Dynamic market uptake of electric vehicles (EVs) has occurred in recent years. On-going support and commitments for increased deployment of EVs from policy makers and the automotive industry has resulted in increased sales volumes. This, together with growing competition in the development of new technologies, are likely to contribute to continuous reductions in the cost of manufacturing batteries – the most important cost component for EVs.
The International Energy Agency has released its latest report, Global EV Outlook 2018: Towards cross-modal electrification, on the status of the global uptake of electric vehicles. This report analyses the factors that have influenced recent developments in electric mobility, the dynamics behind the rapid evolution, the impacts on future prospects for electrification and the implications for policy developments.
This is the executive summary of the report.
New electric vehicle sales
Sales of new electric cars1 worldwide surpassed 1-million units in 2017 – a record volume. This represents a growth in new electric car sales of 54% compared with 2016. Electric cars accounted for 39% of new car sales in Norway in 2017 – the world’s most advanced market of electric cars in terms of sales share2. Iceland and Sweden, the next two most successful markets, achieved 11,7% and 6,3% electric car sales share, respectively, in 20173.
More than half of global sales of electric cars were in China, where electric cars had a market share of 2,2% in 2017. Electric cars sold in the Chinese market more than doubled the amount delivered in the United States, the second-largest electric car market globally.
Electrification of other transport modes is also developing quickly, especially for two-wheelers and buses. In 2017, sales of electric buses were about 100 000 and sales of two-wheelers are estimated at 30 million; for both modes, the vast majority was in China.
The global stock of electric cars surpassed 3-million vehicles in 2017 after crossing the 1-million threshold in 2015 and the 2-million mark in 2016. It expanded by 56% compared with 2016 (Fig. 1).
In 2017, China had the largest electric car stock: 40% of the global total.
In 2017, the stock of electric buses increased to 370 000 units and electric two-wheelers reached 250-million. The electrification of these modes has been driven mostly by developments in China, which accounts for more than 99% of both electric bus and two-wheeler stocks, though registrations in Europe and India are also on the upswing.
Electric vehicle (EV) uptake is closely mirrored by the growth of charging infrastructure4. In 2017, private chargers at residences and workplaces, estimated to number almost 3 million worldwide, were the most widely used charging installations for electric cars owned by households and fleets. Charging outlets on private property for fleets (primarily buses) number some 366 000 units, almost all in China.
Publicly accessible chargers complement the role of private ones and should be viewed as an important component of the EV supply infrastructure. Most of the publicly accessible chargers are slow charging outlets, which numbered almost 320 000 worldwide in 2017. They are complemented by more than 110 000 fast chargers. Fast chargers are especially important in urban environments due to land availability constraints, such as in densely populated Asian cities.
In addition, fast chargers are essential to increase the appeal of EVs by enabling long distance travel. This is a critical facet that the major markets such as China, the European Union and the United States clearly have embraced in ramping up their ambition in defining targets for the number of installations and network density.
So far, EV deployment has mostly been driven by policy. The main markets by volume (China) and sales share (Norway) have the strongest policy push. This is true for light-duty vehicles (LDVs) as well as for buses and two-wheelers. By far the largest volumes of deployed electric buses and two-wheelers are in China, the country with the longest running policies targeting cross-modal electrification.
Looking ahead, the strongest current policy signals emanate from electric car mandates in China and California, as well as the European Union’s recent proposal on carbon dioxide (CO2) emissions standards for 2030. Electrification targets announced by the government of India and by a number of other countries and major cities worldwide also point at growing EV uptake.
Policies are also supporting the development of both private and publicly accessible charging outlets. As more energy companies, automakers, utilities and grid service providers form alliances to develop EV support infrastructure, public funding could be gradually withdrawn from the build-out of public charging, moving towards self-sustaining and business-driven solutions.
Ensuring higher occupancy for publicly accessible chargers is crucial to enable this transition. Given the need to maintain the publicly accessible charging infrastructure across an entire road network, it is possible that targeted support for some electric vehicle supply equipment (EVSE) installations will be needed for cases where full cost recovery conflicts with the need to ensure the provision of adequate charging options.
Battery developments and cost reductions
The development of batteries for consumer electronics provided invaluable experience for the production of lithium-ion (Li-ion) cells. It facilitated increased production and justified considerable investment in research and development, leading to significant cost reductions and improved performance. The impressive progress made in recent years to improve battery performance and reduce costs enabled the use of Li-ion batteries in the automotive sector, and this is now opening up opportunities for further improvements.
Key cost and performance drivers identified for the further improvement of Li-ion batteries include battery chemistry, energy storage capacity, manufacturing scale and charging speeds. These solutions suggest that Li-ion batteries are likely to remain the technology of choice for EVs in the next decade. Several post Li-ion technologies are also showing potential for improved performance and further cost reductions, but their current technology readiness level is still low.
Batteries are currently the main reason of the higher upfront costs of EVs in comparison with incumbent technologies. Our analysis of the total cost of ownership of EVs and internal combustion engine vehicles (ICEVs) shows that battery cost reductions hold significant promise for improving the appeal of EVs for individuals making a vehicle purchase decision. In particular, this analysis shows that the cost competitiveness of BEVs is strongest in fleets with intensive use patterns, such as buses, taxis, ride-hailing services and shared cars.
Announced investment in large-scale battery manufacturing facilities confirms that there is increasing confidence in the future of electric mobility and that augmenting production capacity is likely to catalyse further battery cost reductions.
