China and Europe lead the way
China is undeniably the front-runner when it comes to EV adoption, accounting for more than half of all global EV sales in 2023. The country’s rapid embrace of electric vehicles can be credited to several factors: government incentives, strong manufacturing capabilities, and a wide range of affordable models hitting the market. Interestingly, plug-in hybrid electric vehicles (PHEVs) also saw impressive growth, with an 82% increase in sales compared to 2022. This rise in PHEV popularity is largely due to demand in rural areas, where charging infrastructure is still catching up.
Europe is also setting a strong example. By 2027, EVs are expected to make up around 41% of all new car sales across the continent. The United States, South Korea, and Canada are following behind, though their pace has been slower. Meanwhile, emerging markets like India and Brazil are seeing a surge in interest. In fact, sales in these regions are projected to triple and quintuple, respectively, by 2027. While infrastructure development and affordability remain challenges in these countries, the potential for rapid growth is evident.
Affordability improves as battery costs drop
One of the key drivers of EV adoption has been the falling cost of batteries. In 2023, the average price of lithium-ion battery packs dropped to $139 per kilowatt-hour (kWh), and prices are expected to decrease further to $133/kWh in 2024. This reduction is due to growing production capacity and declining prices for essential materials like lithium, cobalt, and nickel. In some cases, battery cell prices have already reached as low as $72/kWh, which means more affordable EV models are just around the corner.
Despite these price drops, electric vehicles can still be pricier than traditional gasoline-powered cars. In China, for example, an average fully electric car in the compact segment is still about 18% more expensive than an internal combustion engine (ICE) counterpart. However, the price difference between plug-in hybrids and combustion vehicles has all but disappeared, making PHEVs an increasingly attractive option for those looking to make the switch.
Building charging infrastructure to meet demand
The growth in EV sales is being supported by a rapid expansion of charging infrastructure. By the end of 2023, the global network of public charging points had expanded by 40%, reaching nearly 4 million chargers. China continues to dominate here as well, with 69% of the world’s public charging connectors.
However, there are still challenges in ensuring that infrastructure grows at the same pace as vehicle adoption, particularly in markets like North America and parts of Europe. Some countries are making significant strides: Italy, for instance, nearly doubled its charging installations year-over-year, while the UK also showed substantial growth. Yet, more investment is needed to match the rising number of electric vehicles hitting the roads.
The road ahead: investing in electrified transport
In 2023, CEM countries invested heavily in electrified transport, boosting spending in the sector by 32% compared to the previous year. This commitment to electrification has put EVs on track to make up a third of all new passenger car sales by 2027, with global sales expected to reach 30 million units.
But the path to full EV adoption won’t be without its challenges. Automakers are releasing more affordable models, and technology is improving, but policies and infrastructure need to keep pace, especially in emerging economies. China and Europe have been leading the way with comprehensive policy frameworks, but other markets will need similar support to encourage more consumers to make the switch.
Conclusion
The rise of electric vehicles is reshaping the global automotive landscape. With nearly 20% of new cars sold in CEM countries now being electric, the momentum is unmistakable. Falling battery costs, expanding infrastructure, and supportive policies are all contributing to this shift. However, there is still a lot of work to do to ensure that this growth continues, particularly in building out the charging networks and making EVs affordable for everyone. The future of transportation is electric, and while there are challenges ahead, the world is on the right track to a cleaner, greener automotive future.
Sources: BloombergNEF
