Policy Support Drives Global Electric Vehicle Markets

Early adoption of EVs in countries like China, Europe, and the United States was facilitated by policies that stimulated demand, such as vehicle purchase incentives. These markets are now witnessing maturation, especially in the passenger car segment, with increasing EV sales shares. Consequently, countries like China and certain European nations are gradually phasing out incentives for electric cars and shifting their focus to heavy transport and charging infrastructure.

Governments in major EV markets are not only raising their EV adoption targets but also addressing other aspects of the EV supply chain, including support for vehicle and battery manufacturing and critical mineral supply chains. Furthermore, several non-major markets have recently introduced policies to promote EV adoption for the first time. Overall, global spending by governments and consumers on electric cars has exceeded $400 billion in 2022.

For companies, policy requirements played a significant role in driving early electrification efforts. However, as electric car sales surge, major carmakers now consider EVs essential for capturing market share and maintaining competitiveness. This has led to increased competition, with new entrants from China and other emerging economies accelerating industry-wide decarbonization efforts.

The report highlights important EV announcements made between April 2022 and March 2023, including plans for fully electric fleets, more affordable EV models, increased investments, and integration with battery manufacturing and critical mineral supply chains. Major carmakers are adapting their corporate strategies in response to the changing landscape.

Policies primarily target the light-duty vehicle (LDV) segment, covering over 90% of global LDV sales in 2022. These policies encompass fuel economy and pollutant standards, zero-emission vehicle mandates, fiscal regulations, purchase incentives, subsidies, and bans on internal combustion engine (ICE)-only vehicles. There is also a growing policy focus on the heavy-duty vehicle (HDV) segment, with nearly 70% of global HDV sales now covered by EV policies.

Charging infrastructure is also receiving policy attention, with nearly 80% of global EV sales now covered by EV supply equipment (EVSE)-related policies. Governments recognize that the lack of charging infrastructure is a critical barrier to EV adoption and are allocating more funds to its deployment.

The report highlights significant policy developments, including new CO2 standards in the European Union and the Inflation Reduction Act (IRA) in the United States, which are expected to shape the transition to zero-emission road transport. Moreover, several emerging market economies outside of China have implemented specific industrial policies to support battery and EV production, aiming to strengthen domestic manufacturing capabilities.

Zero-emission vehicle targets are a cornerstone of decarbonization policies, with most targets having relatively short- to medium-term implementation dates. While China, the European Union, and the United States account for the majority of coverage, other markets are showing promising increases in ambition.