Increasing Global Warming Will Drive Electric Car Market

In 2022, the electric car market registered a sale of 8.1 million units, and it is predicted to grow at a 23.8% CAGR, to reach 45 million units by 2030, as per P&S Intelligence.

In the past few years, electric vehicles have become a major area of attention for several automakers, such as General Motors, Ford Motors, and BMW AG. Moreover, the main factors that are driving the demand for battery cars include the snowballing consumer concentration in reducing their vehicles’ CO2 release, supportive government guidelines, and refining battery technology.

The improvement of electric vehicle batteries is the major factor for the lowering cost and expanding driving range of electric vehicles. New cell understandings are being studied to make electric vehicle batteries compact, and lighter, and increase the capability to store more energy, to enable such vehicles to strive against conventional fuel-based ones.

Based on volume, the U.S. is projected to witness considerable development, at a CAGR of 24.2% in the coming few years due to the growing government aid for eco-friendly automotive technologies. The vital initiatives for EVs in the country include the U.S. federal tax credit of USD 7,500 on their buying, the ZEV program in California, Corporate Average Fuel Economy standards, and other states.

In the APAC region, China is dominating the industry, with a revenue share of approximately 90% in 2022, boosted by the high output of e-cars, braced by government help and reimbursement strategies.

As electrical vehicles are costlier in comparison to traditional ICE vehicles, the Chinese 

The battery accounts for a significant share of the total price of an electric vehicle. For BEVs to become cost-effective with conventional models, the cost of the battery packs should fall under $120/kWh by 2030. Automotive lithium-ion battery pack cost was previously reduced significantly during the 2010–2016 period, to $227/kWh.

Hence, mainly because of global warming, the sales of the electric car will increase in the future as well.

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Growing GHG Emission Concerns Propelling Electric Car Production

According to the International Energy Agency (IEA), 2.3 million electric cars were sold across the world, in 2020. High volume sales of electric vehicles (EVs) can be attributed to the stringent government emission norms, on account of the rising environmental pollution concerns. Over the last decade, greenhouse gas (GHG) levels have significantly surged due to the vast number of fossil fuel-based automobiles operating on global roads. To mitigate the adverse effects of GHGs, governments across the world are supporting the production and adoption of such cars within their territories.

Moreover, the rising consolidation and surging number of joint ventures among the leading electric car manufacturers will fuel the electric car market at a CAGR of 33.6% during 2017–2023. The market sold 0.8 million units in 2016 and it is projected to sell 5.3 million units by 2023. Manufacturers are collaborating with each other to develop novel technologies to create more advanced electric cars that cater to the surging needs of customers. For example, in September 2017, Mahindra & Mahindra Ltd. allied with Ford Motor Co. to develop and produce EVs and connected vehicle technology for 3 years. 

Electric Car Market Outlook - P&S Intelligence

According to P&S Intelligence, APAC records the highest sales of electric cars, due to the huge government support in terms of incentives and subsidies on such vehicles and implementation of stringent vehicular emission norms in Japan and China. For instance, according to the China Association of Automobile Manufacturers (CAAM), the sales of battery electric vehicle (BEV) and plug-in hybrid electric vehicle (PHEV) passenger cars increased from 155,000 in October 2020 to 186,000 in November 2020.

Whereas, the European electric car market is expected to register the highest sales rate in the coming years, due to the increasing adoption of such new energy vehicles in the U.K., Norway, and Germany. According to the European Federation for Transport and Environment, 507,000 new PHEV electric cars were sold in the 27 member nations of the European Union in 2020. In the same year, one out of eight cars purchased in Germany was an EV. As per this organization, Renault Zoe, Volkswagen ID, and Tesla Model 3 were the most commonly procured BEVs in the EU countries.

Thus, the rising government initiatives toward promoting EV sales and manufacturing and increasing collaborations among OEMs will augment the adoption of electric cars in the foreseeable future. 

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Business impacts of COVID-19 on Electric Car Market. Strategies of Major Industry Competitors

Since the Industrial Revolution, the levels of carbon dioxide (CO2), which is the primary greenhouse gas (GHG), have increased threefold, as per the National Geographic Society. This has been a result of the increasing rate of the burning of oil, coal, and other fossil fuels in power plants, vehicle engines, factories, and homes. As per the U.S. Environmental Protection Agency (EPA), the transportation sector is responsible for around 14% of the total GHG emissions around the globe. With alarm bells ringing, steps are being taken to reduce the emission of these harmful substances from automobiles.

As a result of the increasing consciousness and government initiatives, the electric car market is on path to reaching a sale of 5.3 million units in 2025, from merely 0.8 million units in 2016, with this number growing at a healthy 33.6% CAGR between 2017 and 2025. Around the world, countries are launching policies to not only make fossil-fuel-driven automobiles cleaner, but also ultimately replace them with electric vehicles (EV). For instance, apart from the already effective Euro VI emissions norms, certain European countries are targeting a 100% transition to EVs; the Netherlands aims to achieve this by 2030 and the U.K. by 2040.

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As per the International Energy Agency (IEA), after rising constantly for two years, CO2 emissions stabilized at around 33 gigatonnes (Gt) in 2019. This was primarily a result of the decrease in the emission of CO2 from the burning of coal in power stations, by around 200 million tonnes (Mt) during 2018–2019. So, while the efforts of the power sector have started being fruitful, the transportation domain has a long way to go. This is why not only European and North American countries, but even Asian nations, especially China, Japan, and India, are framing policies for a switch to 100% clean mobility.

Apart from the concerns for the environment, another reason for the rising sale of electric cars is the decline in the price of the battery, especially lithium-ion (Li-ion) variants. As the battery is the most crucial component of an EV, it decides the purchase price of the entire automobile. As the energy storage devices were quite expensive in the past, they made the EVs costly, which led to their low uptake. But, during 2010–2017, the battery prices dropped by almost 77%, to $227/ kilowatt-hour (kWh), and they are further expected to slump to $110/kWh in the next five years, thus making EVs affordable.

Presently, Asia-Pacific (APAC) is the most lucrative electric car market, on account of the high air pollution levels in regional countries, especially China, Japan, and India. This is why the governments here are offering numerous financial benefits to the customers as well as manufacturers of EVs. For instance, Government of India has invested $1,460 million (INR 10,000 crore) to support the purchase of 1,500,000 electric vehicles by March 2022, under its ambitious Fast Adoption and Manufacturing of (Hybrid &) Electric Vehicles scheme Phase II.

Thus, with governments strongly encouraging the adoption of clean automobiles for the sake of the environment as well as humans, the demand for electric cars will witness a massive rise in the years to come.

Read more: https://www.psmarketresearch.com/market-analysis/electric-car-market

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Need to Lower Carbon Dioxide Emissions to Augment the Electric Car Market Growth

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.

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