Global electric vehicle (EVs) sales jumped to a record high in the third quarter, rising 63 percent compared to the same period last year, says a new report from Bloomberg New Energy Finance (BNEF).
Sales of battery electric vehicles and plug-in hybrids exceeded 287,000 units in the three months ended in September, up 23 percent from the second quarter.
BNEF estimates that the electric car market will reach 1 million sales this year for the first time. Strong demand from China continues to be the key driver in the EV space, as the government continues to fight air pollution and pushes for more local production.
“The Chinese government is very focused on pushing up EV sales,” said Aleksandra O’Donovan, advanced transport analyst at BNEF and a report author. “One reason for that is the local pollution levels in the cities, and a second is for China to build domestic heroes to compete internationally in this market.”
As environmental concerns continue to increase, China is pushing for all-electric battery cars and plug-in hybrids to account for at least one-fifth of its overall vehicle sales by 2025. That translates into a jump from 500,000 electric cars last year to 7 million, including hybrids, by mid-2020.
According to the BNEF report, rising volumes in China are also supported by government incentives. “The national subsidies can make EVs up to 40 percent cheaper than regular internal combustion cars,” O’Donovan said.
But some market participants are concerned that EV demand could fall without such incentives.
“There is a big worry about the healthy development of new energy vehicles as subsidies retreat,” said Sau Cheung Ma, an analyst with Guotai Junan Securities in Hong Kong. “We will need a lot [more] imported and joint venture cars to reduce the cost of electric cars.”
The BNEF report also says that during the third quarter, Europe accounted for 24 percent of EV global sales, becoming the second-biggest EV market, followed by North America.
As electric car sales continue to surge, demand for key battery metals such as cobalt is also expected to jump. In fact, lithium-ion battery demand is seen reaching 750 GWh by 2026 from just 80 GWh last year.
According to Benchmark Mineral Intelligence, in order to meet this increasing demand, cobalt supply will need to reach 78,000 tonnes in 2021 from 48,000 tonnes last year. The firm expects that number to increase to 180,000 tonnes by 2026.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.