Will the switch to electric cars run out of power? – BBC news

  • By Ben Chu
  • Economics editor, Newsnight

Booming sales of electric cars are a must if we want to achieve our climate goals. But electric vehicle sales in the West have fallen and if governments want them to recover, they may have to do so at the expense of their own economies.

The numbers

Every motorist on the highway knows the feeling: you’re driving along, miles of open road seem to lie ahead of you, and then out of nowhere, a slowdown.

Something similar has hit the electric vehicle market in 2024. After years of rising sales, growth seems to be coming to a standstill.

Replacing fossil fuel cars with electric cars is central to the UK government’s plan to meet its climate targets – road transport is responsible for 12% of global emissions.

The question is whether this is a blip that will quickly disappear in the rearview mirror, or whether this will prove more lasting. And if it continues, will governments have the guts to do what it takes to keep the net-zero show going?

We need to buy many more electric vehicles to meet climate targets

The growth in EV sales is remarkable. In 2020 there were 10 million electric vehicles on the road, in 2023 there would be 45 million. But sales must remain remarkable, and the chart below shows how.

The International Energy Agency (IEA) says 790 million electric vehicles will be needed by 2035 if we want to reach net zero by mid-century.

That’s why the fact that global sales of the world’s largest EV manufacturer, Tesla, were actually lower in the first quarter of 2024 than in the same period in 2023 is raising eyebrows.

China’s largest EV manufacturer BYD is competing with Tesla for the number one spot. BYD also experienced a slowdown between January and March.

And electric vehicle sales in Europe fell by more than 10% year-on-year in the final quarter of last year.

People just aren’t sure if they’re worth it

In Britain, analysts say strong electric car sales in recent years have been fueled by company car purchases, thanks to generous tax breaks.

But the household market is proving to be a tougher nut to crack, with people saying they are mainly put off by the high costs. The average price of a new electric car in the US is over $60,000 (£47,433). Prices are comparably high in Europe and Great Britain.

Large state subsidies and greater production efficiency mean the average cost to a Chinese consumer is just $30,000. And BYD’s Seagull hatchback sells for less than $10,000.

China is also making massively more electric cars than its domestic market needs – it could easily flood the US and European markets with cheap cars if not held back by tariffs.

Tough choices at a fork in the road

Here lies the dilemma for European and American politicians. They want cheaper electric vehicles to ease the climate transition, but not at the cost of undermining their own carmakers – such as Ford and Volkswagen – and local jobs.

In fact, the talk is really about raising tariffs and other trade barriers on imports to keep out ultra-competitive Chinese electric cars.

More from InDepth

The IEA still expects revenue growth in 2024, keeping us more or less on track for net zero.

Optimists hope that more people will buy electric cars as cheap second-hand vehicles come onto the market in Europe and America. But that clear path is not guaranteed.

EV prices may prove stubborn in the West, while China continues to produce ultra-cheap vehicles.

If that happens, expect the tension between Western governments’ desire to decarbonize transportation and their desire to protect domestic manufacturing champions to become even more acute.

At some point they may be forced to choose.

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