In recent years, there has been a great change in the vehicles we see on the roads, especially when it comes to automobiles. On a global scale, 12 million passenger vehicles currently on the road are electric cars. The rise of this trend in other areas of road transport is an inevitability that awaits us in the future. More than a million commercial electric vehicles are currently on the road, including buses, vans and trucks. In addition, when we take into account the more than 260 million electric scooters, motorcycles and three-wheeled vehicles, it is easy to see the great transformation underway on highways around the world.

The decrease in battery costs and the net zero-emission policies of many countries serve as indications that the number of electric vehicles in the markets will increase. However, despite all the steps taken, it seems the transportation sector has a difficult road ahead if it is going to reach net-zero emissions by 2050, which is of great importance in the fight against climate change. The transportation sector is responsible for 21% of total global emissions, and of that, almost three-quarters stem from roads. Therefore, the spread of electric vehicles is of immense importance in reducing emissions and achieving the targets of the Paris Agreement. In this article, we will discuss the current developments regarding electric vehicles, which are increasingly coming to the fore within the scope of climate targets, and the policies and actions that will guide the future process.

Growing demand

While 2020 was a very difficult year for the automotive industry, it was a year in which the strong demand for electric vehicles became more pronounced. In a conjuncture, global automobile sales fell by 16% due to the coronavirus pandemic in 2020, while the rate of electric cars registered in traffic increased by 41% compared to the previous year. Around 3 million electric cars were sold worldwide. This figure shows us that almost 5% of total sales were electric cars. The markets where the demand for electric vehicles increased the most were China and Europe. In 2020, approximately 1.3 million electric vehicles were sold in both China and Europe. This figure is four times as great as the total electric vehicle sales in the U.S.

Especially in Europe, the increase was remarkable. Europe surpassed China to become the world's largest electric vehicle market for the first time. Electric bus and truck registrations also expanded in major markets, reaching global stocks of 600,000 and 31,000, respectively. Automakers also announced more ambitious electrification plans during this time. Eighteen of the world's top 20 vehicle manufacturers, accounting for nearly 90% of new car registrations in 2020, have announced plans to expand their model portfolios and rapidly expand the production of electric light-duty vehicles.

Opportunities ahead

Global electric car sales in the first quarter of 2021 were up nearly 140% compared to the same period in 2020, led by sales in China and Europe. Sales in the United States also nearly doubled compared to the previous year. In this context, the strong growth in the sector is based on the legal regulations prohibiting the sale of conventional vehicles by the International Energy Agency (IEA), incentives for electric vehicles and the decrease in battery costs with the increasing number of electric vehicles.

Although the sales of electric vehicles in the minibus and truck market have lagged behind passenger vehicles, this segment is expected to shift gears and steer towards electrification within the next few years on the back of technological developments, corporate fleet targets, increasing concerns about air quality in cities and the increasing determination of countries to reach their climate targets. In this context, fleet managers also have positive expectations regarding the share of electric vehicles in their fleet compositions in the coming years. Surveys show that currently, around two-thirds of fleet managers intend to purchase electric vehicles.

Evaluations indicate that conventional passenger motor vehicles' days in the sun are over given the gradual decline in the automobile industry during the pandemic and the increase in demand for electric vehicles. Experts agree that since the peak witnessed in 2017, conventional vehicles have been on a permanent decline.

The outlook is not expected to change in the medium term. It is estimated that the 12 million electric passenger cars currently on the road will increase to 54 million by 2025. With the commitments made by automobile manufacturers, the expansion of electric charging stations and the cost reductions that will accompany increases in battery capacity, the annual sales of electric passenger vehicles, which stood at 3.1 million in 2020, is expected to rise to 14 million in 2025. This figure means that around 16% of passenger car sales will be electric in 2025. Reports indicate that China and Europe will lead the way in electric vehicle sales in this period. The European Union's regulations for vehicle emissions and China's credit incentives for electric vehicles are expected to be very effective in this regard. For example, reports by different institutions state that electric cars are expected to make up 40% of total vehicle sales in Germany by 2025, and 25% in China, the world's largest automobile market.

Problems

When it comes to climate change, the situation is a bit different. In order to achieve the targets set by the Paris Agreement, many different investments are needed. Globally, market incentives are still not adequate enough to make zero-emission technologies feasible and cost-effective in medium and heavy commercial and utility vehicles, along with fast and widespread charging infrastructures. In particular, issues such as insufficient financial support, variable operating costs and deficiencies in operational infrastructures are cited as obstacles to large fleets fully renewing their vehicle portfolios.

Another problem is the fragmented structure of the global automobile market. Automakers are unable to fully transform their portfolios, as other small and medium-sized markets cannot adequately accompany the transformation for electric vehicles, led by China and Europe. Insufficient charging infrastructures in these markets is another issue that challenges automobile manufacturers. In addition, for electric vehicles to reach their full potential to reduce carbon emissions, significant global progress is needed to decarbonize electricity generation, integrate electric vehicles into power systems, create charging infrastructures accordingly and develop sustainable battery production and recycling. Therefore, it seems it would be very difficult for the automotive industry to enact the global movement required by climate change in a short time.

Turkey at forefront

It is a certainty that electric cars will dominate the roads in the next decade. The change in the transportation sector undoubtedly offers great opportunities for countries that adopt green development policies. The declaration announced within the scope of the 2021 United Nations Climate Change Conference, also known as COP26, shows that the relevant stakeholders are determined to make efforts for passenger cars and light commercial vehicles to be completely emission-free by 2040 on a global scale. In particular, the financial sector and multilateral development banks' offering incentives for battery technology and charging stations, as well as for producers and consumers, are among the developments we expect in the coming period. In addition to financial institutions, governments also play a major role. Because, unless all countries support this transformation, automobile manufacturers have to continue to produce conventional motor vehicles in order not to withdraw from these markets. In order for this to be reversed and for a global shift to zero-emission vehicles to happen, governments must support these policies at the highest level.

Aware of the importance of the global shift to electric vehicles in the fight against climate change as well as the economic and social opportunities it will create, Turkey is at the forefront of this global transformation. The country's climate-friendly, zero-emission domestic vehicle Togg, which has won the admiration of all, shows the whole world how assertive it is in this transformation.

The domestic car, which was successfully produced thanks to the support of President Recep Tayyip Erdoğan, who started the Green Development Revolution, should set an example for other countries. It should not be forgotten that it is near impossible to achieve success in the climate crisis by leaving the transportation sector behind. Turkey is driving this transformation.