Outlook for emissions reductions – Global EV Outlook 2024 – Analysis - IEA (2024)

Road transport electrification at the global scale is expected to unlock substantial emission reductions in the coming decades. While it will be important to keep in check any additional emissions coming from electricity generation for EVs, these emissions will be more than outweighed by the emissions reductions resulting from a switch to electric. In the STEPS, the emissions avoided by using EVs rather than ICE equivalents (alongside continued improvements to ICE fuel economy) reach over 2Gt ofCO₂ equivalent (CO₂-eq) in 2035. Additional emissions from electricity generation for EVs are far smaller, at over 380MtCO₂-eq, meaning there is a net saving of 1.8GtCO₂-eq in 2035 in the STEPS. Sustained decarbonisation of power generation helps deliver even more emission reductions in the APS, in which net emissions avoided by switching to electric reach around 2GtCO₂-eq in 2035.

However, there remains a substantial ambition gap between announced pledges and what would be required to put the world on a path consistent with the NZE Scenario. This is especially true in the near term: in 2030, 40% more emissions are avoided in the NZE Scenario compared to the APS, in which only around 5% more emissions are avoided than in the STEPS. By 2035, the gap between the NZE Scenario and APS emissions savings narrows to less than a 35% difference. At the same time, the APS net emissions reductions increase to over 10% relative to the STEPS. Current policies are not aligned with a net zero by 2050 pathway, and nor are announced pledges, calling for greater ambition in policy and corporate decision-making.

Chinese passenger LDVs alone accounted for about 35% of global road transport avoided emissions in 2023, an important reminder of the benefits of switching to electric sooner rather than later to unlock greater cumulative CO₂ benefits. As other segments and regions catch up, this share falls to 25% in 2035 in the STEPS. By 2035, trucks account for almost 15% of avoided emissions globally, and buses nearly 5%. Early adoption of electric 2/3Ws meant that they accounted for almost 10% of avoided emissions in 2023. While this share falls to 5% by 2035, electric 2/3Ws are providing substantial cumulative emissions savings in the interim.

The prospect of retail price parity between electric and ICE cars in some regions and segments by 2030 (see section on Electric car availability and affordability), combined with stronger policy support for electrification of cars than for other vehicle segments, means that the LDV segment is more closely aligned with the NZE Scenario than other segments. In the STEPS and APS, the LDV segment achieves more than 80% of the net avoided emissions by 2035 seen in the NZE Scenario. In contrast, buses are the least aligned with the NZE Scenario, with the STEPS accounting for 20% and the APS only 30% of the emission reductions in the NZE Scenario. For trucks, the STEPS achieves almost half of the net avoided emissions seen in the NZE Scenario in 2035, while the APS delivers almost 70% – a reflection of strong policies in the UnitedStates and EuropeanUnion and pledges across a wider variety of countries.

Today, there are already substantial emissions benefits to switching to EVs when emissions are considered on a lifecycle basis, which includes the emissions associated with the production of the vehicle as well as the well-to-wheel emissions (i.e.well-to-tank and tank-to-wheel emissions). In both the STEPS and APS these benefits increase over time as the electricity mix is decarbonised further.

Globally, in the STEPS, the lifecycle emissions of a medium-size battery electric car are about half of those of an equivalent ICEV that is running on oil-based fuels, more than 40% lower than for an equivalent HEV, and about 30% lower than for a PHEV over 15 years of operation, or around 200000km. These emissions savings increase by around 5 percentage points in the APS, as the grid decarbonises more quickly than in the STEPS. When comparing vehicles purchased in 2035, an ICE car produces almost two-and-a-half times the emissions of a battery electric car in the STEPS, and over three times as many in the APS, over the vehicle lifetime. For a medium-sized car, this equates to 38tCO₂‑eq over the ICE car lifetime compared to 15tCO₂‑eq for a BEV.1

Power grid decarbonisation around the world is crucial for maximising the environmental benefit of BEVs. In terms of global averages for medium-size vehicles sold in 2023, well-to-tank emissions decrease by 25% to 35% thanks to electricity emissions intensity improvements foreseen in the STEPS and APS. For vehicles purchased in 2035, well-to-tank emissions decrease by 55% (in the STEPS) and 75% (APS) thanks to grid decarbonisation, as the emissions intensity of electricity generation drops 50-65% between 2023 and 2035. However, even without these improvements, BEV emissions would still be about 30% lower than those from ICEVs. Grid decarbonisation in the APS also causes emissions from battery production to fall by about 10% by 2035.

Vehicle size also plays an important role in determining lifecycle emissions. Many consumers are choosing larger vehicles than previously, prompted in part by model availability. Though smaller vehicles are clearly preferable in terms of both production and operation emissions across powertrains, the greater efficiency of an electric powertrain means electrification mitigates much of the negative impact of larger vehicles. While some large ICE SUVs can emit up to 50% more emissions than a medium-sized ICE car, a large battery electric SUV emits only around 20% more than a medium-sized battery electric car over its lifetime. Choosing a battery electric SUV over an ICE vehicle represents a lifecycle emission saving of about 60%. Even compared to a medium-size ICEV, a battery electric SUV results in 40% lower lifecycle emissions. See the earlier section on model availability for more information.

PHEVs purchased in 2023 produce around 30% less emissions than ICEVs over the course of their lifetime in the STEPS, while this gap reaches 35% for vehicles purchased in 2035 in the APS, thanks to further decarbonisation of electricity generation. This analysis assumes that the utility factor (share of kilometres travelled on electricity) of PHEVs is 40%.2 Greater lifecycle emissions savings can be achieved if the utility factor is higher. Misaligned incentives In fact, the rated utility factor for PHEVs with range of 60km is around 65%.

