The Electric Vehicle Market was valued at USD 411.02 Billion in 2021, and it is expected to reach USD 1393.33 Billion by 2027, witnessing a CAGR of 19.19% during the forecast period (2022 - 2027).
The impact of COVID-19 on the electric vehicle market was inevitable as it affected almost every other industry in the market. However, the electric vehicle (EVs) market is witnessing substantial growth owing to the swiftly escalating year-on-year adoption rate of mild-hybrid electric vehicles across the globe. For instance, there was a dramatic rise in electric vehicle sales in China and Europe despite the pandemic, showing signs of active market growth during the forecast period.
Over the long term, factors such as the increasing cost of fuel and government initiatives across different geographies to increase awareness about EVs are expected to promote the usage of electric vehicles over the forecast period. Infrastructure for charging stations continue to expand, and countries like China continue to lead the passenger vehicle and urban bus markets owing to a well-established supply chain for batteries and traction motors.
Increased demand for fuel-efficient, high-performance, and low-emission vehicles, as well as increasingly strict laws and regulations on vehicle emissions, as well as lowering battery costs and rising fuel costs, all contribute to the electric vehicle market’s growth.
Electric mobility is becoming more popular among governments across the world. Government regulations to phase out fossil fuel-powered vehicles, government expenditures to improve public EV charging infrastructure, and initiatives in the form of subsidies and tax refunds to encourage the adoption of EVs are all likely to contribute to market development. Governments are investing in charging infrastructures, either directly in public charging stations or indirectly by subsidizing private charging stations at homes and workplaces.
Due to various advancements in battery technology and the application of cutting-edge technologies like as ADAS, AI, IoT, and others, the market is expanding. Major corporations are investing much in delivering their products with the most up-to-date characteristics, improving OEM competition and supporting market expansion. Many nations are seeking to adopt electric mobility, but as new vehicles join the market, charging infrastructures remain a major concern.
Key Market Trends
Heavy Investments by Automakers for Electric Vehicles
Heavy investments from automakers are expected to cater to the growing demand for EVs and play a major role in the evolution of the electric vehicle market. OEMs offer electric vehicles in different segments ranging from hatchbacks such as Nissan Leaf to high-end sedans like Tesla Model 3. For instance,
Ford had previously committed to spending USD 11.5 billion on electrifying its vehicle lineup through 2022. It recently announced that it had increased its autonomous and electric vehicle investments to boost vehicle sales amid continuous lockdowns.
Mercedes Benz confirmed that it would roll out 25 new plugin hybrid electric vehicles in addition to fully electric vehicles by 2025. The wide range of product offerings by companies has attracted many consumers and resulted in a growing market for electric vehicles.
In November 2021, Tesla Inc. announced plans to invest up to CNY 1.2 billion (USD 187.91 million) to expand production capacity at its Shanghai factory. Tesla’s Shanghai factory was designed to make up to 500,000 cars a year and currently can produce Model 3 and Model Y vehicles at a rate of 450,000 total units a year.
In August 2021, Toyota announced its new BEV series, Toyota bZ, which includes a full line-up of electrified vehicles. A concept version of the first model in the series was unveiled at Auto Shanghai, and 15 BEVs are expected to be introduced globally by 2025.
In addition, the growing sensitivity of various governments toward a cleaner environment is expected to increase the demand for zero-emission vehicles during the forecast period. Developed nations such as the US, Germany, and the UK are actively promoting the use of electric vehicles to reduce emissions, which is expected to result in the growth of electric vehicle sales.
China to Witness Significant Growth
The government of China is encouraging people to adopt electric vehicles. The country has already made plans to phase out diesel fuel, which runs the current generation of commercial vehicles, such as trucks. The country is planning to completely ban diesel and petrol vehicles by 2040.
China is a key player in the global electric bus market, and it is anticipated to sustain its dominance during the forecast period. In May 2020, more than 420,000 electric buses were in use in China, which amounts to about 99% of the global fleet. The keen focus on electrification of public transit with prevalent subsidies and national regulations is a major factor contributing to the high share of China in the global electric bus market.
Furthermore, China’s Ministry of Transport offers subsidies and other benefits for developing low emission bus fleets, thereby further positively influencing the market. For instance, 61,000 more new energy buses were sold by Chinese bus makers in 2020, despite the COVID-19 pandemic. Bus production in China accounted for around 15,000 units in 2020. Moreover, in November 2020, Yutong Bus signed an agreement with Qatar Free Zones Authority (QFZA) and Mowasalat to establish a KD factory in Qatar. The company is expected to supply 741 units of e-buses for FIFA World Cup 2022.
Generous subsidies and tight regulations continue to drive most of the growth. Electric vehicles are exempt from license plate lotteries and auctions in some Chinese cities, and this still plays an instrumental role in promoting EVs. After a successful pilot program in selected cities, the Chinese government decided last year to introduce green license plates for new energy vehicles (NEVs) across the country.
BYD, BAIC, Chery, and SAIC are some of the key regional players in the Asia-Pacific electric vehicle market.
Major players in the global electric vehicle market are Toyota Motor Corporation, Tesla Motors Inc., Volkswagen AG, Honda Motor Company Ltd, General Motors Group, Hyundai Kia Automotive Group, and others.
The key players are collaborating with other players and are investing in new technologies and products in order to gain significant market share. For instance,
In April 2022, General Motors and Honda announced plans to codevelop a series of affordable electric vehicles based on a new global architecture using next-generation Ultium battery technology. New EV series expected to go on sale in 2027 starting in North America.
In April 2022, Honda signed a joint development agreement in the area of Lithium-Metal secondary batteries with SES Holdings Pte. Ltd., a U.S. based EV battery research and development company.
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Electric Vehicle Production
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