The energy transition continued to power ahead last year. Global spend was up 17% versus 2022, as the chart from BloombergNEF’s new annual review shows, reaching a new peak of $1.8tn. As Reuters notes:
“Major oil consumers, including the US and the EU, have adopted policies aimed at transitioning away from fossil fuels to cleaner energy, which has discouraged investment in oil and gas amid concerns about future demand.”
Investment in the energy transition has more than trebled from 2019’s spend of $565bn, despite the disruption caused by Covid. And Bloomberg notes that all major regions and sectors are showing major gains:
“The largest country for investment by far was China, with $676bn invested in 2023 – equivalent to 38% of the global total. Although China remains dominant, its lead has been reduced. Taken together, the EU, US and UK outpaced China with $718bn… Investment in the US jumped 22% year-on-year, to $303bn as the effects of the Inflation Reduction Act started to be felt.”
Importantly, transport electrification has now overtaken spend on renewable energy, as the EV revolution takes off. As the chart from Bloomberg’s 2024 EV market report shows, EV sales reached 14m last year and are expected to rise 21% to 16.7m in 2024.
- EVs represented 17% of global passenger car sales last year, double the percentage in 2021
- China’s EV sales are ramping up fast, averaging 36% of global passenger car sales in 2023 as a whole, with sales accelerating to 43% in the six months to December.
WINNERS AND LOSERS ARE STARTING TO APPEAR
China’s EV sales are ramping up fast, averaging 36% of global passenger car sales in 2023 as a whole, with sales accelerating to 43% in the six months to December.
Globally, Bloomberg expects EVs to represent 20% of global passenger car sales in 2024. And, of course, volumes are set to accelerate further next year, as Western automakers start to offer more affordable models.
Essentially, this means EVs are seeing exponential growth, rather than the 1%-2% annual growth of mature markets. But of course, there are still plenty of doubters.
As the chart from the Federal Reserve Bank of Dallas shows, even as recently as in 2021, US oil executives were very negative. When asked for their forecast for US EV passenger car sales in 2030, more than half expected EVs to represent less than 19% and only 1% of respondents thought sales would be greater than 50%.
As the chart from the Federal Reserve Bank of Dallas shows, even as recently as in 2021, US oil executives were very negative. When asked for their forecast for US EV passenger car sales in 2030, more than half expected EVs to represent less than 19% and only 1% of respondents thought sales would be greater than 50%.
In turn, of course, this makes it uneconomic for automakers to produce cars for the other 60% of the market. And they are all keeping a very close eye on Tesla. Tesla took 4% of the total market last year, selling 655k EVs. And its volume jumped 25% from 2022.
Essentially, the mobility market is repeating the transformation seen a century ago when cars replaced stagecoaches. Automotives is the world’s largest manufacturing industry, employing millions of people directly and in supply chains.
Those companies that learn to ride the wave will likely be very successful for years to come.