Thanks for watching! Welcome back to the IEA's podcast, Everything Energy, I'm Dan Hewitt. This week, electric vehicles. The automotive industry has faced major challenges in recent years, from pandemic-driven supply chain shocks to inflation and geopolitical tensions. But amid the turmoil, at least one part of the market has not only grown, it's broken records, and that's electric vehicles! In 2024, 1 in 5 cars sold globally were electric, and this year it's expected to be 104. In some parts of the world, EVs are now cheaper than conventional cars, but what's driving the change? Who's making these cars? How are we charging them? And how is the rise reshaping our energy system? To answer these questions and unpack the 2025 edition of the IEA's annual Global EV Outlook, I'm joined by IEAs energy, technology, and transport analyst, Elizabeth Connolly. Elizabeth, thank you for joining us. Now, first of all, you've been looking at how the world manufactures cells and drives its electric vehicles. So what's the one thing that jumps out at you that has changed last year as opposed to the year before about the way the world interacts with electric vehicles? Sure. I mean, I think what we've seen that's really exciting is that the prices of electric cars have been coming down in some of the major markets, in particular China. And so what that means is that, the sales of electric cars has also been increasing. Last year in 2024, we saw 17 million electric cars sold worldwide. And that's about three and a half million more than we saw the previous year. And just to kind of put that number in context, um, three and a half million. Additional EVs is actually more than were sold worldwide in 2020 alone. So let's look at the broad global picture. Now, in really simple terms, who is making them, who's making the majority of them, who's buying them, and is there a picture maybe between the traditional markets, places like Europe and America, but also the developing world as well. Right. So what we're seeing is that China is selling more and more electric vehicles each year. It's one of the key drivers of growth in electric vehicle sales and electric car sales, I should say. And so last year, about half of cars sold in China were electric. So that's about 11 million electric cars sold. In China, to put that in context, that 11 million that China sold is more than double the amount that Europe and the U.S. Sold together? So China was really about two-thirds of global electric car sales last year. And so one of the things we see is that within their domestic market, Chinese automakers are selling more and more of the electric vehicles in China. So a couple years ago, there was still more prevalence of, let's say, Tesla and these kind of more Western car makers selling electric cars in China, but now... We're seeing that more and more that's becoming dominated by Chinese carmakers. So China produced about 70% of the electric cars sold last year, not only for their domestic market, but it's also looking to export these electric cars as well. And could you tell me a bit about the price point? So how price competitive in China is it to buy an electric vehicle as opposed to buying a petrol car or a combustion engine? So about two-thirds of battery electric cars sold in China were cheaper than their conventional kind of size equivalent car. So to do an apples to apples comparison, we try to make sure that we're talking about, you know, the same size car. And so two- thirds of battery-electric cars sold in China last year were cheaper then conventional equivalents. Why has the price come down in China? Now, how much is that to do with government initiatives like subsidies? What's driving that price down? Sure, I mean, I think government support really had a lot to do with the beginning of the industry. So I think back in 2001, the government was submitting plans to develop this new energy vehicle as they call them, industry within the country, kind of as a way to keep their economy strong and try to work on innovative technologies. And so, China took an approach where they really promoted... Not only the demand for electric vehicles, but also the manufacturing of electric vehicles domestically, as well as the components. So starting even with promoting mining of the minerals that are needed in electric car batteries, all the way to processing these minerals and developing the different battery components and the batteries themselves. And so one thing we've seen in China in particular is that the... The full supply chain is fairly well integrated, which means that they're able to produce at kind of lower cost than we see in most other places around the world. What's the picture in Europe? Because the figures tell a different story there. It looks like they've stalled over recent years, but what's going on? Battery electric cars in Europe remain on average more expensive than conventional cars. And so that's why a lot of European countries still have subsidies for electric car purchases. But what we saw last year in particular was that a major European market, Germany, phased out their subsidy, and that resulted in lower sales of electric cars in 2024 than they had in 2023. When you look across the big picture in Europe, We have seen a bit of a stagnation in electric car sales. So the sales share has been at about 