In order to meet our climate commitments, sales of electric cars must surge. However, EV sales are declining in the West, and governments may need to sacrifice their own economies in order for them to rebound.

The experience is familiar to everybody who drives on a motorway: you’re driving along, apparently for miles at a time, when all of a sudden there’s a slowdown.

In 2024, a comparable product was introduced to the electric car market. Growth seems to be stagnating after years of record-breaking sales.

Since road transport accounts for 12% of global emissions, the UK government’s plan to accomplish its climate targets centres on the replacement of fossil fuel-powered automobiles with electric vehicles (EVs).

Is this going to be a passing phase that quickly passes into the rearview mirror, or will it be something more permanent? If it persists, would governments be willing to take the necessary measures to maintain the momentum of the net zero show?

The sales of EVs have increased remarkably. Ten million EVs were driven in 2020; by 2023, that number had increased to forty-five million. However, sales must continue to be exceptional, as the following figure illustrates.

If we are to reach net zero by the middle of the century, 790 million electric vehicles (EVs) would be required, according to the International Energy Agency (IEA) by 2035.

That suggests a 27% annual rise in revenue growth.

This is why it has drawn attention when it was discovered that, in comparison to the same period in 2023, global sales of Tesla, the largest EV manufacturer in the world, were actually lower in the first quarter of 2024.

Tesla and BYD, the biggest electric vehicle maker in China, have been fighting for the top place. A downturn was also seen by BYD from January to March.

Additionally, despite overall sales in the UK are up over previous year, EV sales in Europe decreased by more than 10% year over year in the last quarter of last year.

Experts claim that the UK’s robust EV sales in recent years were fueled by business car purchases, which were made possible by large tax cuts.

However, the residential market is proving to be more difficult to penetrate, with most consumers citing price as their main deterrent. In the US, a new electric vehicle typically costs more than $60,000. Prices in Europe and the UK are similarly exorbitant.

Due to significant governmental subsidies and improved production efficiency, Chinese consumers often only pay $30,000. Furthermore, the Seagull hatchback from BYD costs less than $10,000.

China is also producing far more electric vehicles (EVs) than the market would ever want domestically; if tariffs didn’t prevent it, it could easily oversupply the US and European markets with low-cost autos.

This is the conundrum facing politicians in the US and Europe. They want more affordable EVs to help with the climate transition, but not at the expense of local employment and their own automakers, Ford and Volkswagen.

Raising tariffs and other trade barriers on imports is indeed the topic of discussion in order to keep out fiercely competitive Chinese EVs.

This week, US President Joe Biden implemented a new 100% tax on Chinese electric vehicle imports, doing just that.

The IEA continues to predict higher sales in 2024, which would essentially put us on course for net zero.

Those that are optimistic believe that when affordable used cars become available in Europe and America, more people will purchase electric automobiles. That obvious path, though, is not always present.

It’s possible that while China continues to produce really affordable cars, EV costs in the West do prove to be sticky.

If that occurs, expect the already existing friction between Western governments’ desire to safeguard domestic manufacturing champions and their drive to decarbonise transportation to become much more intense.

They may have to make a decision at some point.

(Adapted from BBC.com)

Categories: Creativity, Economy & Finance, Regulations & Legal, Sustainability, Uncategorized