Rising Demand for Electric Vehicles Fuels 35% Sales Growth Forecast in 2023

The increase in demand for EVs have significant implications for global oil demand


Over 10 million electric cars were sold globally in 2022, and the sales are anticipated to increase by 35% this year, reaching a total of 14 million, finds a report by the International Energy Agency (IEA).

The report finds that this year, there will be another record-breaking surge in global sales of electric cars, resulting in a larger share of the overall car market.

This growth has led to an increase in the electric cars’ market share from about 4% in 2020 to 14% in 2022, and it is expected to rise to 18% this year, according to the IEA projections.

IEA Executive Director Fatih Birol said electric vehicles (EV) are revolutionizing the automobile manufacturing industry worldwide.

The growth of EVs have significant implications for global oil demand.

According to the latest edition of the IEA’s annual Global Electric Vehicle Outlook, the shift towards electric cars is leading to far-reaching implications for the energy sector, particularly oil, and by 2030 it is expected to eliminate the requirement for 5 million barrels of oil per day.

Three Key EV Markets

Most electric car sales to date are concentrated in three key markets: China, Europe, and the United States.

China is the global leader, accounting for 60% of electric car sales in 2022, with more than half of all-electric cars on the road worldwide being in China. Europe and the United States, the second and third largest markets, saw significant sales increasing by 15% and 55% in 2022.

Major economies are implementing ambitious policy programs, such as the Fit for 55 package in the European Union and the Inflation Reduction Act in the United States, to increase the market share of EVs this decade and beyond.

By 2030, the average share of electric cars in total sales across China, the EU, and the U.S.  is projected to increase to 60%.

The positive trends in electric car sales are having a beneficial impact on battery production and supply chains as well.

The IEA report indicates that the battery manufacturing projects that have been announced would be more than sufficient to meet the demand for EVs until 2030 in the IEA’s Net Zero Emissions by 2050 Scenario.

Nevertheless, the battery and component trade remain highly concentrated, with China dominating the industry and accounting for over 35% of global electric car exports last year.

Several other economies have also announced policies to foster their domestic industries to improve their competitiveness in the electric vehicle market in the years to come.

Growing Economies

While electric car sales and manufacturing are mainly concentrated in a few big markets, there are promising signs in other regions.

In 2022, electric car sales more than tripled in India and Indonesia, albeit from a low base, and more than doubled in Thailand. The share of electric cars in total sales also increased to 3% in Thailand and to 1.5% in India and Indonesia.

A combination of effective policies and private sector investment is expected to increase these shares in the future. For instance, in India, the government’s $3.2 billion incentive program, which has attracted investments worth $8.3 billion, is likely to boost battery manufacturing and electric vehicle rollout substantially in the coming years.

In emerging and developing economies, the growth of electric mobility is mainly focused on two- or three-wheel vehicles, which are more common than cars.

In 2022, more than half of India’s three-wheeler registrations were electric, indicating their increasing popularity.

In many developing economies, two- or three-wheelers offer an inexpensive means of transportation, which makes their electrification important to promote sustainable development.