Is the Future Electric? Exploring the Rise of Electric Cars in 2023

Nearly one in five cars sold in 2023 was electric.

Electric car sales neared 14 million in 2023, 95% of which were in China, Europe and the United States

According to IEA Global EV outlook, almost 14 million new electric cars were registered globally in 2023, bringing their total number on the roads to 40 million. Electric car sales in 2023 were 3.5 million higher than in 2022, a 35% year-on-year increase. This is more than six times higher than in 2018, just 5 years earlier. In 2023, there were over 250 000 new registrations per week, which is more than the annual total in 2013, ten years earlier. Electric cars accounted for around 18% of all cars sold in 2023, up from 14% in 2022 and only 2% 5 years earlier, in 2018. These trends indicate that growth remains robust as electric car markets mature. Battery electric cars accounted for 70% of the electric car stock in 2023.

Sales in emerging markets are increasing, led by Southeast Asia and Brazil.

In India, electric car registrations were up 70% year-on-year to 80 000, compared to a growth rate of under 10% for total car sales. Around 2% of all cars sold were electric. Purchase incentives under the Faster Adoption and Manufacturing of Electric Vehicles (FAME II) scheme, supply-side incentives under the Production Linked Incentive (PLI) scheme, tax benefits and the Go Electric campaign have all contributed to fostering demand in recent years. A number of new models also became popular in 2023, such as Mahindra’s XUV400, MG’s Comet, Citroën’s e-C3, BYD’s Yuan Plus, and Hyundai’s Ioniq 5, driving up growth compared to 2022. However, if the forthcoming FAME III scheme includes a subsidy reduction, as has been speculated n line with lower subsidy levels in the 2024 budget, future growth could be affected. Local carmakers have thus far maintained a strong foothold in the market, supported by advantageous import tariffs and account for 80% of electric car sales in cumulative terms since 2010, led by Tata (70%) and Mahindra (10%).

In 2024, electric car sales in the United States are projected to rise by 20% compared to the previous year, translating to almost half a million more sales, relative to 2023. Despite reporting of a rocky end to 2023 for electric cars in the United States, sales shares are projected to remain robust in 2024. Over the entire year, around one in nine cars sold are expected to be electric.

Based on recent trends, and considering that tightening CO2 targets are due to come in only in 2025, the growth in electric car sales in Europe is expected to be the lowest of the three largest markets. Sales are projected to reach around 3.5 million units in 2024, reflecting modest growth of less than 10% compared to the previous year. In the context of a generally weak outlook for passenger car sales, electric cars would still represent about one in four cars sold in Europe.

Outside of the major EV markets, electric car sales are anticipated to reach the milestone of over 1 million units in 2024, marking a significant increase of over 40% compared to 2023. Recent trends showing the success of both homegrown and Chinese electric carmakers in Southeast Asia underscore that the region is set to make a strong contribution to the sales of emerging EV markets (see the section on Trends in the electric vehicle industry). Despite some uncertainty surrounding whether India’s forthcoming FAME III scheme will include subsidies for electric cars, we expect sales in India to remain robust, and to experience around 50% growth compared to 2023. Across all regions outside the three major EV markets, electric car sales are expected to represent around 5% of total car sales in 2024, which – considering the high growth rates seen in recent years – could indicate that a tipping point towards global mass adoption is getting closer.

There are of course downside risks to the 2024 outlook for electric car sales. Factors such as high interest rates and economic uncertainty could potentially reduce the growth of global electric car sales in 2024. Other challenges may come from the IRA restrictions on US electric car tax incentives, and the tightening of technical requirements for EVs to qualify for the purchase tax exemption in China. However, there are also upside potentials to consider. New markets may open up more rapidly than anticipated, as automakers expand their EV operations and new entrants compete for market share. This could lead to accelerated growth in electric car sales globally, surpassing the initial estimations.