Electric vehicles are picking up speed

Plug-in vehicles are becoming increasingly popular, with the number of passenger EVs on the road set to reach 77 million by 2025, or 6% of the global fleet,[1] a notable rise from today’s 20 million.[2]

According to Adamas Intelligence, in the first half of 2022 global passenger EV registrations jumped 42% YoY to 6.23 million.[3] While in its previous outlook BNEF projected passenger EV sales at 14 million[4] in 2025, this year it has upped its forecast to 20.6 million,[5] with plug-in vehicles to make up a hefty 23% of new passenger vehicle sales globally, up from just under 10% in 2021[6] (see Fig. 1). Such staggering growth will come largely from China and Europe (almost 80% of total EV sales), with the adoption rate there expected above the global average level.

With e-mobility now gaining traction, many developed countries have tightened their environmental regulations to encourage faster transition to electric passenger vehicles (e.g., Germany, Canada and the UK are determined to end sales of ICE vehicles in 2035). This switch becomes even more pressing today as we see well-established supply chains for fossil fuels come apart at the seams.

Along with restricting the use of conventional cars, lawmakers are pushing for a greater share of recycled materials used in battery production. For example, the EU is planning an incremental increase of 20% for copper, 12% for nickel and 10% for lithium in 2035[7] (see Fig. 2). This move will not only help the industry meet the growing demand, but it is also set to improve resource efficiency.

Another challenge is battery recycling, especially considering the growing amount of scrap. It’s hard to get a feel for the available recycling capacity, as most of it is still developing. While this year global demand for lithium-ion batteries (LIB) used in the manufacture of light BEVs is expected at 1,007 GWh, in eight years it may reach 3,076 GWh as more such vehicles hit the roads (see Fig. 3). With a widely expected resource shortage, manufacturers should now focus on developing recycling capacity for batteries that have gone past their life span.

By the looks of it, electric vehicles have a promising future ahead, even though the average LIB price is anticipated to rise to $135 per kWh in 2022 (in 2021 prices), some 2% higher than a year earlier[8] and despite growing production and operating costs, a trend observed across all automotive segments. While it’s difficult to make projections in the prevailing uncertainty, so far there are no major hurdles that would prevent electric transport from continuing its winning run in the next few years, with all the fundamentals being in its favor.