Powering Ahead: The Global Surge in Electric Vehicle Adoption

Accelerating Electric Vehicle Sales

In 2024, electric vehicle (EV) sales are projected to surge, with over one in five cars sold being electric. By 2035, EVs are expected to make up 50% of total vehicle sales globally. The International Energy Agency (IEA), the leading authority on energy trends, highlights significant growth in major markets. This year, EV sales in China, the world’s largest auto market, are projected to reach 10 million vehicles, accounting for 45% of all car sales. In the United States, EV sales are expected to increase by 20% from 2023, making up roughly 11% of all new car sales. In Europe, EV sales could rise by 10%, representing 25% of total sales.

Sources: IEA analysis based on data from on EV Volumes, China Passenger Car Association and the European Automobile Manufacturers’ Association.

Driving Factors Behind EV Growth

There are several factors that are propelling the rise of EV ownership.

Policy Certainty: Government policies and incentives are crucial in promoting EV adoption.

Technological Advancements: Continuous improvements in technology and manufacturing are reducing costs.

Infrastructure Expansion: The growth of charging infrastructure is vital for supporting the increasing number of EVs.

Battery Recycling: Enhanced battery recycling capacity is essential for sustainability.

The burgeoning EV market presents numerous opportunities across its value chain, including raw materials, battery production and recycling, manufacturing, and charging infrastructure. By 2028, the EV ecosystem is estimated to be worth US$906 billion.

The Growing Demand for Batteries

The McKinsey Battery Insights team projects that the lithium-ion (Li-ion) battery chain could grow by 27% annually from 2022 to 2030, reaching a value of over US$400 billion. Batteries for EVs will account for the majority of this demand, with an estimated 4,300 gigawatt-hours (GWh) needed by 2030. Stationary storage and consumer electronics will require significantly less.

Consumer preferences are shifting towards EVs, with 42% of consumers indicating that they want their next car to be electric, according to a McKinsey survey. Improving driving range and expanding charging infrastructure are critical for further EV adoption. 

Opportunities Across the EV Value Chain: The Case of BYD

The EV value chain offers unique opportunities depending on the maturity of the ecosystem in different regions. Countries like India, China, and the USA are exploring opportunities by creating conducive regulatory conditions, building improved infrastructure, and facilitating the use of alternate energy sources to drive EV growth.

Chinese EV and battery manufacturer BYD is a prime example of capitalizing on local opportunities and expanding globally. With advanced technologies and control over its EV supply chain, BYD can offer affordable EVs starting at US$10,000 (BYD Seagull model, a small all-electric hatchback). In contrast, U.S. EV makers have focused on larger, more luxurious models for wealthier buyers, although Tesla announced plans to produce more affordable models by early next year.

BYD began as a battery manufacturer in 1995, controls most of its EV supply chain, from components to shipping. This vertical integration allows BYD to maintain low costs and sell to the masses. The IEA reports that up to 45% of the cars on Chinese roads could be electric by this year, compared to 25% in Europe and about 11% in the U.S. This dominance poses a challenge to U.S. automakers, who are struggling to catch up.

Summary and Investor Insights

The global shift towards EVs is accelerating due to technological advancements, supportive policies, and changing consumer preferences. The expanding EV market creates numerous opportunities across its value chain, from raw materials to manufacturing and infrastructure development.

Investors should pay attention to companies like BYD, which are setting new standards with advanced technologies and cost-efficient supply chains. Investors should also look for companies that demonstrate strong technological capabilities. As electric mobility becomes the norm, staying informed and agile will be crucial to capitalizing on this rapidly evolving market.