UAE on track to boost EV penetration target

The UAE is broadly on track to reach its interim targets in the e-mobility space by increasing the share of electric and hybrid vehicles in its domestic fleet from 4.0 per cent in 2023 to 13 per cent in 2030.

For EVs (electric vehicles) and hybrid buses, the target is to grow the share from 3.2 per cent to 14 per cent over the same period. “This is consistent with our own bullish outlook on the market, which sees a wealthy consumer base, the development of local and regional EV manufacturing industries and continued government support drive up EV sales over our 10-year forecast period,” BMI – a Fitch Solutions Company, said in a research report.

In the near term, the increased availability of Japanese-branded non-EVs and mild-hybrids will weigh on growth. But this will largely be offset by wider access to affordable Chinese-sourced EVs. In the longer term, increased domestic manufacturing capacity should also improve the supply of EVs to the market, the report said.

The BMI report gives a slightly lower forecast for EV penetration than the UAE, which put EVs at 9.7 per cent of the total fleet in 2030. “Deteriorating EV fleet to charger ratios are a factor here, although localised charger production and healthy state-led investment in charging infrastructure should prevent a significant slowdown in EV uptake stemming from ‘range anxiety’ issues.”

Suhail bin Mohammed Al Mazrouei, Minister of Energy and Infrastructure, recently announced the launch of the Global EV Market, a transformational project under the performance agreements signed by federal authorities in 2022. The project comprises a comprehensive plan and an ambitious national programme to integrate the energy and infrastructure sectors and align the work of federal and local government entities and private sector businesses to turn the UAE into a global market for electric vehicles.

To support the Global EV Market transformational project, the MoEI signed several cooperation agreements with Etihad Water and Electricity, Bee’ah Group and the American University of Sharjah, as well as leading EV manufacturers and investors, including Audi, Siemens, BMW, Jaguar Land Rover, NEV Investment, Mercedes-Benz, General Motors, and Porsche.

As per the agreements, the ministry’s private sector partners will play a key role in promoting EVs. They will invest in establishing EV charging stations and operate them, in addition to investing in setting up EV service centres across the country to offer dedicated services to EV owners.

According to a market research report, the UAE EV market is expected to grow at a CAGR of around 28.5 per cent during 2023-28 period. “Currently, the market for electric vehicles in the UAE is at a nascent stage. However, in the future, it is set to expand at a phenomenal pace owing to rising concerns over future energy savings and growing levels of greenhouse gas emissions on account of the massive consumption of fossil fuels and the ever-increasing traffic congestions,” it said.

The BMI-Fitch report holds a bullish outlook on the power sector, with analysts anticipating that the UAE will reach its 2030 target for 14GW of clean generation capacity. “Currently, we forecast nuclear capacity to rise from 4,143MW in 2023, to 5,524MW in 2030. Non-hydropower renewables will rise from 2,659MW to 7,962MW over the same period, totalling 13.5GW overall.”

With plans to launch additional tenders for renewable energy projects moving forward, this should carry the emirates over the goal line. As a result, solar will overtake traditional thermal generators as the largest source of capacity growth over the back end of our 10-year forecast period, analysts said. “By 2050, the government hopes to see clean energy rise to 50 per cent of its total power supply – 6.0 per cent nuclear and 44 per cent non-hydropower renewables – coupled with 38 per cent gas and 12 per cent clean coal,” said the report.

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