The International Energy Agency (IEA) has stressed the importance of making Electric Vehicles (EVs) more affordable to drive a mass-market adoption.
The agency highlighted the importance of making electric vehicles more affordable on Wednesday, January 8, 2025, in its annual virtual global EVs outlook report in which it reiterated the crucial role the adoption of electric cars can play in the market.
According to the IEA, a reduction in the cost of EVs has become necessary to bolster the widespread adoption, particularly in developing countries.
“Although electric cars today often have lower total costs of ownership over their lifetimes due to reduced fuel and maintenance expenses, reducing upfront prices is key to boosting uptake.”
The agency noted that while EVs are gaining popularity, their high upfront costs remain a significant barrier to adoption, especially for low- and middle-income households.
It suggested that, to tackle such challenge, governments and manufacturers should work closely together to reduce production costs, amid economies of scale and investments in research and development.
Also, increase financing options by providing incentives, subsidies, and low-interest loans to make EVs accessible, develop charging infrastructure by investing in public charging networks, and promoting home charging solutions.
It said that by making EVs more affordable and accessible mass-market adoption can drive significant reduction in greenhouse gas emissions and air pollution.
It further said that 55 per cent to 95 per cent of the electric car sales across major emerging and developing economies in 2023 were large models that targeted consumers of high-end goods.
Also, it was too expensive for mass-market consumers who often do not own a personal car in the first place, saying unaffordability hindered the adoption of EVs in emerging and developed markets.
It quoted Lang Xuehong, Deputy Secretary-General of China Auto Dealers Association, saying smaller and more affordable models of EVs launched in 2022 and 2023 have become bestsellers, especially those by Chinese carmakers.
“Due to the growing accessibility, vehicles under Category ‘A at A, A0, and A00’ levels in specific represent around 70 per cent of the auto market in China.
“In the first half of 2024, nearly 95 per cent of small cars sold in China where electric, as electric models are expected to account for one in two total car sales in this country this year.
“These smaller cars are also getting smarter as luxurious set-ups are becoming more common in compact ‘A level’ and even smaller cars, such as seats with massage systems and automatic adjustment.
“As well as electrically heated steering wheels or in-situ turn-around, meaning consumers can enjoy more diverse functions than before.
“These intelligent gadgets can now be easily found in cars of a bit over $10,000, in fact, the cost of these high-end configurations is not high,” Lang said.
She. however, said that the conventional practice is for manufacturers to reserve them for luxury cars, to enhance the vehicles’ prestige and increase their price.
The agency, thereby, reiterated the need for Hybrid Plug-in electric vehicles from China driving global boom and cross-border cooperation to be key in bridging the technology gap.
By Fortune Abang
