As EVs continue to make inroads in the automotive market, they are expected to gain ever more market share from traditional internal combustion engine (ICE) vehicles. How much market share is still a matter of debate. Some optimistic forecasts predict the EV share of new-vehicle sales will reach 20% for pure electric and 43% including hybrid vehicles by 2025 (IHS Markit). Other industry-watchers foresee a more modest 15% of the global total by then.
A combination of more appealing supply and growing demand due to greener consumer attitudes and regulatory incentives is driving this dynamic. A more varied, attractive and affordable selection of EVs is now being offered by start-up and legacy carmakers alike. Global automakers (OEMs) plan to launch some 340 fully-electric and hybrid models over the next three years, finally giving consumers a broad scope of choice.
Battery boost
To a large extent, EV efforts by the OEMs have been spurred by stricter emissions standards and limits on diesel and petrol-powered vehicles in Europe, China and California. Norway, for example, wants EVs to account for 100% of new-car sales by 2025. And California, France, and the United Kingdom have announced that they will end sales of ICEs by 2040.
With continuous improvements in battery efficiency, EVs are expected to achieve cost parity with conventional vehicles by 2024, bringing them into the consumer mainstream. At the same time, battery capacity improvements, along with a more extensive charging infrastructure, is further reducing range-anxiety, thereby lowering another threshold for consumers. Consumer acceptance is also being influenced by regulatory policies encouraging the shift from ICE to EVs.
The policy push for EVs is particularly notable in China, the global leader in EV sales. With sales of over 1 million electric vehicles and market growth of 83% in 2018, China has a larger EV market than Europe and the United States combined. At the same time, EVs still only represent 2% of new car sales in China, leaving ample room for further expansion.
Market pick-up
While lagging behind China and Europe with 27% growth in 2017, the US market surged by 81% in 2018. While this ‘ludicrous mode’ of growth was largely thanks to Tesla, OEMs plan to launch some 100 electric and hybrid models in the US by 2022, crystallizing the EV market. Moreover, with pick-ups and SUVs accounting for more than two-thirds of all vehicles sold in America, new electric pick-up trucks planned by start-ups and OEMs may truly signal the market tipping point.
Meanwhile, Europe’s EV market grew by some 47% in 2018, with Germany’s doubling of EV sales accounting for much of this demand and making it Europe’s second-largest EV market, after Norway. For its part, Norway saw its EV penetration go from 11% to 32% between 2014 and 2018, thanks largely to government incentives, providing a possible template for other markets seeking to drive the transition more quickly.
2019 is shaping up to be a major watershed for EVs, with OEMs ready to launch dozens of new models, bringing EVs into the mainstream showroom. With more choice, more range and lower cost, the hurdles are falling and the EV market is poised to go from hype to impact.
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