- Written by Ben Chu
- Economics Editor, Newsnight
Booming electric vehicle sales are essential if we are to meet our climate goals. But electric car sales in the West have fallen, and if governments want to recover, it may come at the expense of their economies.
Numbers
Any highway driver will know this feeling: You’re driving along the road, miles of open road ahead of you, and then out of nowhere, you slow down.
Something similar will happen in the electric vehicle market in 2024. After years of rising sales, growth appears to be faltering.
Replacing fossil fuel cars with electric vehicles is central to the UK government’s plan to meet its climate targets – with road transport accounting for 12% of planetary emissions.
The question is whether this is just a blip that will soon disappear in the rearview mirror, or whether it will prove to be more permanent. If this crisis continues, will governments have the capacity to do whatever it takes to maintain net zero down the road?
We need to buy more electric vehicles to meet climate goals
The growth in electric vehicle sales has been remarkable. In 2020, there were 10 million electric vehicles on the road, and in 2023 there are 45 million. But sales must still be noticeable, and the chart below shows how to do that.
By 2035, the International Energy Agency (IEA) says there will be a need 790 million Electric vehicles if we want to reach net zero by mid-century.
That’s why the fact that global sales of the world’s largest electric car maker, Tesla, were actually lower in the first quarter of 2024 than they were in the same period in 2023, has raised eyebrows.
BYD, China’s largest electric vehicle manufacturer, is competing with Tesla for the top spot. BYD also saw a slowdown between January and March.
and electric vehicle sales in Europe He falls More than 10% on an annual basis in the fourth quarter of last year.
People aren’t sure they deserve it
In the UK, analysts say strong electric car sales in recent years have been supported by environmental factors Buying company carsThanks to generous tax breaks.
But the home market is proving more difficult to conquer, with people saying they are often held back by the high cost. The average price of a new electric vehicle in the United States is More than $60,000 (£47,433). Prices are similarly high Europe And United kingdom.
Large government subsidies and greater production efficiency mean that the average cost to the Chinese consumer is only $30,000. The BYD Seagull Hatchback is sold at Less than $10,000.
China also manufactures far more electric cars than its domestic market needs, and could easily flood the US and European markets with cheap cars if it were not hampered by tariffs.
Difficult choices at the crossroads
Here lies the dilemma facing European and American politicians. They want cheaper electric cars to facilitate the climate transition, but not at the expense of undermining their own automakers — the likes of Ford and Volkswagen — and local jobs.
In fact, the talk is actually about increasing tariffs and other trade barriers on imports to prevent highly competitive Chinese electric cars.
More from Endebeth
The IEA still expects sales to rise in 2024, which would keep us on track towards net zero.
Optimists hope that more people will buy electric cars when discounted used cars come on the market in Europe and America. But this clear path is not foolproof.
Electric car prices in the West may be flat, while China continues to produce very cheap cars.
If this happens, the tension between Western governments’ desire to decarbonize transportation and their desire to protect domestic manufacturers is expected to exacerbate.
At some point they may have to make a choice.
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