Trystan Casey
The demand for electric vehicles (EVs) is increasing, with more electric cars on the road than ever before. This shift is driven by both industry and consumer influences. Consumers are attracted to the savings on fueling and maintenance costs, the environmental benefits, and the increasing availability of charging stations. The industry is responding to this demand with more electric vehicle models, improved battery technology, and increased production of batteries. This trend is expected to continue, with forecasts predicting that electric vehicles will account for a significant portion of car sales in the coming years.
| Characteristics | Values |
|---|---|
| Demand for EV batteries | Increased by 40% in 2023 compared to 2022 |
| Demand for EV batteries in 2030 | Could exceed 9 TWh |
| Public charging points | 3.9 million worldwide at the end of 2023 |
| Increase in public charging points from 2022 to 2023 | 40% |
| Number of electric buses sold globally in 2023 | 50,000 |
| Global stock of electric buses | Over 635,000 |
| Global sales of electric two and three-wheelers in 2023 | 13% |
| Global electric vehicle market | Growing at a rapid pace |
| Sales of luxury electric vehicles | Increasing |
| Sales of mainstream electric vehicles | Flat |
| Sales of hybrid electric vehicles in the UK in 2022 | Increased by 8.6% |
| Sales of plug-in hybrid electric vehicles in the UK in 2022 | Increased by 3.6% |
| Electric vehicle sales in the United States by 2030 | Could reach 40% of total passenger car sales |
| Electric vehicle sales in the United States by 2030 (optimistic projection) | Could surpass 50% |
| Electric vehicles as a percentage of global electricity consumption by 2035 | 6-8% |
| Occupations that will be in demand due to the electrification trend | Design and development of EV models, production of batteries, installation and maintenance of charging infrastructure |
| Employment in the electrical equipment and component manufacturing industry | Projected to increase by 17% over the 2021-31 decade |
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What You'll Learn
Electric vehicle market growth
The electric vehicle (EV) market is experiencing significant growth and transformation. This growth is driven by various factors, including consumer interest, government policies, technological advancements, and industry initiatives.
Consumer demand for EVs is increasing, with a growing preference for luxury electric vehicles and smaller, more efficient cars, particularly in urban areas. The number of electric vehicles on the road has been rising, and forecasts suggest that this trend will continue. S&P Global Mobility predicts that electric vehicle sales in the United States could reach 40% of total passenger car sales by 2030, with more optimistic projections surpassing 50%. This shift towards electrification is expected to generate demand for labor in areas such as vehicle design and development, battery production, and charging infrastructure installation and maintenance.
To meet the growing demand for EVs, battery manufacturing has been rapidly expanding. In 2023, battery manufacturing capacity increased by 25% compared to 2022, and it is projected that by 2030, global battery manufacturing capacity could exceed 9 TWh. This expansion in battery production is crucial to support the increasing sales of battery-electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs). The development of battery technology has also played a significant role in boosting EV demand by improving battery capacity, range, and performance, addressing the previous concerns of "range anxiety."
The role of governments and international initiatives in accelerating EV adoption cannot be understated. Government bodies worldwide are offering tax credits and incentives for EV purchases, making these vehicles more accessible to consumers. Additionally, ambitious policies and pledges focusing on electromobility and zero-emission transport reflect a global commitment to sustainability and decarbonizing road transport. The Infrastructure Investment and Jobs Act in the United States, signed into law in November 2021, allocated $7.5 billion towards building a nationwide charging network, addressing the need for more public charging stations.
While the EV market is growing, there are some complexities. Used EV prices have experienced a decline, with a significant drop in premium EV values, particularly for used Teslas. Additionally, some surveys indicate a slight decrease in the intent to purchase EVs immediately, with consumers citing high prices and the lack of public charging points as deterring factors. However, despite these challenges, the overall trajectory of the EV market remains positive, and it is expected to play a crucial role in reducing CO2 emissions from the transport sector.
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Battery technology and production
The demand for electric vehicles is increasing, and this is expected to generate demand for labour in the production of batteries that power them. In 2023, battery manufacturing reached 2.5 TWh, adding 780 GWh of capacity relative to 2022. The capacity added in 2023 was over 25% higher than in 2022.
The increase in battery demand drives the demand for critical materials. In 2022, about 60% of lithium, 30% of cobalt, and 10% of nickel demand was for EV batteries. In 2022, lithium demand exceeded supply, despite an 180% increase in production since 2017. Mining and refining will need to continue growing quickly to meet future demand and avoid supply chain bottlenecks.
Innovative technologies such as sodium-ion batteries can potentially mitigate demand for critical minerals, and bring down costs. Sodium-ion batteries could cost up to 20% less than incumbent technologies, but their development is strongly dependent on lithium prices, with current low prices discouraging investments in sodium-ion.
Battery recycling is another important aspect of battery technology and production. Widespread battery recycling would help keep hazardous materials from entering the waste stream, and the U.S. Department of Energy is supporting the Lithium-Ion Battery Recycling Prize to develop and demonstrate profitable solutions for collecting, sorting, storing, and transporting spent and discarded lithium-ion batteries for recycling and materials recovery.
