Electric car sales will rise strongly in 2024 and increasingly undercut oil demand, the International Energy Agency (IEA) forecast on Tuesday, adding affordability and charging infrastructure would be key to future growth.
Electric car sales will hit 17 million this year, compared to 14 million in 2023, with more than one in five cars sold globally set to be electric, the IEA said, predicting 10 million of those sales would be in China.
The pace of electric vehicle uptake will mean that oil demand for road transport should peak around 2025, the Paris-based watchdog said in its Global Electric Vehicle Outlook.
If countries carry through on stated energy and climate policies, some six million barrels per day (bpd) will be shaved off oil demand by 2030 and 11 million bpd by 2035 - or over a tenth of current total oil demand, the IEA said.
“Tight margins, volatile battery metal prices, high inflation, and the phase-out of purchase incentives in some countries have sparked concerns about the industry’s pace of growth, but global sales data remain strong,” it said of EV demand.
Sales in the first quarter of this year were up 25% on the same period last year. Though that rate is unchanged from the first quarter of 2023 versus the comparable period in 2022, it comes on top of a larger base of vehicles, the IEA said.
Still, electric cars’ share of total purchases will vary widely by region, representing about one in nine vehicle purchases in the United States, one in four in Europe, but nearly half in China, the IEA forecast.
Take up in Europe is being held back by “a generally weak outlook for passenger car sales and the phase-out of subsidies in some countries”, it said.
Affordability compared to traditional vehicles remains key to the sector’s growth, it added, with prices again varying widely by region.
Internal combustion cars remain more affordable than their electric equivalents in Europe and the United States, while in China nearly two-thirds of electric cars sold last year were cheaper than their traditional equivalents.
“Electric cars are generally getting cheaper as battery prices drop, competition intensifies, and carmakers achieve economies of scale”, the IEA said, while noting that in some cases - adjusting for inflation - prices stagnated or even rose slightly between 2018 and 2022.
Meeting the growing demand with charging infrastructure will also pose a key challenge, the IEA added, with charging networks needing to grow six-fold by 2035.