Sales of EVs, including battery electric vehicles (BEVs) and hybrid electric vehicles (HEVs), have increased rapidly in many national markets. Consequently, market share of internal combustion engine vehicles (ICEVs) has been declining in North America, Europe and Asia as EVs have further diffused. This regime shift in Europe and Asia has been rapid, with the two markets appearing to have undergone a tipping point, and EVs on track to rapidly capture more than 50 per cent of market share. So far however, the EV transition in North America does not appear to have reached a tipping point (Figure. 4.3.4).
The EV tipping point has been enabled by factors involving technological innovation and economic developments, but also changes in policy intervention and public perception (Geels and Ayoub, 2023). There is a link between the unit volume of technology produced and the cost of production (i.e. learning rates), as has been demonstrated for solar PV and wind production (Way et al., 2022). The reduction in cost of production is driven by the reinforcing feedbacks of economies of scale and learning-by-doing. This reduction in cost, as well as improvements in the technology, makes the technology more attractive and accessible to those who may purchase it, thus creating a positive feedback loop which can drive the rapid deployment of these technologies (Sharpe and Lenton, 2021; Farmer and Lafond, 2016; Lam and Mercure, 2022). BEVs have already passed tipping points in price parity of ownership with ICEVs in EU and Chinese markets, and are likely to do so in other key markets of the US and India by the mid to late-2020s (Figure 4.3.5). In most markets, tipping points for price parity at the point of purchase are also likely to be crossed before the end of the decade (Lam and Mercure, 2022).
The key remaining barriers to adoption are (perceived) average driving range and battery charging time, and deployment of charging infrastructure. Range and charging time are continually improving, driven by the same reinforcing feedbacks as drive down overall costs, with the average range of new BEVs increasing 9 per cent per year from 2015-2021, however they are still some way off performance parity with ICEVs (Meldrum et al., 2022). Installation of public EV charging infrastructure is still lagging in many key markets, but is accelerating in leading countries.
As sales in EVs and PHEVs have increased since 2010 across three of the major global markets, the price of batteries has also declined (Figure. 4.3.6). It is possible that, as EVs become widespread, this trend will continue; although some questions remain around mineral price volatility and how this will affect battery prices. Deployment of charging infrastructure is also growing exponentially, keeping pace with growth in EV sales (IEA, 2023).
Policy interventions can also assist in the diffusion of new technologies by reducing cost or mandating changes. Norway has become a classic case study of the successful transition from ICEVs to EVs, having been the first country to make this switch. One factor in driving this change was a tax system which ensured that EVs were cheaper than comparable ICEV models (Sharpe and Lenton, 2021), thus making them more attractive to consumers and leading to a rapid diffusion. Zero-emissions mandates at national and state level ensure a reduction of ICEVs within fleets and are likely the most cost-effective policy to drive the transition and contribute to this EV transition (Bhardwaj et al., 2022; Lam et al., 2023). Due to the internationally connected nature of the automotive sector, EV mandates in major markets could induce, or bring forward, EV tipping points in other markets due to reduced sales prices (Lam and Mercure, 2022).
The effects of the EV tipping point are unlikely to be isolated just to the automotive transport sector. EV deployment will lead to an extensive charging network and is likely to have a significant impact on battery capacity, with consequences for renewable energy storage and production (Meldrum et al,. 2023). These cascading effects are discussed further in Chapter 4.5.
As indicated, improving transport modes alone will not be sufficient as this does not tackle the overall system size, including material needs, traffic and so forth. Tipping in shifting transport modes and avoiding travel are needed.