20% the past few years, but I have to admit, this is something that we could easily predict because it has to do with the way the EU CO2 regulations are written. And so they introduced targets for emissions reductions of vehicles over a five-year time span. And so... If automakers met their reduction targets in 2023, they didn't really have much incentive to sell more electric cars. And so what we saw is that the sales share stagnated. But 2025 is actually the beginning of a new target, a more stringent target. And so already in the first quarter, we've seen increases in the number of electric cars being sold in the EU. In terms of the projections, it's reasonable to assume that actually there's going to be a very different picture when we look at this report this time next year in terms of what's happening in Europe. Yeah, exactly. I think, you know, we're predicting that in Europe, electric car sales will continue to grow like we've seen and reach around one in four cars sold this year. So that's up from the 20% that we saw in 2024. We're expecting 25% of car sales in Europe to be electric this year Right, now I want to ask you about charging, because I want us to know a bit more about how people are charging their electric vehicles around the world, because it's got a lot of info on this in the report, so they are charging them at home, in public spaces, what did you find? Right, yeah, I think charging is a really important enabler for electric vehicle adoption. What we find in general is that EV owners want to charge wherever is most convenient and cheapest, so often that is home charging, so basically you can leave your car plugged in at home overnight, and when you wake up in the morning it's ready to go. So that seems like the best case solution for EV charging. The only thing is that not everyone has access to a private parking space where they can keep their car parked overnight. And so that's where public chargers really are needed. And so we see that the different governments have been supporting and financing the build out of public charging infrastructure, both slow chargers, kind of curbside chargers I think across from this building that we're sitting in right now, there are a bunch of slow chargers. Where people who don't have access to home charging can park their vehicle overnight and charge the electric car. And these offer prices that are better than faster chargers. But faster charters obviously come in handy if you need to get back on the road quickly. And so, especially along highways, we're seeing countries build out these fast chargers that are able to charge your car and get you back on road while you eat lunch. I think in the back of some people's minds, there is a concern, right or wrongly, that they're going to run out of charge. And when they go on a long journey, they're not going to find somewhere to be able to charge their car. So maybe you could just tell us a little bit about the different types of charger that they are, because there's slow charging and there's fast charging. There's new technology. So how far roughly are you going to go on those sort of charges? And how long do you have to leave it charging for? When we're thinking about comparing it to driving, you know, the more traditional, conventional, gasoline-fueled car, which maybe takes about five minutes to refuel, we kind of try to compare things to that. So in five minutes, if you're using a slow charger, you could only get enough charge to get you maybe another 25 kilometres. But these fast and ultra fast chargers can give you a lot more range in the same five minutes. Today's existing fast and ultra-fast chargers will probably get you somewhere between 75 up to 200 kilometres of range in a five-minute charge. But what's really exciting is that over the past two years we've seen new battery developments coming out of China. The big battery makers there have worked on improving the battery safety, which allows electric batteries to be charged even more quickly. And so in this case, The new batteries could charge with kind of a megawatt scale charger, which is really high power for this kind of thing. And the result is that, in theory, you could charge an electric car for five minutes and get 500 kilometres of driving range. So it's a really exciting development that we're keeping our eyes on. And that's pretty much parity with just filling it up at a petrol station. Exactly, so it makes it a lot more like what people are used to with their conventional cars. Let's look at the pace that electric vehicles are being manufactured, and the capacity of the grid and infrastructure to cope. I think some people might be looking at this and thinking, well, the world is producing these vehicles incredibly quickly, but there could be some problems coming down the line. So firstly, do you think that the infrastructure is going to be ready, or is there going to be some bottleneck? And then also, let's just look at the pressure that's going to put on the grid in the long term as well from this extra demand of electricity. So there are a couple ways that we try to come at the question of, are countries ready for growing EV adoption? So one thing is looking at the historical trends that we've seen. Have countries been able to build out charging infrastructure in a way that keeps pace with the number of electric