The majority of battery demand for EVs today can be met with domestic or regional production in China, Europe, and the United States. China represents nearly 90% of global installed cathode active material manufacturing capacity and over 97% of anode active material manufacturing capacity today.
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Charging infrastructure
The demand for electric vehicles is increasing, and with it, the need for charging infrastructure. The number of public charging points is growing, with 3.9 million worldwide at the end of 2023, up from 2.8 million in 2022. China accounted for 70% of global public charging points in 2023, with Europe in second place with around 725,000 total public chargers.
The United States is also investing heavily in its EV infrastructure, with the National Electric Vehicle Infrastructure Formula Program and the Charging and Fueling Infrastructure Discretionary Grant Program. California currently leads the country in the number of available public EV charging ports, with the Northeast region experiencing the largest increase in public charging in Q2 of 2024.
The IEA estimates that there will be 15 million public charging points worldwide by 2030, increasing to almost 25 million by 2035. This will include 160,000 charging points in the US, with around 55,000 fast chargers. Japan aims to deploy 150,000 charging points by 2030, including 30,000 fast chargers, while India has set targets for chargers to be installed every 25km along major highways.
The increase in EV adoption and the corresponding need for charging infrastructure is expected to generate demand for labour in the installation and maintenance of charging stations. This will create a variety of new jobs, from production workers who assemble batteries to managers overseeing financial operations.
As the demand for electric vehicles continues to grow, the development of charging infrastructure will be crucial to support the increasing number of EVs on the road.
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Government incentives
The IRS has set several requirements that must be met to qualify for these tax credits, including income and vehicle specifications. The vehicle's manufacturer suggested retail price (MSRP) plays a role in determining eligibility, with caps set at $80,000 for vans, sport utility vehicles, and pickup trucks. Additionally, the vehicle's final assembly location, battery components, and critical minerals used are also considered. Tax credits are also available for home charging equipment and energy storage solutions, with a maximum credit of $1,000 for each charging port and energy storage property.
The process of claiming these tax credits is straightforward. Dealerships often facilitate the tax credit during the vehicle purchasing process. Alternatively, individuals can submit IRS Form 8936 when filing their taxes to receive the credit. It is important to note that the tax credit was previously only available after filing tax returns. However, starting in January 2024, buyers can choose to transfer their credit to the dealer, reducing the upfront purchase price of the clean vehicle.
In addition to tax credits, governments are also investing in the development of EV charging infrastructure. For example, the Infrastructure Investment and Jobs Act in the United States allocated $7.5 billion to building a nationwide charging network, focusing on installing fast chargers along interstate highways. Similarly, China has been rapidly expanding its public charging network, with about 70% of the global stock of public chargers located in the country as of the end of 2023. Europe is also making strides, with a 35% increase in public chargers from 2022 to 2023. These initiatives are crucial in addressing "range anxiety," a concern among consumers about the availability of charging stations, and encouraging the wider adoption of EVs.
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Consumer demand
The demand for electric vehicles is increasing, driven by both industry and consumer influences.
- Environmental concerns: Consumers are increasingly conscious of the environmental impact of their choices, and electric vehicles are seen as a more sustainable option compared to traditional fuel-powered cars.
- Cost savings: Electric vehicles offer cost savings in the long run, with lower fueling and maintenance costs compared to traditional cars.
- Improved battery technology: The range of electric vehicles has improved significantly due to advancements in battery technology. The median range on a single charge has increased from 68 miles in 2011 to 234 miles in 2021, addressing "range anxiety," which previously deterred consumers from purchasing electric vehicles.
- Government incentives: Governments worldwide are offering tax credits and other incentives to encourage the adoption of electric vehicles, making them more accessible and affordable for consumers.
- Increasing model availability: As electric vehicles gain popularity, more styles and models are becoming available, appealing to a wider range of consumers.
- Charging infrastructure: The number of public charging stations is increasing, making electric vehicles more convenient and accessible for consumers.
- Performance and efficiency: Electric vehicles have improved in performance and efficiency, offering a more attractive alternative to traditional cars.
- Urbanization: With over 50% of the global population projected to live in cities by 2030, smaller and more efficient electric cars are becoming more prevalent in urban areas, driving up demand.
While there may be fluctuations in the market, such as temporary declines in demand or the impact of used electric vehicles entering the market, the overall trend indicates a growing consumer demand for electric vehicles.
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Frequently asked questions
Yes, the demand for electric vehicles is increasing. The number of electric vehicles on the road has increased in recent years and will continue to grow as demand increases worldwide. This is driven by both industry and consumer influences.
There are several factors contributing to the growing EV market, such as increased consumer interest, government policies, and buy-in from the auto industry. The development of battery technology, which has improved the range of electric vehicles, has also played a role in the increased demand.
The increasing demand for electric vehicles has several implications. Firstly, it will generate demand for labor in areas such as the design and development of electric vehicle models, battery production, and the installation and maintenance of charging infrastructure. Secondly, it will lead to the opening of new manufacturing plants and the creation of new jobs in the electric vehicle industry. Finally, it will contribute to the goal of decarbonizing road transport, which accounts for around one-sixth of global emissions.
