Canada is staking its economic future on the hope that the IEA projections on electric vehicle sales are accurate

Rashid Husain SyedFatih Birol, the executive director of the International Energy Agency (IEA), believes that the global EV revolution is primed for a new growth phase. Despite recent criticism from the U.S. House of Representatives, which argues that the IEA’s focus on the green energy era jeopardizes the energy security of major industrial economies, Birol remains optimistic about the revolution’s trajectory.

According to the IEA’s recent Global Electric Vehicle Outlook report, global electric vehicle sales are projected to increase by over 20 percent, reaching 17 million this year. The report also suggests that the rapid adoption of electric vehicles will lead to a peak in oil demand for road transport around 2025.

“Surging demand” for EVs over the next decade, the IEA maintained, was set “to remake the global auto industry and significantly reduce oil consumption for road transport.”

Its projection said half of all cars sold globally by 2035 will be electric, up from more than one in five this year, provided charging infrastructure keeps pace. The IEA’s definition of electric vehicles includes both battery electric vehicles and plug-in hybrid vehicles, even though hybrids utilize gasoline alongside electric batteries.

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The agency’s bullish long-term outlook for EVs – based on current government policies – comes despite the world’s biggest battery EV maker, Tesla, expressing some pessimism about the future of the industry by slashing its prices in major markets to counter declining sales and growing competition from Chinese upstarts and established carmakers.

Recent negative headlines about slowing EV penetration are out of step with positive global trends, insisted Birol. The data “does not at all show a reverse of the growth of electric cars. It shows an extremely robust increase of global electric car sales,” he told reporters.

Today, “China is the de facto leader of electric car manufacturing around the world.” In 2023, Chinese carmakers accounted for more than half of global electric car sales, compared with their 10 percent share of the conventional car market.

EV sales in China will account for almost 60 percent of the global total this year and about 45 percent of all car sales in the country. By 2030, almost one in three cars on the roads in China will be electric, up from fewer than one in 10 last year, said the IEA. That compares with its forecast for 17 percent in the United States and 18 percent in the European Union, compared with just over two percent and almost four percent, respectively, last year.

“This shift will have major ramifications for both the auto industry and the energy sector,” Birol said. The IEA sees global oil demand peaking in 2030, helped by the electrification of the transport sector.

The growth is not driven just by Chinese buyers. The number of new battery electric cars sold in the European Union rose almost four percent in the first quarter of this year compared with the same period in 2023, says the European Automobile Manufacturers’ Association.

According to the IEA report, some 17 million battery and plug-in hybrid electric vehicles will be sold in 2024, up more than 20 percent compared with 2023.

Canada is staking its economic future on the belief that Birol’s projections are accurate. Some commentators suggest that Canada is positioning itself to become a leader in electric vehicles (EVs). In recent months, the country has taken significant steps toward this goal. In 2022, GM opened its first full-scale Canadian EV plant in Ingersoll, Ontario. Additionally, four companies have recently invested in massive battery plants in Canada: E-One Moli in Maple Ridge, B.C.; Volkswagen in St. Thomas, Ontario; Stellantis in Windsor, Ontario; and Swedish battery developer Northvolt, which announced a $7-billion plant east of Montreal.

And Honda has just announced that it is set to make a $15-billion electric vehicle investment in Ontario to build four new manufacturing plants in the province. The deal will result in “Canada’s first comprehensive electric vehicle supply chain,” the federal government said in a press statement. It will include the construction of Honda’s first electric vehicle assembly plant and a new stand-alone EV battery plant at Honda’s facility in Alliston, Ont.

“Honda will also build a cathode active material and precursor processing plant through a joint venture partnership with POSCO Future M Co., Ltd. and a separator plant through a joint venture partnership with Asahi Kasei Corporation,” the statement said.

Once the assembly plant is fully operational in 2028, it will produce up to 240,000 vehicles per year,” the statement added.

Despite the odds, the transportation sector seems to be fully committed to transitioning to an uncertain new “green” era.

Toronto-based Rashid Husain Syed is a highly-regarded analyst specializing in energy and politics, with a particular emphasis on the Middle East. Besides his contributions to both local and international newspapers, Rashid frequently lends his expertise as a speaker at global conferences. His insights on global energy matters have been sought after by organizations such as the Department of Energy in Washington and the International Energy Agency in Paris.

For interview requests, click here.

The opinions expressed by our columnists and contributors are theirs alone and do not inherently or expressly reflect the views of our publication.

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