EV Market Trends 2020
For World EV day 2020, we take a timely look at trends in the EV market – what trends are we seeing and how do we expect these to continue?
The number of electric vehicles is already significant
In 2019 the global electric car stock surpassed 7 million vehicles. China has the world’s largest EV market, with 2.3 million EVs on the road. In terms of market share, Norway has the world’s largest percentage of vehicles running on electricity – 56 per cent in 2019. At the end of 2018, the UK had an EV stock of 180,000 EVs.
Monthly sales are increasing
In June 2020 in the UK, there were 13,829 BEVs and PHEVs registered, compared to only 4,731 BEVs and PHEVs registered in June 2019. That equates to a 3-fold year-on-year growth in the demand for electric vehicles and illustrates a clear increase of uptake of EVs across the UK.
Pure battery EVs are increasingly preferred
In 2018, pure battery electric vehicles (BEVs) comprised of 66 per cent of the global EV market. In 2019 the global pure BEV stock surpassed 5 million. In the UK, there were 8,903 BEVs registered in June 2020, compared to 2,461 BEVs registered in June 2019. That is 3.5-fold increase and shows that pure battery EVs are becoming more accepted as concerns about range anxiety start to recede.
The Tesla Effect
The arrival of Tesla Model 3 spiked the sales of EVs in 2018, especially in the US. Tesla’s market capitalisation exceeded US $300 billion in mid- 2020, which made the manufacturer the ‘most valuable’ automaker in the world, ahead of Toyota and with Volkswagen in third place. Whilst Tesla are clearly not selling more cars than their competitors, the market is valuing their technological leadership within the battery/EV space. It can be seen as a view of their expected future position, as ICE vehicles are increasingly legislated out of the market. As a consequence, this has placed more pressure on conventional automakers to invest more in producing EVs globally. That said, Tesla’s market share is growing – in 2019 the Tesla Model 3 was the best-selling car in the Netherlands out of all EVs and ICE vehicles!
Coronavirus is shaping people’s attitudes
Air pollution caused by ICE vehicles increases the severity of COVID-19 due to its impact on respiratory health. Air pollution also aids the spread of COVID-19 by acting as a carrier. Simultaneously, the public have experienced cleaner air during lockdown – a snapshot of what a clean future could be. Both factors will increase the demand for electric vehicles.
There seems to be more focus on EVs because of COVID19, as there seems to have been a shift in people’s perspective. Research found that 45 per cent of drivers are reconsidering their plans about EVs due to the radical improvement on air pollution from reduced traffic. Of these, 19 per cent said their next company car or private purchase would be an EV. Twenty-six per cent said they intend to become an EV driver within the next five years.
In practice, electric car sales are expected to stay at the same level as in 2019. This is a reduction compared to what sales could have been if COVID19 had not occurred. This is to be expected – in a significant economic downturn, people’s spending on items such as new cars is sure to take a hit.
100% electrification is the expected endpoint
“Electrification is key to the decarbonisation of transport. Even in the slowest decarbonising scenario, there will be no new cars sold with an internal combustion engine after 2040.” The electric car market is currently evolving from early adopters to mass adoption, due to lower prices, more EV models available, and the technological advantage in performance the EV has over ICE vehicles. Furthermore, automakers have announced plans for releasing another 200 new EV models over the next five years, which are expected to convince more drivers to switch to EVs. Today, 17 countries have announced one hundred per cent zero-emission vehicle targets or the phase-out of internal combustion engine vehicles through 2050. In 2019, France was the first country to make ending sales of petrol and diesel vehicles legally binding by law by 2040.
Vehicle-to-grid could be a game-changer
The vehicle-to-grid (V2G) market is expected to grow to more than $5 billion between 2020-2024. The V2G technology enables electricity to be returned to the grid from EV batteries that helps ease the demand on the electricity grid. Furthermore, the public is increasingly viewing EVs as the superior solution over ICE vehicles, as EVs are more energy-efficient, have newer technology, less maintenance requirements and is transitioning to becoming cheaper due to changes in battery and more models that will help make EVs the same price as ICE vehicles eventually. EVs could become less expensive than ICE vehicles as soon as in three to five years due to the cost of lithium-ion batteries falling rapidly. Research by Wood Mackenzie predicts that there will be 323 million global EV stock by 2040. Major automakers have set their target of becoming climate neutral by 2050 and consider BEVs the most robust lever to achieve their target.
Manufacturers are getting on board
Toyota currently makes up more than 80 per cent of the global hybrid vehicle market. The automaker aims to generate half of its sales from EVs by 2025, that is five years earlier than previously estimated. It should be noted that these are hybrid vehicles, and Toyota has attracted criticism for being slow off the mark in terms of pure battery EVs.
Volkswagen will spend more than $30 billion on developing EVs by 2023. The manufacturer aims to make up 40 per cent of its global fleet by 2023 and produce 1 million EVs by the end of 2023, two years ahead of previous predictions.
General Motors has said that Cadillac will be its lead brand for EVs. The automaker aims to have mostly EV models by 2030 and potentially only have EV models by then. Ford has announced that they will produce 40 EV models by 2022.
Volvo has only recently released their first EV and sale will be available from the end of 2020. The manufacturer has pledged to generate 50 per cent of its global sales from EVs by 2025 and promised to reduce its total carbon footprint of each vehicle manufactured by 40 per cent by 2025.
Honda now aims to have all of their vehicles sold in Europe to be partially electrified by 2022, bringing this date forward from 2025. BMW Group aims to have EVs account for 15 per cent to 25 per cent of its sales by 2025. In June 2020 the automaker announced that they will offer 25 EVs by 2023, two years earlier than previously planned. Nissan plans to introduce eight new EVs by 2022.
These levels of activity and commitment within the electric vehicle space would have been unimaginable even five years ago. Combined with tight policy, the transition to electric vehicles looks well on course.