However, analysis from the past few years has shown that the real-world utility factor is significantly lower than the official values from vehicle type approvals (such as the World Harmonised Light Vehicle Test Procedure). The European Commission published a report finding that the real-world CO₂ emissions from PHEVs were on average 3.5 times higher than the laboratory values. A main factor behind this discrepancy is that PHEVs are not charged and driven in full electric mode as frequently as assumed. A separate study has suggested that the real-world utility factor is lower for company cars compared to privately owned cars, because those vehicles tend to be charged less frequently. Increasing PHEV charging and the use of the battery mode would result in greater reductions in emissions, but such measures are difficult to enforce.

Regionally, the lifecycle emissions benefits of BEVs vary, depending in particular on the local grid emissions intensity, average annual driving distance, and fuel economy of ICEVs. The potential for emissions savings from BEVs is relatively high in the UnitedStates, thanks to the high annual mileage of cars and projected rapid power grid decarbonisation. The emissions intensity of the US average grid mix falls by 70% by 2035 in the STEPS. As a result, the lifecycle emissions of a BEV purchased in the UnitedStates today are around 45%, 60%, and 65% lower than those of a PHEV, HEV and ICEV. Compared to the ICEV, this amounts to a net lifetime savings almost 50tCO₂‑eq for a medium-sized BEV.

In the United Kingdom, annual mileage is lower than in the UnitedStates – and closer to the global average – and, as a result, the lifetime emissions savings for a battery electric car compared to an ICE car amount to less than 20tCO₂‑eq per vehicle. The average annual mileage in India is broadly similar to the UnitedKingdom, but the emissions intensity of power generation is higher, given a high use of coal. As result, BEV lifecycle emissions are similar to PHEV and HEV (<10% difference), and just 20% lower than ICEV. Thus, a battery electric car in India saves less than 10 tonnes of CO₂‑eq over its lifetime compared to an ICE medium-sized car. However, it is worth noting that there are significant efforts to decarbonise electricity generation in the country: the emissions intensity of the grid falls to 60% of today’s level by 2035 in the STEPS. The environmental benefit of road electrification in India will therefore increase rapidly in the next years. Even today, electrification can already offer important public health advantages by decreasing air pollution in India’s mega cities, like Mumbai.

In China, BEV emissions are about 20%, 30%, and 40% lower compared to PHEV, HEV and ICEV, respectively, equivalent to almost 5 tonnes of CO₂‑eq (compared to a PHEV) and up to 10 (compared to an ICEV) for a medium-sized vehicle. Despite the emissions benefits of BEVs being lower in China than in Europe and the UnitedStates, its larger battery electric car fleet – over 16million vehicles compared to over 6.5million in Europe and around 3.5million in the UnitedStates – makes China the leading country for GHG emissions saved through road electrification.

The importance of vehicle lifecycle emissions is being increasingly recognised in the policy sphere. The EU battery regulation requires a battery passport that includes the battery carbon emissions and, in 2023, France announced new eligibility rules for EV subsidies. These set a cap on the carbon intensity of vehicle production to promote vehicles with lower emissions across their full lifecycle, and include the calculation methodology. Elsewhere, the Brazilian government has issued a provisional measure to establish a programme that would set minimum recycling requirements in vehicle manufacturing and reduce taxes for companies with lower pollution and emissions levels. The EU HDV CO₂ standards include a review clause to evaluate the possibility of developing a common methodology for the assessment and reporting of the full lifecycle CO₂ emissions of new HDVs.

Battery chemistry plays an important role in defining the lifecycle emissions of EV batteries. In order to decarbonise battery manufacturing, policy ambition and concerted action to define common LCA methodologies and improve transparency will be required across the entire battery supply chain. Initiatives like the battery passport are particularly important towards this aim.

Of the two main chemistries currently used, high-nickel NMC and LFP, the emissions per kWh of LFP batteries are about one-third lower than NMC batteries at the pack level. In the context of carbon tariffs, or eligibility rules for EV subsidies based on lifecycle emissions, EV and battery producers might therefore be incentivised to rely more on LFP batteries, which today are almost exclusively produced in China, rather than the more emissions-intensive NMC batteries.

The main source of emissions across the battery lifecycle depends on the chemistry. Critical minerals processing accounts for 55% of total emissions for NMC, compared to 35% for LFP. Battery manufacturing accounts for almost 50% of LFP total emissions, against 15% for NMC. The production of active material for both cathode (NMC or LFP) and anode (graphite) materials is also important, and currently accounts for about 25% of NMC and 15% of LFP emissions.

Strategies to reduce emissions from high-nickel chemistries should focus on critical minerals processing, such as for nickel ores. Improving energy and process efficiency for critical minerals processing, active material production and battery manufacturing can also help, as can electrification along different steps in the supply chain, whenever possible. At the same time, as more retired EV batteries become available, replacing increasing shares of material inputs with recycled content will not only reduce emissions but also improve overall battery supply chain sustainability. In the case of LFP batteries, in particular, decarbonisation strategies should focus on reducing battery manufacturing emissions through higher efficiency and electrification, while reducing emissions associated with lithium ore processing.

Using low-carbon electricity can also support the decarbonisation of battery production. Electricity-related emissions today account for about 20% and 25% of NMC and LFP total lifecycle emissions, respectively. Sourcing this electricity from lower-carbon sources3 is therefore important, but it is not sufficient for deep battery decarbonisation, which would require higher levels of electrification compared to today’s 20-25% electrification rates over the entire battery cell supply chain. Other important strategies to reduce battery-related emissions are increasing the energy density, which decreases the battery material intensity, and recycling. In the APS, battery lifecycle emissions decrease by about 35% for both NMC and LFP through 2035, thanks to 30% higher energy density at the battery pack level, decarbonisation of power grids, and 20% of the cathode active material sourced through recycling.