May 28

Electric Car Sale Surge Faces Headwinds

Editorial Staff
Feb 7, 2022
Image: Michael Fousert via Unsplash

Green transition efforts got a huge boost from electric car sales last year. Yet challenges lie ahead.

First, the good news: electric cars surged last year, according to the International Energy Agency.

Sales more than doubled to 6.6 million in 2021, representing close to 9% of the global car sales market. That compares to sales of 3 million electric cars and 4.1% of total car sales in 2020. In 2019, 2.2 million were sold.

Governments and investors have sought to battle global warming by curbing carbon emissions, including from internal combustion engines. This has led to initiatives to switch auto transport to electric, and thus access nuclear, wind, solar and hydro as non-carbon power sources.

Led by Tesla, electric cars have made massive advances in quality, affordability and reliability. Judging by the sales numbers, this has increasingly won over the consumer.

China led all nations with electric car sales tripling to 3.4 million. Government expansion of subsidies for two years after the pandemic contributed to the gain, as did an expanded share of small car offerings, the IEA said. Growth there should continue this year, according to the agency.

Europe followed, with sales jumping nearly 70% to 2.3 million, about half of which were plug-in hybrids, the agency said. Germany led with the highest electric market share.

The United States more than doubled electric car sales to over half a million, dominated by Tesla, the IEA said. China, Europe, and the U.S. accounted for over 90% of all electric cars sold worldwide. In each, new electric vehicle sales are already registering as visible shares of total sales.

Now the bad news: maintaining growth rates is going to become more challenging, at least in the immediate future, due to rising commodities prices, materials availability and supply chain issues.

Steel prices rose by as much as 100%, aluminium around 70%, and copper more than 33% last year, hitting all car manufacturers. Battery materials price also jumped: lithium carbonate was up by 150% year on year, graphite by 15%, and nickel by 25%, according to the IEA.

Economies have surged out of the pandemic, yet the supply of commodities is still recovering.

Prices for batteries themselves have yet to undergo any price increases, according to the IEA. That may be due to technological progress offsetting materials cost increases, as well as the use of alternate materials. Or there may be some time lag between materials price increases and battery price increases.

Automakers in general also faced microchip shortages that held back output. Electric cars use about twice as many chips as normal cars. That may have actually held back sales.

Supply chains will also have to keep pace as sales continue to grow and do so from a higher base, according to the IEA. That includes ensuring the availability of materials such as lithium and cobalt, which require expanded production. It also means getting growth right in expanding assembly and battery parts and other components.

Proponents of electric vehicles talk about an inflection point where car capabilities expand, while battery and power prices drop to a point where consumers will go electric merely for the cost benefits. There is no set date for that point.

Commodities price headwinds and supply chain disruptions seem to be pushing that moment back for the time being. A surge in power prices in Europe and elsewhere related to natural gas supplies also seems to set it back.

Yet the scale of government support and of the big bump in sales may be more important over the long term. Whether it comes sooner or later is up for debate, but it appears that the big switch to electric is inevitable.

This website uses cookies to improve and customize the user experience. To learn more, please see our cookie policy.
Cookie Policy
WP Twitter Auto Publish Powered By :