Global EV Scenario, China and US Lead, Europe slows down

Global sales of new electric vehicles remained strong in the first half of 2024. The global new light vehicle market, which includes passenger cars and light commercial vehicles, increased by 3.7% in the first half of 2024. Within this, combined battery-electric vehicle (BEV) and plug-in hybrid (PHEV) sales increased by 22% year on year, reaching 1.35 million units. Between January and June 2024, deliveries of new EVs increased relatively consistently. Because of the Chinese New Year, February was the only month that did not experience double-digit growth in the first half. This consistency and competitively high rate of growth appears promising at first. However, this represents a slowdown from the same point last year. In the first half of 2023, global EV deliveries increased by 35% year on year.

Ups and Downs in Electric Vehicle Growth

Growth has become more irregular around the world. Despite mounting economic challenges, China continues to dominate the global EV market in terms of volume. The country accounted for 60% of global electric vehicle sales in the first half of the year. EVs and PHEVs accounted for 46% of the Chinese new-car market in June. New plug-in vehicle volumes also outpaced the overall light vehicle market in China. EV sales increased 31% year on year in the first half of 2024, while overall sales rose 2%. Growth is particularly strong for both premium segments and extended-range electric vehicles (EREV). This powertrain uses a small internal-combustion engine generator to charge the battery instead of driving the wheels. Like BEVs and PHEVs, EREVs can be charged via the mains. 

US and the effects of the Inflation Reduction Act (IRA)

The effects of the Inflation Reduction Act (IRA) in the United States are wearing off, despite a recent surge in EV sales. In addition, there are uncertainties and challenges associated with the eligibility of various vehicles for contributions. The first half of 2024 was marked by delays in both vehicles and batteries, with OEMs having to reroute supply chains to comply with IRA requirements. EV deliveries in the region increased by 12% in the first six months of the year, outpacing a 3.2% increase in overall light-vehicle deliveries. In other parts of the world, some EV markets experienced triple-digit growth, albeit from low bases. The most important markets in terms of volume and growth were Brazil, India, Thailand, Turkey, Mexico, Indonesia, Taiwan, and Malaysia. However, two of the group's largest markets, Japan and South Korea, appear to be in reverse.

The market in Europe

While global EV sales are still increasing, rising by 22% in the first half of 2024, far outpacing the overall market growth of 3.7%, EV sales in Europe are stagnating after a surge in 2020 and 2021. Looking back, there's the 2020 95gCO2/km New European Driving Cycle (NEDC) mandate and green recovery support measures to think about. Introduced during the pandemic, this resulted in an unprecedented EV boom in 2020 and 2021. Volumes increase by 136% and 68% year on year, respectively. This means the CO2 emission targets were easily met. Europe's EV demand outstripped supply, as prices rose and discounts disappeared, resulting in large margins for some models. However, the pandemic and its associated costs put a strain on public budgets. This shifted funding for green projects to EV charging infrastructure, which remains insufficient.

The power of incentives

Beginning in 2022, EV incentives in Europe were gradually reduced, first for PHEVs, then for BEVs. More expensive EVs also faced more restrictions on subsidies. By 2024, at least six countries had phased out direct purchase incentives. This includes high-volume markets such as Germany, Norway, Sweden, the United Kingdom, Italy, and Switzerland. However, annual road tax exemptions have remained in place in many areas. As order backlogs cleared, supply caught up to slower demand. This has been hailed as a watershed moment, with a buyers' market returning. 
This put margins under considerable pressure, with many EV models starting to lose money. Having comfortably met the European CO2 mandates between 2020 and 2024, carmakers have little incentive to push for more EV deliveries. However, this will change by 2025, when fleet emissions must be 15% lower than in 2021. As a result, efforts should be focused on the upcoming challenge.

Worldwide scenario

EV Volumes predicts that new EV sales will reach 16.5 million units worldwide this year. This would represent a 16% increase from 2023. China is expected to produce 10 million units, Europe 3.3 million, North America 2 million, and the rest of the world 1.4 million. This year, EVs will account for nearly one in every five light vehicle deliveries. However, PHEVs are gaining traction globally faster than BEVs. This is primarily due to the increasing popularity of EREVs in China, which EV Volumes classifies alongside PHEVs. While EREVs are less technically complicated than PHEVs, they have a higher fuel-saving potential. The disadvantage of this powertrain is that it requires a larger battery than a standard PHEV. For the driver, there is also a disconnect between engine sounds and vehicle motion. EREVs serve the typical PHEV markets of midsize and large cars, as well as SUVs. In China, the powertrain now accounts for 18% of all EV sales in these categories, and one-third of all PHEVs. BEVs account for 45% of sales in these segments, while PHEVs make up 55%.