The new edition of the IEA’s annual Global Electric Vehicle Outlook shows that more than 10 million EVs were sold worldwide in 2022 and that sales are expected to grow by another 35% this year to reach 14 million. This growth means EVs’ share of the overall car market has risen from around 4% in 2020 to 14% in 2022 and is set to increase further to 18% this year, based on the latest IEA projections.

‘Electric vehicles are one of the driving forces in the new global energy economy that is rapidly emerging – and they are bringing about a historic transformation of the car manufacturing industry worldwide. The trends we are witnessing have significant implications for global oil demand. The internal combustion engine has gone unrivalled for over a century, but EVs are changing the status quo. By 2030, they will avoid the need for at least 5mn b/d of oil. Cars are just the first wave: electric buses and trucks will follow soon,’ comments IEA Executive Director Fatih Birol.

The overwhelming majority of EV sales to date are mainly concentrated in three markets – China, Europe and the US. China is the frontrunner, accounting for 60% of global sales in 2022. Today, more than half of all EVs on the road worldwide are in China. Europe and the US, the second and third largest markets, both saw strong growth with sales increasing 15% and 55% respectively in 2022.

Ambitious policy programmes in major economies, such as the Fit for 55 package in the European Union (EU) and the Inflation Reduction Act (IRA) in the US, are expected to further increase market share for EVs this decade and beyond. By 2030, the average share in total sales across China, the EU and the US is set to rise to around 60%, according to the IEA.

The encouraging trends are also having positive knock-on effects for battery production and supply chains. The new report highlights that announced battery manufacturing projects would be more than enough to meet demand for EVs to 2030 in the IEA’s net zero emissions by 2050 scenario. However, manufacturing remains highly concentrated, with China dominating the battery and component trade – increasing its share of global EV exports to more than 35% last year.

Other economies have announced policies to foster domestic industries that will improve their competitiveness in the EV market in years to come. The EU’s Net Zero Industry Act aims for nearly 90% of annual battery demand to be met by domestic battery manufacturers. Similarly, in the US, the IRA places emphasis on strengthening domestic supply chains for EVs, batteries and minerals. Between August 2022, when the IRA was passed, and March 2023, major EV and battery makers announced investments totalling at least $52bn in EV supply chains in North America.

Despite a concentration of EV sales and manufacturing in only a few big markets, there are promising signs in other regions, according to the report. Sales more than tripled in India and Indonesia last year, albeit from a low base, and more than doubled in Thailand. The share of EVs in total sales rose to 3% in Thailand, and to 1.5% in India and Indonesia. In India, the government’s $3.2bn incentive programme, which has attracted investments worth $8.3bn, is expected to increasing battery manufacturing and EV rollout substantially in the coming years.

In emerging and developing economies, the most dynamic area of electric mobility is two- or three-wheel vehicles, which outnumber cars. For example, over half of India’s three-wheeler registrations in 2022 were electric, demonstrating their growing popularity.