- Written by Ben Chu
- Newsnight Economics Editor
Strong electric vehicle sales are essential to meeting climate goals. But EV sales in Western countries are declining, and governments may have to sacrifice their own economies if they want EV sales to recover.
numbers
Any highway driver knows this feeling. You'll be driving down miles of open roads and out of nowhere your car will start to slow down.
The electric vehicle market in 2024 will experience a similar situation. After years of soaring sales, growth appears to be stalling.
Replacing fossil fuel-powered cars with EVs is central to the UK government's plans to meet climate change targets, with road transport accounting for 12% of global emissions.
The question is: Will this be a fleeting moment that will quickly disappear in the rearview mirror, or will it last much longer? And if it continues, will the government have the guts to do what it takes to keep the net zero show going?
We need to buy more EVs to meet climate goals
The growth in EV sales is remarkable. In 2020 he had 10 million EVs on the road, in 2023 he had 45 million. But sales need to remain impressive, and the graph below shows that.
The International Energy Agency (IEA) says 790 million EVs will be needed by 2035 to reach net zero by mid-century.
That's why the fact that Tesla, the world's largest EV maker, actually had lower global sales in the first quarter of 2024 than in the same period in 2023 raised eyebrows.
BYD, China's largest EV maker, is competing with Tesla for the top spot. BYD also saw a slowdown from January to March.
And EV sales in Europe fell more than 10% in the final quarter of last year compared to the same period last year.
people aren't sure if they're worth it
In the UK, analysts say strong EV sales in recent years have been driven by company car purchases thanks to generous tax breaks.
But the residential market is proving more difficult to address, with many saying the high cost has deterred most buyers. The average price of a new EV in the US is over $60,000 (£47,433). Prices are similarly high in Europe and the UK.
Thanks to heavy state subsidies and increased production efficiency, the average cost to Chinese consumers is only $30,000. And BYD's Seagull hatchback sells for less than $10,000.
China also produces far more EVs than its domestic market demands, which could easily flood U.S. and European markets with cheap cars if not curbed by tariffs.
Difficult choices at a fork in the road
Herein lies the dilemma for European and American politicians. They want cheaper EVs to help speed climate change, but not at the cost of hurting their own automakers like Ford and Volkswagen and local jobs.
In fact, there is talk of raising tariffs and other trade barriers on imports to keep out ultra-competitive Chinese EVs.
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The IEA still predicts sales growth in 2024, which will keep us on track towards near net zero.
Optimists hope more people will buy EVs once discounted used cars come on the market in Europe and the United States. But that clear path is not guaranteed.
While China continues to mass-produce ultra-cheap cars, EV prices in Western countries may indeed remain high.
If that happens, tensions between Western governments' desire to decarbonize transportation and their desire to protect domestic manufacturing champions are likely to become even more acute.
At some stage you may have to make a choice.
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