EV Manufacturers Need To Plan Ahead As Hyper Growth Surges
Electric Vehicle (EV) sales are soaring across Europe. Although chip shortages and supply chain problems are causing problems to the wider auto industry, the EV market seems to have hit that part of the rollercoaster where you just go over the top and start screaming.
Look at the UK market. Almost 200,000 new EVs were registered last year. That’s more than the previous five years combined. In fact, if you look even more recently at the UK data – just March 2022 alone – in one month more EVs were purchased than in the whole of 2019.
The same wave of EV sales is taking place across all of Europe. EVs now account for 29% of the entire auto market in Europe. That’s worth repeating because it’s still common to see ‘why buy an EV’ explainers in the mainstream media. Almost a third of all new vehicles in Europe last year were EVs.
In November and December 2021, one in three new cars sold in Germany was an EV, but some European countries have gone even further. In Norway, 72% of auto sales are now EVs, in Sweden it’s 45% and in the Netherlands 30%.
The soaring price of petrol and diesel is a strong driver. The Russian invasion of Ukraine has created a wave of uncertainty around energy supplies and many consumers are now looking to EV manufacturers as a form of insurance – it may be a little more to spend up front, but then you never have to worry about the price of petrol ever again.
In fact, analysts are already predicting price parity for EVs is coming soon – as soon as 2025 or 2026 depending on which forecast you read. This is clearly leading to an acceleration in demand. Battery life is improving and offering much better range. Petrol prices are soaring. EV prices are dropping and will soon be below the cost of an equivalent petrol vehicle. It’s like a perfect storm that will see more or less 100% of all new vehicles from EV manufacturers by the start of the next decade.
It’s clear that the tipping point has been reached. EV sales are now accelerating and the internal combustion engine (ICE) is in terminal decline. But can the manufacturers keep up with this demand?
This is the next problem for the industry. As gradual growth accelerates into a headlong rush for EVs, can the auto brands find enough of those rare metals and minerals required for so many batteries? The contrast with a decade ago is stark. In 2012, about 130,000 EVs were sold globally. Now it’s normal for more than this to be registered in a week.
A paper published in January 2022 by the International Energy Agency (IEA) said: “As highlighted in last year’s IEA special report on The Role of Critical Minerals in Clean Energy Transitions, the world faces potential shortages of lithium and cobalt as early as 2025 unless sufficient investments are made to expand production. Further growth of EVs requires not only an expansion of the extraction of key minerals – but also of the entire EV value chain.”
The sales figures indicate that we are now in the age of the EV. ICE vehicle sales are declining rapidly and EVs will make up the majority in vehicle sales in the near future. However, this one black cloud on the horizon needs to be addressed. The supply chain for critical minerals required in battery production must be boosted if the auto industry wants to see a complete switch from ICE to EV inside the next decade.