The International Energy Agency (IEA) — in its outlook – has revealed electric vehicle (EV) sales continue to grow rapidly, with over 7 million units sold globally in the first half of 2024.
This represents a 25 percent increase compared to the same period in 2023. EVs now comprise nearly 5 percent of the global car fleet, with China leading the surge by accounting for almost 80 percent of the sales increase. The country saw its EV sales rise from 3 million in 2023 to over 4 million by mid-2024.
However, the IEA cautions that the path to mass adoption of EVs is unlikely to be straightforward. There are growing concerns about charging infrastructure and the capacity of electricity grids to support increased demand. While overall global EV sales are on the rise, there are regional discrepancies. In the European Union, sales were flat, with a notable decline in Germany, while the UK saw a 15 percent increase, and the US experienced a nearly 10 percent rise. EV adoption is also gaining momentum in emerging markets like Brazil, Indonesia, and Mexico.
A significant trend highlighted by the IEA is the increasing popularity of plug-in hybrid electric vehicles (PHEVs), which made up 35 percent of total EV sales in the first half of 2024. In China, PHEV sales grew by 70 percent, driven by range-extended electric vehicles (REEVs), which offer an electric range of around 130 kilometers—much higher than the 80 km range of standard PHEVs. This trend is mirrored in the US, where PHEV sales grew by 25 percent, while battery electric vehicle (BEV) sales rose by just 5 percent.
The report emphasizes the need for expanded charging infrastructure to alleviate “range anxiety,” particularly as more consumers opt for PHEVs and REEVs with longer ranges. Despite challenges, the IEA expects robust EV sales for the remainder of 2024, projecting around 17 million units sold globally by year-end, with China alone contributing over 10 million.
Battery technology also continues to evolve, with manufacturers adopting lower-cost chemistries that require less cobalt and nickel, leading to a reduction in battery costs. Battery prices fell below USD 80 per kilowatt-hour during the first nine months of 2024, further supporting the expansion of the EV market.
While EVs remain central to decarbonizing road transport, the IEA highlights the importance of continued efforts to balance incentives for consumer adoption, enhance infrastructure, and strengthen grids for a successful transition to a fully electric future.
Electric vehicles (EVs) continue to see strong growth globally, despite challenges such as tight profit margins, high inflation, reduced purchase incentives in some regions, and limited public charging infrastructure. While EVs currently account for 20 percent of new car sales, they make up less than 5 percent of the total cars on the road. Nevertheless, global EV sales reached approximately 14 million units in 2023, and that number is projected to rise to around 17 million in 2024, with EVs making up over 20 percent of total car sales.
In the first half of 2024, global electric car sales grew by 25 percent compared to the same period in 2023, driven largely by China, which alone accounted for 60 percent of global sales. In August 2024, more than 1 million EVs were sold in China, with sales for the entire year expected to exceed 10 million, representing nearly half of all car sales in the country.
Lower battery costs are helping to sustain this optimism. The global average price for battery cells fell below USD 80/kWh in the first nine months of 2024, thanks to significant investments in battery manufacturing over the past five years. Despite this, global EV battery manufacturing capacity of 2.2 TWh in 2023 far exceeded the demand of 750 GWh, signaling strong future growth potential.
In terms of affordability, China leads the way, where about 60 percent of electric cars sold are cheaper than their internal combustion engine (ICE) equivalents. However, in Europe and the United States, EVs generally remain more expensive than ICE vehicles. To spur wider adoption, automakers are planning to introduce more affordable models, supported by falling battery prices, which are expected to make EVs more competitive in these regions.
The rapid rise in electric vehicle (EV) sales is poised to significantly curb future oil demand, with projections indicating that annual sales of electric cars will increase from 14 million today to over 40 million by 2030, and nearly 60 million by 2035, according to the STEPS scenario. This surge is expected to displace more than 6 million barrels per day (mb/d) of oil demand by 2030, and 13 mb/d by 2035, primarily driven by passenger cars. However, the pace of EV adoption will be a critical factor in determining the extent of oil demand reduction.
In the first half of 2024, electric car sales rose by 25 percent year-on-year, with China contributing to 80 percent of this increase. While North America saw a 13 percent rise in EV sales, growth in other regions, such as parts of Asia and the European Union, has been more modest. In the EU, the phase-out of certain EV subsidies and the delay in stringent CO2 emissions standards until 2025 have slowed sales momentum.
Several factors will shape the future trajectory of EV sales, including government policies, emission standards, the availability of affordable models, and the expansion of charging infrastructure. According to STEPS, EVs are expected to account for 45 percent of new passenger car sales globally by 2030, but this could vary depending on the pace of policy implementation and market dynamics. In a scenario of slower EV growth, market share could drop by 10 percentage points, while faster growth could boost EV market share to two-thirds by 2035, particularly in emerging economies outside China.
However, there are risks that could slow the rate of EV adoption in certain regions. In the United States, uncertainty surrounding future greenhouse gas emission standards could impact demand. Given that the U.S. accounts for 85 percent of the North American car market, a slowdown there could ripple throughout the region. In the European Union, a 2026 review of CO2 standards will assess progress toward 2035 targets, influencing the speed of adoption. Meanwhile, advanced economies in Asia are facing challenges in increasing their EV market share, and Australia may need additional support measures to meet its recently announced EV goals.
Even China, the world’s largest EV market, is showing signs of mixed consumer sentiment, with plug-in hybrid vehicles (PHEVs) accounting for over 30 percent of total EV sales. This suggests that range anxiety, fueled by concerns over charging infrastructure, remains a key issue for Chinese consumers.
In a sensitivity scenario, where various risks dampen EV sales by around 10 percent compared to STEPS, global oil demand would be around 2 mb/d higher in 2035. In this case, sales in the U.S. and China would be about 10 percent and 7 percent lower, respectively, than projected, and European Union sales 5 percent lower. Despite this potential slowdown, the peak in global oil demand is still expected by the end of the decade, albeit at a slightly higher level of 103 mb/d rather than 102 mb/d as forecasted in the STEPS scenario.