Evidence from the International Energy Agency (IEA) and Bloomberg New Energy Foundation suggests that peak sales of internal combustion engine (ICE) vehicles passed as long as eight years ago. Whatever your opinions of them, electric powered vehicles are gradually taking over. Current and future climate policies are set to significantly reduce transport crude oil demand – by the equivalent of US daily use in just 10 years time.
As can be seen in the figure below, global ICE vehicle sales hit their peak in 2017 and are in increasing decline. The next image shows Bloomberg NEF estimates of sales market share by vehicle type. You can see that where a fifth and a quarter of sales among cars and buses respectively were EVs, just 4% were vans and trucks – but this is set to change too.
Not to be ignored are emerging markets – 2- and 3-wheelers are the mode of transport for the majority of the world’s population. You’re more likely to receive a delivery by tuk-tuk than a van in India or Vietnam, and the data suggests that electric versions are already at just below 50% of global sales.
The IEA estimates that global battery electric van and truck sales grew by 35% in 2023, though this was geographically uneven with China accounting for 70% of global sales. Europe is in a growth spurt with 300%+ y-o-y growth, albeit from a low base to 1.5% of market share in 2023. The US also had similar growth but only to an almost insignificant 0.1% of market share.
Even so, the IEA stated, “Every other car sold globally in 2035 is set to be electric based on today’s energy, climate and industrial policy settings.” The IEA projection doesn’t take account of strong new policies in recent months, notably the UK and EU but other countries and regions that are set to accelerate EV adoption even further.
The IEA estimates that global battery electric van and truck sales grew by 35% in 2023, though this was geographically uneven with China accounting for 70% of global sales. Europe is in a growth spurt with 300%+ y-o-y growth, albeit from a low base to 1.5% of market share in 2023. The US also had similar growth but only to an almost insignificant 0.1% of market share.
Even so, the IEA stated, “Every other car sold globally in 2035 is set to be electric based on today’s energy, climate and industrial policy settings.” The IEA projection doesn’t take account of strong new policies in recent months, notably the UK and EU but other countries and regions that are set to accelerate EV adoption even further.
How good is this for the climate?
In a recent report the American Trucking Research Institute (ATRI) suggested that electric HGVs only cut carbon emissions by 30% relative to that of diesel vehicles over their useful lifetimes. This does not match that of the IEA or Bloomberg NEF.
The IEA suggest an EV car will emit 50% the carbon dioxide of a diesel one. Bloomberg estimate that current electric vehicle use cuts transport crude oil consumption by 1.7m barrels per day – 3% of global transport demand – or the same as Japan’s daily transport consumption.
Grid energy power sources vary from country to country. China and India rely heavily on coal for example, where Europe relies far more on renewables proportionately. Relative efficiency of EV and ICE drivetrains are another factor: an EV will transform 85% of the power it receives from the grid into motion where a very efficient ICE, just 15% of the fuel it uses. Consequently a ‘coal powered’ EV could well emit less carbon dioxide than a diesel vehicle.
Looking forward
On current government policies, the IEA suggest that EV use will reduce transport crude oil demand by 10-12m barrels per day by 2035. This is the equivalent of US daily transport demand. Where some may say that this isn’t enough, these projections still show a significant step forward. As governments around the world improve such climate and transport policies, and market demand for new energy vehicles starts to really kick in, so the logistics industry will start playing a big role in cutting global carbon emissions.
Author: Richard Shrubb
