Electric Vehicles Transform Road Transport in G20 Economies

The global transport sector faces a very important shift as electric vehicles (EVs) replace internal combustion engine vehicles (ICEVs). Road transport accounts for nearly 70% of transport-related CO2 emissions, posing challenge to climate goals. Among the nine G20 emerging market economies (EMEs), the transition to EVs is accelerating, driven by climate finance and infrastructure development.

Transport Sector Emissions and Climate Impact

Road vehicles contribute about 23% of global energy-related CO2 emissions. In the nine G20 EMEs—Argentina, Brazil, China, Indonesia, Mexico, Russia, South Africa, and Türkiye—road transport causes 21% of global road transport emissions and 12% of their total emissions. Rising incomes and economic growth are increasing demand for passenger vehicles, making emission reduction urgent.

Electric Vehicle Adoption Trends

By 2022, EVs made up 44% of road vehicles in these nine EMEs, largely due to China’s 61% share. Excluding China, EV share was only 5% but is expected to grow to 28% by 2030. China’s EV share will increase slightly to 63% by 2030, as sales shift from electric two-wheelers to affordable small cars. India and Indonesia will see the largest growth in EV adoption, rising to 34% and 30% respectively by 2030.

Climate Finance and Investment Requirements

The switch from ICEVs to EVs could save $5 billion in capital expenditure for these economies by 2030, mainly because China’s vehicle sales are projected to decline. However, excluding China, the eight other EMEs will require $105 billion in climate finance for this transition. Most investments come from households and the private sector.

Charging Infrastructure Development

A major challenge is building robust charging infrastructure. In 2022, 2.7 million public chargers existed globally, 60% in China. China focuses on fast-speed chargers, which cost seven times more than slow-speed ones. Türkiye also faces high costs due to regulatory requirements for large charging stations. Total investment needed for charging infrastructure in the nine EMEs is estimated at $465 billion.

Country-Specific Financial Needs

China requires the largest climate finance—$336 billion—for road transport electrification and charging infrastructure. Indonesia and Russia follow with $38 billion and $27 billion respectively. India’s requirement is relatively low at $18 billion, as electrification mainly involves two-wheelers with similar costs to ICE versions.

Future Outlook for EVs in G20 EMEs

China leads in EV share and infrastructure development. Other EMEs show varying progress; India and Indonesia are expected to make gains by 2030. In six other EMEs, EV adoption will remain limited. Overall, the cost of switching to EVs is manageable. Governments must prioritise widespread charging infrastructure to support this transition.

Questions for UPSC:

1. Point out the major challenges and opportunities in transitioning from fossil fuel-based transport to electric vehicles in emerging economies.
2. Critically analyse the role of climate finance in supporting sustainable transport infrastructure in developing countries with suitable examples.
3. Estimate the impact of increased electric vehicle adoption on global carbon emissions and energy demand. How can policy frameworks enhance this impact?
4. Underline the importance of charging infrastructure in promoting electric vehicle usage. What lessons can India learn from China’s experience in this regard?

Answer Hints:

1. Point out the major challenges and opportunities in transitioning from fossil fuel-based transport to electric vehicles in emerging economies.

1. Challenges include high upfront capital expenditure for EVs and charging infrastructure, especially fast chargers.
2. Limited existing charging infrastructure and regulatory hurdles (e.g., Türkiye’s requirement for large stations) slow adoption.
3. Dependence on private households for investment limits scale and speed of transition.
4. Opportunities arise from reducing transport sector CO2 emissions, which account for about 70% of transport emissions globally.
5. Rising income and economic growth in EMEs boost demand for passenger vehicles, enabling EV market expansion.
6. EV adoption can reduce capex needs (e.g., $5 billion savings mainly from China) and improve urban air quality and energy security.

2. Critically analyse the role of climate finance in supporting sustainable transport infrastructure in developing countries with suitable examples.

1. Climate finance mobilizes funds for EV adoption and charging infrastructure, critical for emission reductions.
2. China leads with $336 billion climate finance needs, enabling fast charger deployment and EV market dominance.
3. Other EMEs require substantial finance ($123 billion excluding China) but face challenges in mobilizing public and private funds.
4. Households and private sector bear most costs, denoting need for government incentives and subsidies.
5. Example – India’s relatively low finance need ($18 billion) due to focus on two-wheelers with lower cost differential.
6. Effective climate finance accelerates technology transfer, infrastructure buildout, and market confidence in EMEs.

3. Estimate the impact of increased electric vehicle adoption on global carbon emissions and energy demand. How can policy frameworks enhance this impact?

1. EVs can reduce CO2 emissions from road transport, which contributes 23% of global energy-related emissions.
2. In nine G20 EMEs, EV share rising from 44% (2022) to 47% (2030) can curb emissions growth amid rising vehicle demand.
3. Energy demand shifts from fossil fuels to electricity, potentially increasing electricity demand but enabling cleaner energy use.
4. Policy frameworks like subsidies, emission standards, and carbon pricing incentivize EV adoption and phase out ICEVs.
5. Investment in renewable energy and grid upgrades is essential to maximize EV emissions benefits.
6. Policies supporting charging infrastructure deployment reduce range anxiety and boost consumer confidence.

4. Underline the importance of charging infrastructure in promoting electric vehicle usage. What lessons can India learn from China’s experience in this regard?

1. Robust charging infrastructure is critical to EV adoption; lack of chargers limits usability and consumer acceptance.
2. China’s focus on fast-speed chargers (costly but efficient) has driven rapid EV uptake and market leadership.
3. China’s large-scale investment (60% of global chargers) shows benefits of coordinated public and private sector efforts.
4. India can prioritize affordable and widespread charging networks, including fast chargers in urban and highway corridors.
5. Regulatory frameworks should encourage flexible station sizes, avoiding high fixed costs like Türkiye’s 50-charger minimum.
6. Public investment and incentives can accelerate infrastructure deployment, reducing range anxiety and supporting EV market growth.