Source: IEA.
Prior to 2010, electric vehicles were marginal products almost used as prototypes. From 2010 sales increased rapidly with electric vehicles becoming mainstream to reach 6.6 million units in 2021, accounting for 8.6% of global sales. The exponential growth pattern may be indicative that a paradigm shift is underway. Electrification remains highly focused within China, Europe, and the United States as the supply of electric vehicles requires an electric distribution grid as well as sufficient electric generation capabilities. Each new electric vehicle represents an entirely new demand on the power grid as it is an equivalent shift from gasoline demand to electric demand.
China represents the largest market share with 50.7% of sales in 2021, an outcome of tax incentives and the exemption for electric vehicles from local vehicle sales quotas. Europe represents the second largest market with 34.6% of sales, but there are significant variations in market share. Electricity-rich Norway has the largest sales share in the world, with 72% of all new vehicle sales being electric. This figure is around 25% for Germany and 15% for France and the United Kingdom. Sales in Japan are very low, mainly attributed to its enduring electricity shortages in the aftermath of the Fukushima nuclear incident in 2011. Many advanced economies expect at least of 50% market share of electric vehicles by 2030.
Manufacturing electric vehicles remains a challenge in terms of the procurement of components, particularly batteries. Further, an electric vehicle consumes twice as many microchips as a regular car for its manufacturing. The market is thus more driven by supply than by demand, making electric vehicles comparatively more expensive. Tesla (USA; 936,000 vehicles in 2021), VW (Germany; 763,000), and BYD (China; 598,000) are the world’s leading manufacturers.