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Exploring the Factors Propelling and Obstacles Hindering the Electric Vehicle Market

Electric Vehicles Market
While Europe and the United States recorded a steep growth in new electric vehicle registrations between 2020 and 2021, China claimed pole position.
  • As of 2021, Electric Vehicles (EVs) make up an estimated 6.1% of all vehicles on the road in the United States, a significant increase from just 1% in 2019.

  • According to the International Energy Agency (IEA), if the current growth trend continues, 13% of new cars sold in 2022 will be electric.

Electric Vehicles (EVs) have been part of the Western automobile market since the 1820s, but it was Tesla’s Roadster in 2008 that sparked a race toward innovation for automakers. With its success in the luxury vehicle market, Tesla helped bring EVs to the forefront of the automotive industry. Today, EVs dominate the segment, as seen at the 2022 New York Auto Show, where automakers presented various all-electric models, including SUVs and pickup trucks. These types of vehicles are especially popular in the mass-motorized U.S. market, where light trucks accounted for more than three-quarters of light vehicle sales in 2021.

While Europe and the United States have seen significant growth in new EV aquisitions, China leads the way. Sales of new energy vehicles in China have been growing since before 2018, and EV sales increased by around 155 percent between 2020 and 2021. China’s focus on battery-electric vehicles is linked to its goal of achieving independence from oil consumption, a goal shared by many countries in their efforts to improve transport sustainability.

However, carbon dioxide emissions from transportation have been steadily increasing in China since 1999, with passenger cars contributing 41 percent of the country’s total carbon dioxide transport emissions in 2020. This share jumps to 78 percent when adding trucks, buses, minibuses, and two- and three-wheelers.

To address this issue, governments play a critical role in promoting competition between manufacturers by setting national and regional targets and improving consumer access to charging infrastructure. However, government spending on EVs in 2021 represented just over 10 percent of total EV spending worldwide, with consumer spending making up nearly 90 percent. Therefore, it’s essential to look at the entire EV market to understand its current state and the steps necessary to promote market growth.

Efforts to phase out gasoline and diesel vehicles are underway in Europe, with the UK announcing in November 2020 its plan to end sales of vehicles with internal combustion engines (ICEs) by 2030, and the EU-27 setting a 2035 deadline for the same goal in June 2022. Automakers have also made similar commitments, with Volkswagen Group setting targets in line with the European Parliament. In the race to sustainability, all actors need to work together to promote the growth of the EV market and address the challenges posed by transportation emissions.

Growing EV Adoption in the United States

In 2020, EVs accounted for 2.2% of all vehicles on the road in the United States in Q3 and 2.3% in Q4. The number of EVs on US roads has risen to approximately 2,531,206 battery and plug-in hybrids. In 2021, sales of EVs nearly doubled, bringing the total number of electric cars on the road to 16.5 million globally.

Future Growth of Electric Vehicles

According to the International Energy Agency (IEA), if the current growth trend continues, 13% of new cars sold in 2022 will be electric. Analysts at IHS Markit project that if EV sales gradually ramp up to 60% over the next 30 years, around 40% of all cars on the road would be electric by 2050.

Positive Impact on Emissions Reduction

The use of EVs can help to decarbonize road transport, which accounts for 16% of global emissions. As more people switch to EVs, the overall emissions from the transport sector could significantly decrease, helping to mitigate the effects of climate change.

While the percentage of EVs on the road is still relatively low, the increasing adoption of EVs and sales growth is a positive sign for the future of sustainable transportation. The benefits of lower costs, improved range and performance, and reduced emissions are driving consumers to make the switch to electric vehicles. With continued efforts to improve technology and infrastructure, the future looks bright for the growth and adoption of EVs.

A Look into the Driving Factors and Challenges

The global market for electric vehicles (EVs) has seen a significant increase over the past two years, fueled by a range of factors including rising gas prices, greater environmental awareness, and the phasing out of internal combustion engine vehicles. According to recent reports, the EV market is expected to continue to grow rapidly over the next decade, both in terms of production and the used EV market. However, this growth is not without its challenges.

Factors Driving the Popularity of Electric Vehicles

The EV market is diverse, and its growth is dependent on a range of factors such as national policies, consumer demand, and investments. Governments around the world are introducing policies to incentivize the purchase of EVs and phase out gas-powered vehicles. Consumer demand for EVs is driven by factors such as reducing costs and emissions, as well as improvements in range, model availability, and performance.

Challenges Facing the Electric Vehicle Market

Despite the growth in the EV market, there are still challenges to overcome. Range anxiety and a lack of knowledge are common constraints to EV adoption, and charging infrastructure is sparse in many countries. The total cost of ownership remains higher than internal combustion engine vehicles, partly due to high purchase prices. Additionally, the inequality of battery supply is steered by international reliance on the Asian market.

External Factors Affecting the Electric Vehicle Market

The Electric Vehicle Market is also affected by external factors such as supply shortages and the surge in gas and auto prices. Higher commodity prices have disrupted the EV battery supply chain, while the industry’s heavy reliance on China for batteries creates imbalances. Automakers are increasing their investments in the EV market, increasing their patent filing and R&D expenses. However, many traditional manufacturers have focused on plug-in hybrid electric vehicles rather than battery-electric vehicles due to their smaller batteries that reduce costs. The shift toward all-electric vehicles has impacted the economic performance of original equipment manufacturers compared to EV giants like Tesla.

Indirect Emissions and Sustainability

To truly understand the sustainability of EVs, their indirect emissions must be considered. Natural gas and coal remain the largest sources of electricity in many parts of the world, releasing enormous amounts of carbon dioxide into the atmosphere. Switching to renewable resources like solar and wind could potentially lower emissions. Battery production also contributes to indirect emissions, as does the manufacturing and maintenance of electric vehicles. This places the EV market in a unique position in the global race to sustainability, requiring the involvement of all stakeholders.


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