Plugging into a future away from fossil fuels, the electric vehicle market is to depict a CAGR of over 22%. - Bonafide Research

Electric vehicles use one or more electric motors or traction motors for propulsion. Electric vehicles are a battery electric vehicle (BEV) or a plug-in hybrid electric vehicle (PHEV). The BEV segment includes the vehicles that only use chemical energy stored in rechargeable batteries, with no secondary source of propulsion, while the PHEV segment considers whose battery can be recharged by plugging it into an external source of electric power, and by its on-board engine and generator. Globally, the BEV segment leads the market and is expected to reach over 80% in terms of volume, while the PHEV segment is to portray an anticipated CAGR of 36.03%, through the forecasted period. \ Factors such as growing demand for low emission commuting and governments supporting long range, zero emission vehicles through subsidies & tax rebates have compelled the manufacturers to provide electric vehicles around the world. This has led to a growing demand for electric vehicles in the market. Countries around the world have set up targets for emission reductions according to their own capacity. Also, increasing investments by governments across the globe to develop EV charging stations and Hydrogen fueling stations along with incentives offered to buyers will create opportunities for OEMs to expand their revenue stream and geographical presence.

The report titled 'Global Electric Vehicle Market Outlook, 2027' published by Bonafide Research identifies and discusses recent developments in electric mobility across the globe. The market that was recorded at a value of USD 191 Billion in the year 2021 is anticipated to grow to a market of USD 600 Billion the forecasted period. Factors such as increase in demand for fuel-efficient, high-performance, & low-emission vehicles, stringent government rules & regulations toward vehicle emission along with reduction in cost of electric vehicle batteries and increasing fuel costs supplement growth of the electric vehicle market. Moreover, factors such as lack of charging infrastructure, high manufacturing cost, and range anxiety and serviceability are the factors expected to hamper growth of the EV market. Furthermore, factors such as technological advancements, proactive government initiatives and development of self-driving electric vehicle technology are expected to create ample opportunities for the key players operating in the electric vehicle market.

Gasoline being a fossil fuel is not a renewable source of energy, and is anticipated to get exhausted in the future. To support sustainable development, it is important to develop and use alternative sources of fuel. This involves use of electric vehicles, which do not use gas and are more economical than conventional vehicles. An electric vehicle converts over 50% of the electrical energy from the grid to power at the wheels, whereas the gas-powered vehicle only manages to convert about 17%–21% of the energy stored in gasoline. The demand for fuel-efficient vehicles has increased recently, owing to rise in price of petrol and diesel. This is attributed to depleting fossil fuel reserves and growth in tendency of companies to gain maximum profit from these oil reserves. Thus, these factors give rise to the need for advanced fuel-efficient technologies, leading to surge in demand for electrically powered vehicles for travel.

The growth of the Asia-Pacific electric vehicle market is attributed to supportive government policies and regulations, increasing investments by leading automotive OEMs, and decreasing prices of batteries. Increasing adoption of electric mobility in emerging economies and increasing EV and battery manufacturing capabilities in Southeast Asia provide lucrative growth opportunities for the growth of this market. Government initiatives across Asia-Pacific to phase out fossil fuel-powered vehicles, increasing concerns raised over the environmental impacts of conventional vehicles, improvements in battery capacity, and supporting government policies and regulations to set up battery manufacturing capabilities are promoting the growth of this market. The governments in the region are providing incentives with the aim of promoting the utility of electric vehicles in passenger as well as commercial segments. China is considered the largest market for electric vehicles in Asia. The region has a high dominance of normal or slow charging stations, with an estimated 40% share in 2021.While China and Japan have 200,000 and 40,000 charging stations, respectively, other countries in the region are far behind as far as charging stations are concerned.

European countries have very well accepted electric vehicles. According to the obtained data, in 2020, car manufacturers sold more than 500,000 electric cars in Europe. The sales of electric vehicles have increased progressively since 2010, with a yearly growth of around 50% over the past 5 years. As per the statistics published in the European Electric Vehicle Fact Book 2019/2020, electric vehicles represented 3.6% of new passenger car registrations in 2019, a growth of 2.5% as compared with 2018. Electric vehicles are becoming more popular in Europe as charging infrastructure improves, production costs fall, and governments work to reduce carbon emissions generated by the transportation sector.According to the International Council on Clean Transportation report, Europe is now the second-largest electric vehicle market in the world by volume, behind China and ahead of the U.S. This tremendous growth in demand for electric vehicles in Europe is expected to drive the growth of the European electric vehicle market over the forecast timeframe.

