Adoption of electric vehicle
The exponential growth of electric vehicle sales is attributed to decreasing costs, advancements in technology, and backing from governments. According to analysis from the International Energy Agency, 10% of passenger vehicles sold worldwide in 2022 were electric-powered. That’s ten times greater than it was merely five years ago.
Electric Vehicles (EVs) emit less greenhouse gases compared to gasoline- and diesel-powered vehicles due to their lack of internal combustion engines. Once all power on the electric grid comes from zero-carbon sources, emissions will decrease even further. Increasing the number of EVs is crucial in decreasing transportation emissions, as is decreasing private vehicle use and transitioning to public transportation, biking, or walking.
Several countries are making the transition to electric vehicles quickly. According to our analysis, Norway had the largest proportion of EV sales at 80% in 2022, followed by Iceland at 41%, Sweden at 32%, the Netherlands at 24%, and China at 22%. China’s position in this ranking is particularly important because it is the largest car market globally. The European Union (12%) and the United States (6%) are experiencing rapid growth in EV sales despite having lower sales compared to the two largest car markets.
According to a high-ambition scenario from Climate Action Tracker, EVs must increase to make up 75% to 95% of passenger vehicle sales globally by 2030 to align with international climate goals and prevent numerous negative effects from climate change caused by limiting global temperature rise to 1.5 degrees C (2.7 degrees F). Given the recent rapid increase in electric vehicle sales, achieving this goal is possible. The average yearly growth rate was 65% in the last five years; in the next eight years, the world requires an average yearly growth rate of just 31%.
National EV Sales
Although EV sales began to increase at varying times in each country, they are all adhering to a similar growth pattern shaped like an S-curve. This is a common path for the implementation of new technologies. When a technology reaches a tipping point, such as when electric vehicles become more affordable than conventional gas or diesel cars, its trajectory starts to rise. In the end, growth decreases when the technology nears full saturation at 100%.
None of the countries have reached the point of slowing down in terms of EVs, but Norway is possibly nearing that phase. The S-curve is formed by the initial increase in speed and eventual decrease. In most cases, the overall shape of adoption rates may not be a perfect S due to the influence of policy changes and social and economic factors, which can either accelerate or decelerate the process.
TOP LEADING COUNTRIES
- Norway
- Iceland
- Sweden
- China
Decreasing expenses and improving technology have enabled electric vehicle sales to increase more rapidly now than previously. Our examination of the International Energy Agency’s EV Data Explorer reveals that countries that achieved 1% EV sales in the last five years have experienced faster growth compared to countries that reached this milestone earlier.
India’s sales of electric vehicles increased from 0.4% to 1.5% within a single year, between 2021 and 2022 as an illustration. That is approximately three times quicker than the worldwide average, which rose from 0.4% to 1.6% in EV sales from 2015 to 2018 over a period of three years. Israel saw a significant increase in EV sales from 0.6% to 8.2% in the span of two years, between 2020 and 2022. It took over five years for the world to reach such significant growth, increasing from 0.5% in 2016 to 6.2% in 2021.
Until now, the majority of leaders in the electric vehicle sector have been wealthy nations such as those in Scandinavia, or countries with significant market influence like China. Solid governmental policies and financial incentives in these nations set the stage for the growth of a thriving electric vehicle sector, leading to reduced costs. Now that electric vehicles are becoming more financially advantageous, countries with varying income levels or national circumstances may be able to emulate or surpass the progress made in this area.
The Largest Car Markets
The transition to electric vehicles worldwide depends heavily on the performance of the three largest car markets – China, Europe and the United States – which account for 60% of all global car sales. In recent years, there has been a significant increase in electric vehicle sales in all three markets. China’s electric vehicle sales market is currently twice as large as the worldwide average.
The share of EV sales in Europe is just higher than the average worldwide. In 2022, the EV sales share in the United States lagged one year behind the global average, with the U.S. at 6.2% EV sales, the same as the world in 2021. The U.S. sales are expected to increase rapidly following the Inflation Reduction Act that led to $62 billion in investments in electric vehicles in its initial year.
India and Japan continue to have low sales, ranking as the fourth and fifth largest car markets, respectively. Nevertheless, they are starting to speed up now, and recent sales figures indicate that countries adopting technology later often experience faster growth than those who adopt it early.
