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What is the future outlook for electric vehicles?

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The future forecast for electric cars (EVs) is optimistic and dynamic since the global EV market is quickly expanding and diversifying across different countries and categories.

According to the International Energy Agency (IEA), global sales of electric vehicles will have climbed by around 60% by 2022, topping 10 million for the first time. The IEA predicts 14 million sales by the end of 2023, representing a 35% rise year over year. As a consequence, in 2023, electric cars might account for 18% of total automobile sales for the whole calendar year.

The key drivers for the growth and adoption of EVs are:

  • Policy support: Many countries have put laws and regulations in place to encourage the adoption of renewable energy technology and to phase out fossil fuel subsidies. Carbon pricing, fuel economy requirements, vehicle emission standards, zero-emission vehicle mandates, subsidies, incentives, taxes, and restrictions are a few examples.
  • Consumer Preferences: Many people are becoming increasingly conscious of the environmental and social benefits of electric vehicles, such as lower greenhouse gas emissions, air pollution, noise pollution, and reliance on oil. Some users prefer EVs for reasons of performance, convenience, or social prestige.
  • Technology innovation: Many manufacturers have engaged in R&D to increase the performance, economy, safety, and dependability of EVs. Battery technology, charging infrastructure, vehicle-to-grid connectivity, autonomous driving, and digital services are among the important areas of innovation.
  • Cost reduction: The cost of EVs has decreased dramatically over the last decade as a result of learning curves, economies of scale, and technological advancements. According to some forecasts, EVs will be less expensive to build than internal combustion engine (ICE) vehicles by 2027, making them more competitive and accessible to mass-market buyers.

But it is not without its challenges and uncertainties affecting the future outlook for EVs:

  • Supply chain constraints: The availability and cost of raw materials required in battery manufacture, such as lithium, cobalt, nickel, and so on, are critical to the production and deployment of EVs. Due to geopolitical considerations, environmental concerns, or societal difficulties, certain resources may encounter supply shortages or price changes.
  • Infrastructure gaps: Adoption of EVs needs appropriate and accessible charging infrastructure, which varies by area and location. A lack of charging infrastructure can limit EV range and convenience while also causing customer worry.
  • Market competition: The EV market is growing more congested and diversified, with more models available in a variety of sectors and price ranges. This can generate chances for new entrants and competitors while also increasing pressure on incumbents and leaders. Other low-carbon options, such as hydrogen fuel cell vehicles or biofuels, may potentially compete with the EV industry.

The future outlook for EVs is not deterministic or linear; it is contingent on various factors and scenarios.

According to IEA develop three scenarios for illustrating the possible pathways for the global eV market in the next decade:-

  • Stated Policies Scenario (STEPS): This scenario incorporates current government policies and firm ambitions as of mid-2021. Based on current legislation, the worldwide prognosis for electric car sales has improved to 35% in 2030 in this scenario.
  • Sustainable Development Scenario (SDS): This scenario is consistent with the Paris Agreement’s objective of keeping global warming well below 2°C. Based on new measures, the worldwide estimate for the percentage of electric car sales has climbed to 60% by 2030.
  • Net Zero Emissions by 2050 Scenario (NZE2050): This scenario corresponds to a 50% likelihood of keeping global warming to 1.5°C. Based on additional measures, the worldwide projection for the percentage of electric car sales has climbed to 85% in 2030.

Sources:- IEA, Forbes, weforum, Statista, The Guardian, China Briefing, Niti gov in, Mckinsey

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