IEA Predicts Another Record Year for Electric Vehicles

Electric car sales could jump 35% this year to 14 million vehicles, an expansion in markets led by China, Europe and the U.S. that could cut oil demand by at least 5 million barrels a day, according to the International Energy Administration (IEA).

More than 10 million EVs were sold worldwide last year, pushing their market share to 14% from 4% in 2020, the energy research and advisory group said in its annual Global Electric Vehicle Outlook.

"The internal combustion engine has gone unrivaled for over a century, but electric vehicles are changing the status quo," said IEA Executive Director Fatih Birol. "Cars are just the first wave: electric buses and trucks will follow soon.”

Policies such as the U.S. Inflation Reduction Act of 2022 have spurred demand, the IEA said. Some $52 billion was plowed into North American EV supply chains between last August, when the bill was passed, to March. 

China, which accounts for 60% of demand, dominates the market, followed by Europe, and the U.S. In China, a big market for U.S. automaker Tesla (TSLA), sales by domestic rival BYD Co. (BYDDY) surged in the first quarter, and local automakers are set to surpass sales of their foreign rivals for the first time this year. While pandemic lockdowns hampered sales in China, demand dropped by just 1%, compared with declines of 40% in Japan and 13% in the U.S.

The IEA noted “promising signs” of demand in other markets. EV sales tripled in India and Indonesia, for example, though from a lower base level. More than half of India’s three-wheel registrations in the past year were electric.