In North America, the adoption of electric vehicles has gained traction in several regions/countries due to increasing fuel prices. Electric vehicles act as a substitute for petrol and diesel vehicles and are powered by lithium-ion batteries that offer a hybrid charging facility. These vehicles are eco-friendly and do not cause any pollution. They do not emit harmful greenhouse gases while operating. The cost of electricity is much lower than the cost of fossil fuels. This reduces the cost of operation of electric vehicles as compared to other petrol and diesel vehicles. Thus, the rising crude oil prices and the depletion of fuel reserves are expected to drive electric vehicle demand. The USA leads the market with a larger market share in terms of value in the year 2021. A new regulation by the US government requires electric motors to make an audible noise when travelling up to 19 mph. By September 2019, manufacturers have to equip all new hybrid and electric vehicles with sirens that meet the new safety standard. Mexico’s climate legislation targets emissions cuts of 50% by 2050 (from 2000 levels) and 35% renewable energy by 2024, which is to support the market over the forecast period and propel the higher market growth.

As for the South America, the region has seen numerous e-taxi and e-bus, fleet acquisition targets by logistics and utility companies, local design and manufacturing of fully electric micro-cars, car sharing, and car rental services in Brazil and Argentina. The PHEV segment has been ruling the market with Brazil stands out as a leader with the most charging stations. In 2021, sales of electric and hybrid vehicles increased in Brazil. In the South American nation during that year, close to 35,000 units were sold, a 77 percent increase from the year before. In Argentina, there is a constant increase in the demand of low emission vehicles, including battery electric cars and hybrid electric vehicles. For instance, in 2021, 5,871 low-emission vehicles were sold in the country. These include battery electric vehicles and hybrid electric vehicles. This signifies a growth of 148%, on 3,488 electric vehicles sold in 2020.

On the other hand, electric vehicles are increasingly visible on roads, with a sharp drop in the cost of EVs in the past years that has encouraged increased adoption in the region. With low fuel prices and a passion for speed, luxurious electric automobile drivers have shown a slow shift towards the market. However, the adoption of electric cars will enter the fast lane in the Gulf, especially in tech-savvy urban hubs like Dubai. In particular, Saudi Arabia and UAE are becoming early adopters of electric vehicles in the region. In addition, even though it is still cheaper in both countries to drive an internal-combustion engine vehicle than EVs, the efforts of these governments are encouraging. Unlike the major global trend, the region is to grow collectively in the year 2020, despite of Covid pandemic reaching to a market of 38.48 Thousand Units. However, considered individually the major countries show a considerable decline during the same.

The global electric vehicle is majorly classified into two segment based on price, with the mid-priced vehicle class with limited and less emphasis on expensive features ruled the market with a share of over 70% in 2021. The small urban car will cost only USD 8,680 after incentives with a range of almost 200 miles. Companies are manufacturing comparatively less expensive vehicles, however, with the increase in the disposal income and government incentives; the market is likely to get inclined towards the luxury class segment which is expected to account for an approx share of 40% by end of the forecasted period. As the acknowledgment of commercial electric vehicles is increasing, the segment is likely to reach a market of over 800 Thousand Units by the end of 2027, while the passenger vehicle continues to lead the market. The market for an electric vehicle is potential given the longevity and price of the batteries.

The cost of EV batteries has been decreasing during the past decade due to technological advancements and the production of EV batteries on a mass scale in large volumes. This has led to a decrease in the cost of electric vehicles as EV batteries are one of the most expensive components of the vehicle. In 2010, the price of an EV battery was approximately USD 1,100 per kWh. However, by 2020, the price fell to approximately USD 137 per kWh, and it reached as low as USD 120 per kWh in 2021. The price of these batteries is as low as USD 100 per kWh in China. This is because of the reducing manufacturing costs of these batteries, reduced cathode material prices, higher production, etc. The prices of EV batteries are expected to fall to approximately USD 60 per kWh by 2030, which is expected to significantly reduce the prices of EVs, making them cheaper than conventional ICE vehicles.

Covid-19 Impact:
Globally, the COVID-19 pandemic has a savage effect on all types of markets. Especially, in the automotive sector, due to the restrictions on production and contraction of automobile sales, the market growth has reduced. But gradually after lockdowns, the market growth is increasing day-by-day for its advanced features. The electric vehicle market growth is raised by the adoption of EVs in the US, China, and European countries and demand for battery-operated vehicles. Globally, all the government’s goal is to have zero-emission vehicles and to reduce dependence on oil imports which are provided by electric vehicle market. Some factors to increase the demand for electric vehicles market value are establishing of charging infrastructure, the rise of residential units, lowering the price of batteries.