vehicles that are being deployed? What we see on a global basis is, yeah, it's been pretty steady. On a global level, there's about 10 EVs on the road per public charging point, and it's been around that number for the past few years. This is pretty heavily influenced by what we're seeing in China, where there's less private chargers, so public chargers play a much bigger role. And China's been able to build out charging infrastructure at a pace that matches EV adoption, which is really impressive. And we also see similar trends in the EU. There are regulations here that, known as the alternative fuel infrastructure regulation, that are promoting EV charging build out. And I think that the regulatory landscape in the EU is really supporting that charging infrastructure is deployed at the same rate. And tell us about the grids. Are they ready to cope with this huge amount of extra electricity that is going to be needed to power all these electric vehicles? Right, that's a really important question. And I think it depends where you're looking. So there can be congestion on grids, even at very local levels. And so what some of our suggestions are in terms of making sure that the grids are ready, beyond just planning in advance, is also leveraging smart charging to make sure that electric vehicles aren't placing more demand on grides when they're already kind of at their peak demand from other end-use sectors. And then there's also vehicle to grid integration or bi-directional charging, where EVs could even be able to provide electricity back to the grid when the grid needs it. And that way electric vehicles don't become a burden so much as an asset for grids. Let's talk about trucks. A huge important part of the transport sector and also a big emitter of carbon dioxide. So what does the picture look like in terms of battery powered trucks? And also how cost competitive are they in the long term if you use them over not just months, but years? So this year, electric truck sales grew even more than electric car sales. So they grew by nearly 80% globally. In terms of total truck sales, that's just 2%. But we're seeing a lot of progress there and a lot a strong growth, especially in China. And so one of the things we wanted to look into this year was, you know, why are we seeing electric trucks take off so much in China? And so what we did was looked at analysing the cost of owning a heavy duty electric truck. To understand how competitive that is with diesel trucks. And so in China, for example, we found that already today, if you're gonna own an electric truck for five years, electric trucks are already cost less over that five years than a diesel truck. And that's because they're more efficient. And in China electricity is significantly cheaper. And I think while a lot of the progress that we've seen in electric vehicles tends to come back to a story around China, we are seeing similar progress in other countries. And so while they might not be, electric trucks aren't cost competitive today in Europe or the US, within this decade, so by 2030, we do expect this cost parity to be reached with electric trucks in the US and Europe. Now let's talk a bit about how electric vehicles have impacted the price of oil. Because for example, China is the biggest consumer of oil and China is also the biggest market for electric vehicles. So what can we say, what does the report say about the way that electric vehicles impacted the way the world used oil in 2024? It's important to keep in mind that countries are deploying electric vehicles for a number of different policy reasons. So one of them is for climate change, one of the is for air pollution, but one of them is also for energy security. So especially a country like China, which is the world's largest oil importer, electric vehicles were seen as a way to help improve energy security, reduce dependency on oil, and you know, it's working. So we're already seeing that today. Globally, electric vehicles in 2024 helped avoid the use of 1.5 million barrels of oil that's per day, which to put in context is about how much Indonesia consumes in a day. And what can we say about the price of oil, or is it difficult to draw a line between the two? Right. Well, I mean, demand certainly plays into oil prices, but so do kind of the overall economic situation. And so what we saw earlier this year actually is with a lot of the kind of uncertainty that's been brought into the world. We saw oil prices fall. I think they reached as low as $60 a barrel earlier this And so that obviously has an impact for EVs. And so if you're thinking about how cost competitive an EV is, obviously it's not great if the price of oil comes down, because then you're losing some of your competitive edge. But the good thing that we found this year when we were trying to analyse what level of price that oil would need to drop to to make driving a conventional car more cost effective than driving an electric vehicle. And what we find is at the $60 a barrel, even at $40 a barrel. If you're charging your car at home, it's gonna still be more affordable. And what we find in China, where again, home charging is maybe a little less prevalent, in China even at $40 a barrel of oil, even fast charging in a public charger, it still brings cost savings for driving an electric car. Now let's have a think