Norway
Norway, one of the coldest regions globally, is crossed by fjords, which create challenges for accessing certain areas. With worries about EV batteries struggling in cold weather and having shorter ranges compared to gasoline cars, it would be logical to think that Norway would be slow to embrace EVs. On the contrary, Norway and its Nordic counterparts like Iceland and Sweden are the clear frontrunners in EV adoption. In 2022, electric vehicles made up 80% of passenger car sales in Norway, with a total of 150,000 sold.
Norway stands out from the crowd due to the government’s intentional and continuous support for EVs, which began back in 1990, well before other countries. Its goal is to eliminate sales of internal combustion engine vehicles by 2025, which is the soonest of any country.
Norway’s push to make electric vehicles the top choice for new car purchases has succeeded for three main reasons.
Initially, government incentives have positioned electric vehicles as the most financially advantageous option for consumers. Norwegian consumers purchasing fully electric vehicles are exempt from paying hefty value-added and registration taxes and also qualify for other financial advantages. This gets rid of a significant amount of the expense associated with purchasing and possessing an EV.
These rewards were progressively introduced during the 1990s and early 2000s, with assistance from various governments and every political faction. The government initially aimed to back a Norwegian electric vehicle brand named TH!NK. The company failed and the majority of cars in Norway are brought in from other countries, yet the government persisted in advocating for electric vehicles because of their positive impact on the environment.
Despite offering substantial incentives, electric vehicles only became popular once the technology had significantly improved. The decisive moment occurred approximately in 2012, when the overall expenses associated with owning an EV throughout its lifespan (covering purchase, upkeep, and charging) became lower than those of owning a conventional petrol or diesel vehicle, factoring in tax incentives. In 2021, Electric Vehicles (EVs) were, on average, 5,000 euros more affordable to buy after factoring in all the tax incentives available.
Furthermore, the government has made significant investments in electric vehicle charging infrastructure, leading Norway to have the highest number of public fast chargers per person compared to any other country globally. These can charge an EV battery from empty to 80% in just 20 minutes. Furthermore, Norway allows for charging fees for residents in apartment complexes and offers subsidies for housing associations to set up their own charging stations.
Additionally, Norway offers EV owners various benefits, including complimentary city parking, discounts on road tolls, priority bus lane access, and reduced ferry transport rates due to the country’s fjord-dotted terrain.
Due to the effectiveness of its electric vehicle (EV) policies, the government has begun to slowly reduce EV incentives for high-end cars and certain other benefits for all EVs. With the increased popularity of electric vehicles in Norway, it is no longer logical to grant all cars the privilege of bus lane access and free parking. Additionally, some of these measures could potentially prompt individuals to opt for driving instead of using public transportation, resulting in higher emissions. Therefore, Norway is now more actively exploring methods to promote alternative modes of transportation aside from personal vehicles.
China
China is undoubtedly the largest contributor in the realm of electric vehicles. 4.4 million all-electric passenger vehicles were sold in China in 2022, accounting for 22% of total sales. This number exceeds the total number of 3 million electric vehicles sold in all other countries. China’s backing of electric vehicles has contributed to the decrease in battery expenses and facilitated the global acceptance of EVs.
China, previously lagging in internal combustion engine vehicle production compared to other nations, viewed EVs as a strategic investment in a new sector of car manufacturing where it could gain a competitive advantage by getting an early start. It was also curious about the potential of EVs in decreasing air pollution and reliance on foreign oil.
In 2009 and 2010, China initiated financial incentives and tax benefits for electric vehicle manufacturers and buyers in selected cities nationwide. Cities could tailor the level and kind of electric vehicle incentives to suit their requirements and collaborated with indigenous electric vehicle businesses to support their expansion.
One illustration is how the Chinese EV company BYD initially had strong connections to Shenzhen but has now become one of the largest EV manufacturers globally. Following the pilot cities programs, China proceeded to invest billions of dollars in diverse national and local subsidies and tax incentives. In 2018, China started to shift towards a zero-emissions vehicle credit system based on the market, inspired by California’s mandate for zero-emissions vehicles, in order to phase out direct subsidies. The change has occurred slowly, and certain EV incentives and tax benefits have been prolonged beyond their originally intended end date.
