Reports of an Electric Vehicle Slowdown Have Been Greatly Exaggerated

Source: By Colin McKerracher, Bloomberg • Posted: Tuesday, December 5, 2023

 The auto world is winnowing down which carmakers are producing competitive EVs.

BYD Tang (right) and Han electric vehicles at a company showroom in Mexico City.
BYD Tang (right) and Han electric vehicles at a company showroom in Mexico City. Photographer: Mariceu Erthal/Bloomberg

No sign of an EV slowdown

For all the headlines written recently about how EV demand is faltering, the data definitely doesn’t support this — at least not yet.

Sales of passenger EVs are on pace to hit 14 million this year, up 36% from 2022. In the US, where most of the concerns about demand have been raised, sales are growing even faster and will be up 50% this year. Sales might be short of what some manufacturers were hoping for, but have been in line with BNEF’s forecast from the beginning of the year, and most industries would be very happy with this kind of growth rate.

EV Sales Head For Another Record Year

Source: BloombergNEF. Note: 2023 is BNEF’s forecast for the year. Data includes battery electric and plug-in hybrid passenger vehicles.

A slowdown could still be coming, but for now, this looks much more like a winnowing down of who is competitive in the market than a general drop-off in demand.

New Automakers Grab a Growing Share of the Market

Source: BloombergNEF. Includes battery electric and plug-in hybrid passenger vehicles

More EV progress in emerging economies

EV adoption is rising quickly in emerging economies including India, Thailand and Indonesia, where low-cost models are driving demand.

EVs are already 9% of cars sold in Thailand — an adoption rate similar to the US — which runs counter to the argument that EVs are only a rich-country phenomenon. The numbers are still modest overall, but the growth rate is encouraging in these fast-growing auto markets. With more new models in the $10,000 range hitting the market, growth should continue.

Electric Vehicle Sales Accelerate in Emerging Economies

Passenger EV sales

Source: BloombergNEF. Includes battery electric and plug-in hybrid passenger vehicle sales. Note different axis scales

The Inflation Reduction Act supercharged investment

BNEF data shows that the IRA has helped spark $100 billion of newly announced investment in EV and battery manufacturing.

Construction is already underway for some of these projects, and BNEF expects the first IRA-related EV and battery manufacturing facilities to open fully in the second half of 2024, with more ramping up in 2025 and beyond. Canada and Mexico also benefit, given their integration in the US auto supply chain and access to critical minerals.

IRA Drives Investment Boom

EV and battery investments announced since the Inflation Reduction Act

Source: BloombergNEF

Phase-outs of combustion vehicles have stalled

From 2015 to 2021, the number of countries committing to ending sales of new combustion vehicles rose quickly. The biggest boost came in 2021, when the European Union announced its plan for a 2035 phase-out.

Progress has stagnated since then, with only a few minor additions to the list the last two years. Countries with phase-out targets in place now represent 19% of new passenger-vehicle sales.

Ambition Stalls on Getting Rid of Gas Guzzlers

Source: BloombergNEF. Note: Includes national targets for passenger cars

Full phase-outs are not the only targets that matter. Indeed, both the US and China have partial targets in place for 2030, with China aiming for EVs to be 40% of sales and the US aiming for 50%. China could achieve its goal as early as next year, but the US meeting its objective will be more challenging. Setting targets is easier than delivering on them.

No new automakers announced net-zero or combustion-vehicle phase-out commitments in 2023, and some, including Ford and General Motors, moved their near-term EV targets back this year, citing lower-than-expected demand.

Automaker Commitments to Net-Zero Have Stalled

Share of global car sales from automakers with a net-zero commitment

Source: BloombergNEF. Note: Data reflects passenger cars

Electric vehicles remain one of the fastest-moving parts of the energy transition. There are plenty of reasons for optimism, but a stronger push from both policymakers and automakers will be needed to keep up the momentum in the years ahead.

— With assistance from Aleksandra O’Donovan