Trends in electric light-duty vehicles – Global EV Outlook 2022 – Analysis – IEA

Sales of electric cars reached another record high in 2021 despite the Covid-19 pandemic and supply chain challenges, including semiconductor chip shortages. Looking back, about 120 000 electric cars were sold worldwide in 2012. In 2021, that many were sold in a week.

After increasing in 2020 despite a depressed car market, sales of electric cars – battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs) – nearly doubled year-on-year to 6.6 million in 2021.1 This brought the total number of electric cars on roads to over 16.5 million. As in previous years, BEVs accounted for most of the increase (about 70%).

EV markets are expanding quickly. Electric car sales accounted for 9% of the global car market in 2021 – four-times their market share in 2019. All the net growth in global car sales in 2021 came from electric cars. Sales were highest in the People’s Republic of China (“China” hereafter), where they tripled relative to 2020 to 3.3 million after several years of relative stagnation, and in Europe, where they increased by two-thirds year-on-year to 2.3 million. Together, China and Europe accounted for more than 85% of global electric car sales in 2021, followed by the United States (10%), where they more than doubled from 2020 to reach 630 000.

China accelerates EV vehicle deployment as a new five-year plan sets more ambitious objectives

More electric cars were sold in China in 2021 (3.3 million) than in the entire world in 2020 (3.0 million). China’s fleet of electric cars remained the world’s largest at 7.8 million in 2021, which is more than double the stock of 2019 before the Covid-19 pandemic. Over 2.7 million BEVs were sold in China in 2021, accounting for 82% of new electric car sales. Electric cars accounted for 16% of domestic car sales in 2021, up from 5% in 2020, and reached a monthly share of 20% in December, reflecting a much quicker recovery of EV markets relative to conventional cars.

This impressive growth comes alongside government efforts to accelerate decarbonisation in the new 14th Five-Year Plan (FYP) (2021-2025), continuing the trend of progressively strengthening policy support for EV markets in the past few FYP periods. The current FYP includes medium-term objectives in transport such as reaching an annual average of 20% market share for electric car sales in 2025. Notably, China had extended subsidies for electric cars for two years in the wake of the pandemic, with a planned scale-back of 20% in 2021 and 30% in 2022 – but by the end of 2022 they will be phased out. There are also a number of subnational regulations that give preferential treatment to EVs, such as local subsidies or tax breaks, financial incentives and exemptions from purchase limitations.

Growth in 2021 in spite of declining subsidies indicates the maturing of China’s EV markets. Consumer anticipation of declining subsidies may also have supported record high sales, although the pace at which subsidies effectively decline warrants further examination. China’s electric car market can be expected to further expand in 2022 and beyond, as investments from previous years ramp up production capacity and bear fruit.

Europe sustains strong growth after its 2020 boom, reaching the world’s highest electric car penetration rates

In Europe, electric car sales continued to increase in 2021 by more than 65% year-on-year to 2.3 million, after the boom of 2020. EV sales remained strong even though the overall automotive market has not yet fully recovered from the pandemic: total car sales in 2021 were 25% lower than in 2019. Over the 2016-2021 period, EV sales in Europe increased by a compound annual growth rate (CAGR) of 61%, the world’s highest, above China (58%) and the United States (32%).

Overall, electric cars accounted for 17% of Europe’s auto sales in 2021. Monthly sales were highest in the last quarter, when electric car reached a 27% sales share and surpassed diesel vehicles for the first time. However, the distribution is uneven across countries. The largest market in terms of number of EVs sold remains Germany, where electric cars accounted for 25% of new cars sold overall, which increased to one-in-three in November and December. Germany offers some of the highest subsidies in Europe.

The highest market share for new electric car sales in 2021 in Europe are Norway (86%), Iceland (72%), Sweden (43%) and the Netherlands (30%), followed by France (19%), Italy (9%) and Spain (8%). For the first time in 2021, the bigger market of the United Kingdom was not included in European Union-wide regulations, although it has put in place national law that mirrors EU regulations. The key driver underpinning EV growth in Europe is the tightening CO2 emissions standards that occurred in 2020 and 2021. The expansion of purchase subsidies and tax benefits in major markets also contributed to the acceleration of sales.

In 2021, there were about 5.5 million electric cars on European roads – more than three-times the stock of 2019 before the Covid-19 outbreak. As in previous years, new sales were evenly split between BEVs and PHEVs, in contrast to China where BEVs typically score a clear lead. In 2021, Europe’s stock of electric cars was about 55% BEVs, a share that has remained steady since 2015 and is lower than other regions such as China (80%) and the United States (65%). This may reflect a corporate strategy among European automakers and original equipment manufacturers (OEMs) of offering PHEV versions of many large and high-end car models to capitalise on their experience in developing conventional drivetrains (a necessary part of PHEVs), whereas their experience in electric powertrains is more recent. In addition, the CO2 regulation structure in Europe makes PHEVs very attractive for OEMs in terms of compliance.

A new wave of electric car uptake in the United States

After two years of consecutive decline of 10%, electric car sales increased in the United States in 2021. About 630 000 electric cars were sold – more than in 2019 and 2020 combined – bringing the total stock of electric cars to over 2 million. About 75% of new EV sales were BEVs, up from 55% just five years ago, resulting in a higher share of BEVs relative to PHEVs today over the total EV stock (65%) than in 2015-2016 (about 50%). Relative to other regions, the overall car market recovered faster from the pandemic in the United States, but electric cars still doubled their share to 4.5% in 2021. Tesla accounts for over half of all units sold, and there are generally fewer models available in the United States than in other major markets. Some of the main drivers underpinning growth in the United States in 2021 were the increased production of Tesla models and the availability of new generation electric models by incumbent automakers.