In general, the policies promoting industrial growth have proven to be successful. Currently, Chinese companies manufacture eight of the top 10 EV models sold in China, and China is starting to export EVs worldwide. Chinese buyers have the option of selecting from close to 300 electric vehicle models, a higher number than any other country. Chinese corporations have taken the lead in creating cost-effective electric vehicle options, surpassing other nations in this aspect. Many other countries prioritize larger vehicles with costlier batteries, but in China, smaller vehicles are more common. Recently, BYD introduced an electric hatchback priced at $11,000, while the Wuling Hongguang Mini EV, priced at $4,500, has been a popular choice among buyers.
Including subsidies, the cost of a lot of electric cars in China is now lower than that of similar gas or diesel-fueled vehicles. Tesla’s presence in the Chinese market has ignited a competition over pricing, leading to lower costs for electric vehicles.
Government Leadership
The lessons learned from Norway and China can be valuable for other nations. Both nations had administrations that intentionally decided to support electric vehicles, allocated funds for public charging stations, and enforced measures to ensure electric vehicles were economically competitive. The adoption of electric vehicles increased quickly when EVs became a more cost-effective option for potential car buyers compared to conventional gas or diesel vehicles, particularly when buyers were assured of the vehicles’ range and convenient access to public charging stations.
Due to the efforts made by countries like Norway and China on policy changes, the decreasing prices of electric vehicles will soon lead to cost competitiveness in more countries. However, governments should not delay actions to address the climate crisis. While not all nations have the wealth of Norway or the market influence and governmental system of China, electric cars can still benefit a range of developing countries economically and environmentally.
Up to now, cost competitiveness has mainly been attained via subsidies, which can be costly for government budgets, and there are additional alternatives available as well. Policies requiring all sales to be EVs are the most powerful policy to promote the shift. At present, 16 countries, such as Canada, Japan, and the United Kingdom, have implemented policies requiring all vehicle sales to be electric by 2035 or earlier.
Additional nations need to establish and implement similar policies. Should the EU, U.S., and China synchronize their national regulations to achieve 100% EV sales by 2035, the increased production scale would decrease costs globally and accelerate cost parity in countries like India by up to three years. Furthermore, nations ought to boost the quantity of publicly available charging stations, particularly fast chargers, to facilitate the adoption of electric vehicles.
The transition to electric vehicles needs to be fair for everyone. Governments ought to provide incentives for car manufacturers to develop electric vehicle models that are more budget-friendly. Subsidies should be directed towards low-income households to not only be fair but also to be more successful in boosting EV adoption, as lower-income households are more responsive to changes in prices.
Achieving 75% to 95% of global passenger vehicle sales as electric vehicles by 2030 will be a tough task, but possible if the world learns from these lessons and maintains the current fast rate of change.
Lastly, it is crucial to recognize that boosting EV sales is just one aspect of the overall picture. In order to reduce carbon emissions from road transportation, old gas and diesel cars should be taken out of use instead of being resold, and the trend of favoring SUVs over smaller vehicles needs to change. Furthermore, the objective should not be for every individual to possess a vehicle. Changing the transportation system to enhance access to different types of mobility can decrease emissions, decrease fatalities related to cars, save time spent in traffic, and reduce harm to ecosystems.
E-mobility extends to urban railways in addition to roads, such as in Buenos Aires where the World Bank is providing over $900 million in loans to electrify and improve two essential rail lines. One line serves low-income neighborhoods while the other connects the business district to suburbs.
These initiatives strive to provide a safer, quicker, and more regular service, which is particularly beneficial for female commuters, as they depend more on informal and public transportation than male commuters; almost 75% of women who use public transport to travel to work report feeling unsafe while doing so. Several improvements address these issues directly: updated lighting, surveillance cameras, and emergency call stations. The electrification project will not only benefit travelers but also facilitate the transition of one line from diesel to electric power, thereby decreasing greenhouse gas emissions in transport. The improved infrastructure will also be created to endure severe weather conditions and other climate threats.
Reducing carbon emissions from transportation is a pressing issue that must be addressed promptly. According to Cecilia M. Briceno-Garmendia, Lead Economist for the World Bank’s Transport Global Practice and the main writer of the report, all methods to reduce carbon emissions are being considered, including e-mobility. In developing nations, the shift to e-mobility is now a matter of figuring out ‘how’ and ‘when’ rather than ‘if.’
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