enhance energy security through reduced oil consumption, and, if designed appropriately, can reduce air pollution and greenhouse gas emissions,” the special report states.
“Boosting demand for electric vehicles, including fuel cell vehicles, would incentivise automakers to shift towards lower emission models and to pursue cost reductions in battery and fuel cell manufacturing: it could also lead to jobs in new domestic industries such as battery production.”
The IEA claims that if the measures presented in the special report are followed by enough major economies and backed with $1trn of investment through to 2024, GDP will be 3.5% higher than in a ‘business-as-usual’ scenario.
On a domestic scale, a report backed by the UK Government and released earlier this week concluded that the EV sector could provide a £24bn boost to the UK economy through to 2025, provided it receives the right support to scale up production. Boris Johnson is reportedly positioning projects to extend EV charging networks as a key short-term measure to create jobs and spur decarbonisation.