Electric Vehicles are at the forefront of the global decarbonization movement primarily because the transportation industry is responsible for 20% of global CO2 emissions & is the 2nd largest polluting sector globally. While Electric Vehicles have been available for the past decade, the last couple of years have seen an accelerated transition in adopting EVs, fueled by record sales in China, the US & Europe.
In 2022, Total electric vehicle sales, encompassing BEV & PHEV, reached approximately 15 million, representing a 34% growth from 2022. EVs accounted for approximately 17% of all vehicle sales in 2023, an increase from 14% in the previous year. Favorable government policies primarily drove these record sales in the form of tax incentives & subsidizing manufacturers leading to lower production costs. Electric Vehicles reached a tipping point in 23 countries in 2023, where EVs accounted for more than 5% of all new vehicle sales. In 2022, it was at 19 countries. Notable newcomers include Canada, Australia, Spain, Thailand, and Hungary, joining early adopters like the US and China. This 5% milestone is significant as it often signals a rapid surge in EV adoption, similar to the adoption patterns of other successful technologies. Currently, Norway leads the world with an 84% EV adoption rate.
However, the explosive boom EVs experienced in the first half of 2023 was followed by a sharp decline in adoption and sales in the year's second half. This was primarily due to high inventory coupled with worsening economic conditions which led to a significant drop in demand in the 2 largest EV markets, the US and China. Subsidy cuts in European markets like Germany, Sweden, and the UK further damaged demand, particularly for PHEVs. Accordingly, the global EV share is predicted to be lower throughout the decade than the previous forecast, reaching 23.5% in 2025, 45.3% in 2030, and 68.4% in 2035.
