Sales of electric cars are rising, but affordability is key, IEA told Reuters

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By Noah Browning

LONDON (Reuters) – Electric car sales will surge in 2024 and increasingly undermine oil demand, the International Energy Agency (IEA) predicted on Tuesday. Adding affordability and charging infrastructure would be key to future growth.

Electric car sales will reach 17 million this year, up from 14 million in 2023, with more than one in five cars sold worldwide will be electric, the IEA says, predicting 10 million of those sales will be in China .

The pace of electric vehicle adoption will mean oil demand for road transport should peak around 2025, the Paris-based watchdog said in its Global Electric Vehicle Outlook.

If countries follow through on established energy and climate policies, oil demand will decline by around six million barrels per day in 2030 and by 11 million barrels per day in 2035 – or more than a tenth of current total oil demand , the IEA said.

“Slim margins, volatile battery metal prices, high inflation and the gradual removal of purchasing incentives in some countries have raised concerns about the sector’s growth rate, but global sales data remains strong,” the electric vehicle demand report said.

Turnover in the first quarter of this year was 25% higher than in the same period last year. While that percentage is unchanged from the first quarter of 2023 to the comparable period in 2022, it is on top of a higher number of vehicles, the IEA said.

Still, the share of electric cars in total purchases will vary widely by region, amounting to about one in nine car purchases in the United States, one in four in Europe, but almost half in China, the IEA predicts.

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Uptake in Europe has been hampered by “generally weak prospects for passenger car sales and the phasing out of subsidies in some countries,” the report said.

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Affordability compared to traditional vehicles remains key to the sector’s growth, it added, with prices again varying widely by region.

Internal combustion engine cars remain more affordable than their electric equivalents in Europe and the United States, while in China almost two-thirds of electric cars sold last year were cheaper than their traditional equivalents.

“Electric cars generally become cheaper as battery prices fall, competition increases and car manufacturers realize economies of scale,” the IEA said, noting that in some cases – adjusted for inflation – prices stagnated or even rose slightly between 2018 and 2022.

Meeting growing demand with charging infrastructure will also be a key challenge, the IEA said, with charging networks needing to expand sixfold by 2035.

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