about some of the roadblocks that might prevent EVs being rolled out even further. And by that I mean, is there a problem with the concentration of minerals that are needed to create electric vehicles? Are there other potential problems with geopolitics? What do you think, when you're looking down the road, might be an issue for the expansion of electric vehicles at the rate that we saw last year? We've talked about how EVs can help address energy security by reducing oil dependency, but of course, that also comes with their new kind of challenges and this certainly links into critical minerals that are used in electric vehicle batteries. And so what we find right now, I mentioned that China invested heavily in the full supply chain for EVs. And at this point, China really dominates a lot of the steps of producing an EV battery. Mining of the minerals obviously depends on where the mineral resources are naturally found. But when it comes to refining the minerals, processing them so they can be used, that's dominated mostly by China. When it comes making the components of batteries, so the anodes and cathodes, China again dominates. And then for battery production, China along with Japan and Korea also are really where most of the world's batteries are being made today. And this is something that I think countries are realising is another form of an energy security concern. And so they're working on policies to help diversify the supply chain. And I know countries like the US and the EU have been passing legislation and providing incentives to build out domestic battery production in their countries. And is there anything that Europe can do, America can do if they want to stop that concentration of minerals in Asia? Or is that just the way the world has been developing them and that's the picture going forward over the next few years? No, I mean, I think there's a lot of policy tools that can help address this. I mean one thing that we're seeing is, you know, developing strategic partnerships with kind of the smaller producers today could help them ramp up their processing capacity, this kind of thing. And so I think that's one approach that the EU is trying to take is they're setting kind of limits on how concentrated the supply chain can be and then, you In places to help diversify the supply chain. So I think that is something that countries are already taking measures towards. And this is an obvious point, but it also means that the global sale of electric vehicles is going to be uniquely vulnerable to things like tariffs. 20% of electric cars sold last year were traded internationally. And so tariffs, depending on how they're applied, could certainly have an impact on the price consumers are paying for electric cars. But I think it's really important to understand how the policies are applied. So for example, in the United States, there were 25% tariffs announced earlier this year, but those covered not only electric cars, but also conventional cars and some vehicle components. And so. You know, what we tried to do was try to understand how many cars in the U.S. Are imported in the first place. And what we find is that last year in the US, 50% of conventional cars sold came from outside the U S, so they were imported, whereas only 40% of electric cars were imported. So, you know, if we're talking about price competitiveness, there might be more conventional cars with price increases than electric cars, which might mean that the electric sales share isn't so impacted. Of course, if the price of all vehicles goes up, we might see less sales overall. And that's something we're certainly trying to keep our eye on. And just finally, the report makes projections and that helps businesses and governments plan what's coming up in the years ahead. So what were some of the projections about the expected sale of electric vehicles, where they might be bought and sold? What does the next five and next 10 years look like as far as electric vehicles are concerned? Right, so I think electric car sales are poised to continue growing. And so what we expect is that by 2030, over 40% of cars sold worldwide will be electric. That's gonna be supported by growing sales in China in particular, partially because they're cost competitive there, so we expect to see electric car sales reach 80% of car sales in China by 2030. We also have really strong policy support in Europe. The CO2 standards will have a new target for 2030, and that's expected to drive electric car sales to represent around 60% of total EU car sales in 2030. We also expect there to be strong growth in emerging markets. Again, we're seeing prices come down in several emerging markets, especially those that are depending more and more on imports from China. And so we think that'll be another area for growth. Certainly there are a lot of uncertainties facing the global EV outlook this year. We already talked about tariffs. There's also economic uncertainty and then fluctuating energy prices if sustained could also have an impact. So we do try to put this in our report when we talk about the projections. But overall, especially with the growing price competitiveness in China and emerging markets, we think this 40% sales share in 2030 is fairly robust. All right, Elizabeth Connolly, thank you very much for joining us. Thanks so much for having me.