China still leading the world in EV market readiness, report reveals

According to EY's 'Electric Vehicle Country Readiness Index', China takes the top spot, just ahead of Norway, as its tight control of production and an infrastructure boom keep the Communist nation at the top.

EY's Index looks at the preparedness of the top 14 vehicle markets for the arrival of EVs based on supply, demand and regulation. Norway, a new entrant to the index, is a close second to China due to huge uptake in demand and strong regulations. Sweden, Germany and the UK round out the top five positions respectively. The US remains in seventh position, despite recent regulatory action to encourage greater take-up of EVs.

The UK is ranked in fifth place in terms of global EV readiness by the report, with consumer demand continuing to grow and consumers apparently willing to pay an average premium of 15 per cent for an electric model of car. Major companies such as Uber are also aiming to electrify their fleets, with the UK offering usage incentives such as green number plates, parking discounts and zero-emission zones, indicating that regulation is the best method to encourage adoption.

However, the report also states that the UK lags behind other countries in terms of local production and needs to improve its public charging infrastructure, with 37 per cent of consumers pointing to a perceived absence of adequate charging infrastructure as a cause for hesitation.

China retains the top position when it comes to progress toward an electric vehicle (EV) future. Battery manufacturing and supply chain control remain key drivers in this, with China accounting for 122 out of the world's 200 lithium giga-factories.

Backed by soaring consumer demand (51 per cent of Chinese consumer respondents expect to buy an EV as their next vehicle) and widespread charging infrastructure (by 2021, China had deployed 41 per cent of all DC fast chargers), China continues to be the largest EV market globally in absolute volume terms. This is despite having an overall electricity supply deficit.

Norway has long been a pioneer when it comes to EV adoption. This is due to strong regulation in the form of tax benefits, as well as the introduction of EV lanes and parking spaces, resulting in EVs accounting for more than 70 per cent of all new 2021 car registrations.

Sweden’s strong energy ecosystem along with high consumer uptake (more than 40 per cent in 2021, according to EY analysis) and strong manufacturing presence (41 per cent of all cars produced in Sweden are expected to be electric models in the years up to 2026) means the country remains ahead of Germany and the UK. However, both Germany and the UK have a decidedly strong base of original equipment manufacturers (OEMs), localised battery production and upcoming EV launches deserving of their 'Leaders' status credited in the report, an appellation afforded to the top five countries in EY's list.

Randy Miller, EY Global advanced manufacturing and mobility leader, said: “Earlier this year, the 2022 EY Mobility Lens Consumer Index indicated for the first time that more than half of all consumers looking to buy a car want an EV. We know now that the demand is there and now it is up to OEMs and governments to catch up.

“China, Norway and the other Leaders listed in the Country Readiness Index have demonstrated that a strong mix of regulation to stimulate demand, combined with localised battery production and implementation of a robust infrastructure plan, are critical factors in helping countries successfully transition to EVs.”

Four of the top five countries overall in the Index are also in the top five countries in the regulatory pillar (China, Norway, UK and Germany). It is clear that there is a strong correlation between overall success and the strength of regulation.

Miller added: “If countries want to reduce their emissions from vehicles and help meet climate targets through a move to EVs, then it is clear that regulation is absolutely key. There are some countries where we’ve seen regulatory action recently, most notably in the US, so it will be interesting to see whether that affects supply and demand going forward.

“The challenge for every country is the inflexion point at which regulation is no longer needed and EVs are established in the market. Clearly some believe they’re nearly there as they are removing incentives, but others have work to do in order to achieve their EV goals.”

The US remains solidly 'mid-table' in terms of its EV performance. Despite a robust OEM presence and strong backing from US President Biden’s administration, the US remains in seventh place overall – the same position on the Index as in 2021. This is mainly due to poor demand, according to the report. Less than 4 per cent of new car registrations in the US are EVs and, as the EY Mobility Consumer Index shows, just 29 per cent of US consumers are looking to buy an EV as their next vehicle - the lowest of all the countries surveyed.

Miller said: “While more work clearly needs to be done in driving consumer demand in the US, I believe the country is moving in the right direction when it comes to EVs. The federal government is putting around $10bn into EV battery supply chains and charging infrastructure and the manufacturing sector is seriously gearing itself up for EV production, with 13 battery plants due to be built across the country by 2025.”

Meanwhile, back in Europe, Italy lags behind its neighbours, sitting in 12th position, despite having the highest proportion of respondents looking to buy an EV (73 per cent). This is largely due to a lack of infrastructure and an energy ecosystem in need of improvement.

Canada follows in 13th position, despite a strong energy ecosystem and plans for battery factories to be built in the country. It also trails in demand, in some part due to the high cost of EVs in Canada.

India occupies the 14th, and final, position, with the country facing similar issues to Canada vis-a-vis charging infrastructure and affordability being major barriers to progress. Efforts are being made in regulation, however, with production-linked incentive schemes looking to incentivise 50GWh of battery manufacturing.

Other countries in the overall ranking list are South Korea (sixth place); the Netherlands (eighth); Spain and France (ninth and tenth), and Japan (eleventh).

The report breaks down the Overall ranking into three subdivision rankings: Supply, Demand and Regulatory. Across these three rankings there is considerable movement for the countries, with Norway topping the Demand and Regulatory columns. South Korea also jumps to the second spot in the Supply column, while the Netherlands vaults to fourth spot in the Demand ranking, but sinks to 13th in Supply.

Clearly, the EV picture across these territories remains in a state of flux, as the electric transition continues to bed in, reflecting both supply and demand as well as industry and government regulation.