What EV sales reveal about CO2, Tesla and Biden

Source: By Miranda Willson, E&E News reporter • Posted: Monday, February 1, 2021

Electric vehicle sales worldwide soared in 2020 despite the economic fallout of the pandemic, but only a fraction of the growth happened in the U.S., the International Energy Agency reported in preliminary data released last week.

Global EV sales increased 46% year over year from 2019 to 2020, even as total car sales dropped by 14%, IEA said. Most of the growth happened in Europe and China, where sales rose by 135% and 12%, respectively. Korea also saw a 60% increase in EV sales compared to 2019 numbers.

In the U.S., meanwhile, EV sales increased by 4% last year, according to the data. But total domestic car sales were down 15%, suggesting that EVs in the U.S. showed some resilience to the economic disruption caused by the pandemic.

Despite the growth, the data showed that the share of global EV sales remain at approximately one-tenth of traditional SUVs. And EV sales need to grow exponentially — from roughly 4% of global market share to 50% in a decade — to be aligned with a net-zero emissions target by 2050, IEA said.

Globally, IEA’s preliminary data for 2020 defied the agency’s expectations from last May, at which time the auto industry was struggling. IEA had projected in May that EV sales in 2020 would “slightly exceed” the total number of EVs purchased in 2019, but EV purchases increased significantly in the second half of the year.

“[The] IEA preliminary estimate is that electric car sales worldwide climbed to over 3 million and reached a market share of over 4%, making 2020 a record-breaking year for electric mobility,” IEA analysts Marine Gorner and Leonardo Paoli wrote in a commentary about the data.

In Europe, a mix of COVID-19 stimulus measures, policy changes, technological improvements and falling battery costs bolstered EV sales, IEA said. Sales exceeded 2019 levels almost every month last year in France, Italy, Germany and the United Kingdom, according to the agency.

While the U.S. did not pass similar stimulus measures aimed at EVs, policies adopted in California and a few other states may have contributed to the slight growth in sales nationwide, the agency said. Last year’s modest increase in U.S. EV sales — in spite of “degrading policy support” at the federal level — should also fuel an optimistic outlook for electric cars over the next few years as the economy recovers from the pandemic, IEA said.

But according to one analyst, last year’s boost in the U.S. was mostly due to Tesla purchases, while most other EV brands saw a dip in sales.

“What we saw in 2020 was a bifurcated market, a K-shaped recovery. People who had money, saved money and then spent on expensive vehicles — Tesla EVs, big trucks and SUVs,” said Michelle Krebs, executive analyst at Cox Automotive. “People on the lower leg of the K lost jobs, struggled with credit issues and were frozen out of the car market.”

The Biden administration has indicated an interest in pursuing tighter fuel economy standards, deployment of EV-charging stations and the establishment of tax credits to help automakers pivot toward EV manufacturing, all of which could accelerate growth in the market, IEA said.

Automakers are also planning to roll out a number of new EV models in the U.S. at a range of price points, said Sam Abuelsamid, principal analyst at Guidehouse Insights.

“The availability of new [battery electric vehicle] options, especially more affordable vehicles along with growing charging infrastructure should help boost sales in the next couple of years. New policies from the Biden administration are also likely [to] provide an impetus for growth,” Abuelsamid said in an email.