Electric cars: rapid growth in sales hastens end of the ICE age

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Highway snarl-ups are a common feature of European roads. Investors surrounded by traffic fumes may be forgiven for thinking that the internal combustion engine (ICE) cannot be superseded. But there are signs that electric vehicles have already reached a tipping point.

Europe’s demand for EVs is such that politicians worry about a flood of imports from China. An EU trade probe on production subsidies has begun. About 20 per cent of all EVs sold in Europe are produced in China.

About 26mn EVs have been sold to date, according to the International Energy Agency. These include plug-in hybrids, which have an internal combustion engine alongside a battery. That is a fraction of the total car stock of 1.3bn. But sales are revving up. They are set to increase from about 10mn in 2022 to about 14mn in 2023 — 18 per cent of all cars sold.

Drivers making the switch can expect to save money, though the exact figures depend on local electricity prices. Greater efficiency makes EVs cheaper to run. Assume, for example, that UK drivers charge their EVs at home for 32p per kWh and that cars travel 5km on each kWh. That equates to 6.4p per km. Diesel cars, meanwhile, might be able to do 15km on one litre, which at present costs 152p. This means they are paying 10p per km.

In terms of initial outlay, EVs are becoming more affordable. The cheapest Tesla Model Y ($46,900) now costs less than the average amount paid for a new car in the US. Chinese carmakers known for their cheaper models are setting their sights on increased exports to the US and Europe.

Slow charging times and the need for comprehensive charging infrastructure remain barriers. But forecasts for EV sales suggest rapid growth over the next few years. Bernstein analyst Oswald Clint superimposed EV growth trajectory on that achieved by the internal combustion engine at the start of the century and found that the curves matched.

The implication is clear: within the next decade, there could be 800mn battery, plug-in and hybrid electric vehicles on the roads.