International Energy Agency warns of battery shortages
if not managed well
VEHICLE electrification demand and supply have surpassed any forecast made pre-pandemic as global sales reached over 6 million vehicles in 2021. There are more vehicles sold each week now that the whole of 2012, according to the latest “Global Electric Vehicle Outlook, 2022” report. The report only focused on electric cars and trucks and did not consider electric motorcycles, last mile and micro-mobility EVs including unicycles and scooters.
The Frost and Sullivan study says that of 6.7 million units sold in 2021, 70.7 percent were pure battery electric vehicles (BEV), and 29.1 percent were plug-in hybrids (PHEV). Divided by continent, China remains to be the biggest market where electric car sales nearly tripled in 2021 to 3.3 million or 50 percent of total global sales. Europe’s EV takeup increased by 65 percent to 2.3 million followed by the United States which, more than doubled its EV population to 630,000 cars. The total number of EVs on the road by the end of 2021 was about 16.5 million, three times the number before the pandemic hit.
Global EV penetration increased from 4.4 percent in 2020 to 8.8 percent in 2021. The Asia Pacific region (including China) recorded a 151.7 percent growth, the highest among others, although the take is slow in the Southeast Asian region compared to Japan, Taiwan, and South Korea.
Tesla sold nearly a million cars at 936,172 with 13.8 percent market share, followed by the VW Group with 762,717 units. (11.3 percent) for a total of 25.1 percent of the global EV market. This means the remaining 75 percent is shared between nearly a hundred other brands and small start-ups
“Few areas of the new global energy economy are as dynamic as electric vehicles. The success of the sector in setting new sales records is extremely encouraging, but there is no room for complacency,” Fatih Birol, IEA Executive Director said.
Ensuring future growth will demand greater efforts to diversify battery manufacturing and critical mineral supplies to reduce the risks of bottlenecks and price rises, according to the International Energy Agency. Policy changes, importation and manufacturing incentives, environmental regulations, renewable energy sources and the development of charging infrastructure are seen as motivators for EV growth.
Sustained policy support has been one of the main reasons for strong electric car sales in many markets.
In the Philippines, the recent enactment of the Electric Vehicle Industry Development Act (EVIDA) is seen to be the impetus for the growth of the industry, which tasks the Board of Investments (BOI) to craft an Electric Vehicle Incentive Strategy (EVIS) similar to the current automotive development program called the Comprehensive Automotive Resurgence Strategy (CARS). By doing so, based on the 2030 target, the gap between fossil fuel vehicles and EV will be narrowed to such a level that consumer preference will swing to electric cars which may in turn spur local production.
Currently, the law includes incentives for the importation of completely built EVs under applicable sections of the TRAIN Act (R.A. No. 10963). However, importation of completely built charging stations are exempted from import duties for eight years, while EV users can avail of discounts of 30 percent on motor vehicle user’s charge and 15 percent from vehicle registration and inspection fees for eight years.
Part of the recommendations of the study which came out last week of July include using stringent vehicle efficiency and carbon dioxide emission standards prioritizing two- and three-wheelers and use of urban buses to kick-start EVs in emerging and developing markets. In the more progressive markets the standardization of connector plugs and utilization of advanced features, such as V2G services, business intelligence, blockchain technology, and suggestive charging pattern is seen to underpin EV demand. Globally, the promotion of more investments in critical mineral extraction while respecting environmentally and socially sustainable practices to ensure sufficient supplies to power the clean energy transition is encouraged.
Both the International Energy Agency and the Frost & Sullivan study point out to the global supply chain for the raw materials necessary to make batteries as a key point in both increasing the use of EVs by making batteries cheaper, and the sustainable supply of minerals and other key components of battery manufacturing. Indonesia has extensive nickel and cobalt reserves, both primary raw materials for Lithium-ion batteries. The state-owned Indonesia Battery Corp (IBC) only last July announced it is set to build its first electric vehicle (EV) battery plant and aims to begin production by 2023.
“Policy makers, industry executives and investors need to be highly vigilant and resourceful in order to reduce the risks of supply disruptions and ensure sustainable supplies of critical minerals. Under its new Ministerial mandate, the IEA is working with governments around the world on how to strategically manage resources of critical minerals that are needed for electric vehicles and other key clean energy technologies,” Birol warns.