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Surging raw material costs may hamper EV sales momentum – IEA

Global sales of electric vehicles (EVs) – including battery electric vehicles (BEVs) and Hybrid vehicles – have continued to register solid growth this year, after having doubled in a year in 2021 to a record 6.6 million sales, said the IEA in its latest ‘Global EV Outlook 2022’.

Surging raw material costs may hamper EV sales momentum - IEA

With EVs contributing to nearly 10 percent of global cars sales in 2021, the total number of green vehicles on the world’s roads has risen to nearly 16.5 million, a 3x growth compared to 2018. Recording a 75 percent surge from last year in the same period, over 2 million units were sold in the first quarter of 2022, implying that the sales of EVs has continued to ascend dynamically this year.

The success of EVs has been attributed to government policies acting as the main pillar amongst several other factors. Many countries have pledged to discard internal combustion engines (ICE) to ensure carbon neutrality. Meanwhile, a growing number of carmakers have plans to completely electrify their fleets, and reinforce the estimated 450 models of EVs currently available in the market.

Despite the triple fold growth of EVs on the roads worldwide, the Paris-based agency’s Announced Pledges Scenario (APS), based on existing climate-centric pledges and announcements, presumes that by 2030, over 30 percent of global vehicles sold will represent EVs excluding two-and three-wheelers. Impressive as it sounds, it still only amounts to half of the share needed to align with the trajectory that would result in net zero carbon emissions by 2050.

The rapid surge in EV sales has also tested the resilience of battery supply chains that were still trying to recover from Covid-19 lockdowns, and has recently been put under pressure after the Russia-Ukraine conflict. There was a significant hike in the prices of raw materials essential for EV production such as nickel, lithium, and cobalt. In just over a year, the prices of lithium went up by at least seven times, said the IEA.

“Policymakers, industry executives and investors need to be highly vigilant and resourceful in order to reduce the risks of supply disruptions and ensure sustainable supplies of critical minerals.”, said Fatih Birol, executive director, IEA.

With continued public policies and subsidies, enhancement of the charging infrastructure, and stringent vehicle efficiency, the EV ecosystem is expected to bloom as the sales are expected to increase further, said the IEA.

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