Supportive policies and cost reductions are likely to lead to significant growth in the market uptake of EVs in the outlook period to 2030. In the New Policies Scenario, which takes into account existing and announced policies, the number of electric light-duty vehicles on the road reaches 125-million by 2030. Should the policy ambitions continue to rise to meet climate goals and other sustainability targets, as in the EV30@30 Scenario, then the number of electric LDVs on the road could be as high as 220 million in 2030 (Fig. 2): 130-million battery electric and 90-million plug-in hybrids, respectively.
Rapid developments in scaling up battery production and reducing costs enabled by increasing electric car sales, primarily driven by policies targeting LDVs, have positive spill over effects across other modes of transport:
As EV penetration grows to 2030, so does the number of charging outlets installed. Private chargers are expected to outnumber electric LDVs by 10%. This accounts for a reduction in the opportunity for electric car owners to install a charger at home (with the diversification of electric car buyer profiles as the market expands), but increasing availability of charging infrastructure at workplaces. This also accounts for lower ratios of charging outlets per electric LDV in densely populated areas such as China and Japan.
This scale of publicly accessible charging infrastructure is consistent with the recommendations of the EU Alternative Fuels Infrastructure (AFI) Directive, which suggests a ratio of one publicly accessible charger for ten electric cars. The ratio of publicly accessible chargers per electric car required, however, may end up being much lower than one charger for ten electric cars, as evidenced by the ratio currently observed in Norway – the most advanced electric car market in 2017 in terms of market share. In Norway, there is only one publicly accessible charger for 19 electric cars. The actual deployment of publicly accessible charging infrastructure in the coming years, in a large part, will depend on countries’ and regions’ strategies and policies regarding the availability of charging infrastructure in public spaces.
The charging infrastructure for buses is projected to be exclusively based on fast chargers (minimum 50 kW), which will allow for the recharging of two buses per night.
The shift to EVs will increase demand for some materials. In particular, a rapid ramp-up in the demand of cobalt and lithium may pose some risks. The supply of cobalt is especially critical due to the concentration of mining and refining facilities in a handful of countries. Ongoing developments in battery chemistry aim to reduce their cobalt content; battery chemistry with less cobalt can achieve higher energy and power densities, but also tend to have lower thermal stability. Even accounting for this, the cobalt demand for EVs is expected to be ten times higher than current levels by 2030 in the New Policies scenario in a central assessment on battery chemistries, and over 25 times larger in the EV30@30 scenario.
Uncertainties about the future growth of cobalt demand, together with low volumes of historic global cobalt demand (in comparison to other materials), led to price surges in recent years. Enabling a smooth transition to electric mobility requires ensuring a stable supply of cobalt at moderate prices. The contribution of regulators in this respect should focus on reducing uncertainties on EV uptake, as this would facilitate investment in extraction capacity and the emergence of contractual arrangements spanning longer periods of time.
Policy needs for a timely and sustainable transition to electric mobility require a wide array of measures and supporting actions. They must be adapted to specific market contexts. Plus, they must be adaptable as markets evolve to mass adoption of electric vehicles.
In the early stages of EV deployment and diffusion, public procurement schemes (for instance, buses and municipal vehicles) have the double benefit of demonstrating the technology to the public and providing the opportunity for public authorities to lead by example. Importantly, they also allow the industry to produce and deliver bulk orders and initiate economies of scale. Taxes that reflect the CO2 content are important to ensure that the policy environment is conductive to increased EV uptake. Fiscal incentives at vehicle purchase, as well as complementary measures that enhance the value proposition of driving electric on a daily basis (e.g. preferential parking rates, road toll rebates and low emission zones) are pivotal to attract consumers and businesses to electric vehicles.
More comprehensive policies are critical to lay the foundation for a transition to electrification and to assuage stakeholders’ uncertainties. Increasingly stringent, technology-neutral regulations on tailpipe CO2 emissions and mandates requiring that automakers sell a minimum share of zero- or low-emission vehicles are well suited for this purpose.
Policy-makers will also need to set appropriate signals for charging infrastructure and grid service businesses to enable viable business models to emerge and to facilitate a smooth integration of EVs in power grid operations. Approaches should be designed to reap maximum benefits from the available synergies of transport electrification with increasing supplies of variable renewables. In particular, changes in the regulations governing grid operations, such as allowing non-utility stakeholders to enter the charging services market (which is currently not permitted in a number of countries), can easily lift key barriers to innovation and investment. National or local regulations targeting new or renovated buildings are also a prime resource to expand the EV-readiness of the building stock and to facilitate consumer EV adoption.
Both our scenarios suggest that in the 2020s, foregone revenues from fuel taxation will call for alternative tax approaches. Taxation based on vehicle activity (e.g. distance-based pricing) is well suited to recover funds needed for investments and maintenance of transport infrastructure, to give a price to the emission of local pollutants – based on their impact on health and the environment, and to reduce traffic congestion.
The uptake and widespread diffusion of EVs does not come without long-term social, sustainability and natural resource implications. Clearly defined and respected norms and requirements for traceability are needed across the battery supply chain. Regulators can play an important role in setting minimum standards related to labour and environmental conditions, and in developing effective instruments to ensure that they are properly enforced. Regulatory frameworks shall not only be targeting the EV battery materials supply chain, but also the end-of-life and material recycling processes, with the aim to facilitate cost reductions for battery recycling and to maximise the residual value of batteries at the end of their useful life.
This is the executive summary of the report.
Contact Antoine.Eyl-Mazzega, International Energy Agency, firstname.lastname@example.org
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