The
compliance to the stringent emission norms across the globe, combined with
government incentives and subsidies for electric vehicle (EV) adoption, is
positively influencing the electric car market. In 2017, 927,485 electric cars were
sold, and the market is expected to progress at a 33.6% CAGR during the forecast
period (2017–2023). An EV is an automobile that uses electric energy
as fuel, which is stored in battery packs which are rechargeable.
A shift toward battery
electric vehicles (BEV) from plug-in hybrid battery electric vehicles (PHEV) is
being observed in the electric car market. BEVs, being eco-friendlier,
are compelling the governments to offer subsidies and incentives for their
adoption. In the U.S., car companies are motivated to sell more BEVs than
PHEVs, owing to the fact that the former vehicle type gets them more Zero
Emission Vehicle (ZEV) credits. Likewise, in France, the provision for more tax
exemptions exists for electric cars emitting up to 20 g CO2/km than
those emitting 21 to 60 g CO2/km, where the former and latter
figures usually correspond to BEVs and PHEVs, respectively.
To increase their electric
car market presence, automakers are seeking expansion by acquiring small
local players and engaging in joint ventures (JV). Foreign companies are
rapidly entering the Chinese market through collaborations with regional
players. For instance, Volkswagen Group is collaborating
with SAIC Motor to develop electric cars in China. By 2022, the
Renault–Nissan–Mitsubishi Alliance aims to launch 12 new electric vehicle
models. Similarly, BMW Group, in 2018, entered into a JV with Great Wall Motor
Company Limited in China for the production of electric cars under the Mini
brand.
Further, stringent emission
norms are driving the electric car market forward. With increasing
global concerns about the rising greenhouse gas levels in the environment, and
automobile fuel being one of the major contributors to that, many countries are
imposing strict regulations to limit these harmful emissions. For instance, in
keeping with the Europe 2020 strategy, the European Union aims to cut down the
CO2 emissions by 20.0% by 2020 from the levels reported in 1990.
Another contributing factor
in the growth of the market is the reducing prices of battery packs, as they
hold a significant share in the pricing of an EV. To help BEVs compete with
conventional cars in terms of pricing, the cost of battery packs should be lower
than $120/kWh. During the 2010–2016 period, their cost
dropped to $227/kWh. The market would benefit by the decreasing costs of
battery packs, which combined with improved battery range and capacity, would
further drive the market growth.
Based on technology, the electric
car market classifications are PHEVs and BEV. BEV’s dominance in China and
higher subsidies provided for their adoption compared to PHEVs contributed to
their larger volume share in the market during the historical period (2013–2017).
Owing to their better eco-friendliness as compared to PHEVs, they are projected
to be the faster growing category in the forecast period as well, leading the
market in 2023.
On the basis of segment, the
categories are premium, medium, low, and economy. In 2017, the economy category
held the largest volume share in the electric car market, with
the low category coming in second. The sales of the cars under these
categories were observed to be higher than the others during the historical
period owing to their affordability and popularity in key markets such as
China. The fact that China is the largest market for EVS further substantiates
this finding.
Hence, the market is slated
to advance owing to the surging concerns about air pollution.
