The mounting environmental concerns, generous incentives by governments, innovation, consumer acceptance, increasing commitment by OEMs (original equipment manufacturer), and financial viability are collectively paving the road for electric vehicles (EVs).
Here's a look at some of the active and potential electric vehicle markets along with initiatives and plans by automobile manufacturers to electrify vehicles manufactured by them.
China, the world’s largest automobile market, is leading the transition towards electric vehicles. The number of new-energy cars in China totaled 2.61 million in 2018, up 70 percent or 1.07 million year-on-year, according to the Ministry of Public Security. The government in China has been strongly pushing the adoption of New Energy Vehicles (the term used for EVs in China) through tighter regulations and generous subsides to curb carbon emissions and reduce its dependence on oil imports.
China’s Ministry of Industry and Information Technology (MIIT) finalized the New Energy Vehicle (NEV) policy in September 2017 setting a mandate for automakers to sell a minimum number of new energy vehicles annually from 2019. The policy requires the sales of NEVs to reach a threshold equivalent to 10 percent of their total in 2019 and 12 percent in 2020. It is projected that sales in China will account for almost 50 percent of the global EV market in 2025 and 39 percent in 2030.
The year 2018 witnessed the highest growth rate in the adoption of electric vehicles the U.S. since 2013; approximately 360,000 plug-in electric vehicles were sold in 2018 which was 81 percent higher than in 2017. To promote the sale of EVs in the U.S., the government offers financial incentives for lowering their up-front costs; the Internal Revenue Service (IRS) tax credit is for $2,500 to $7,500 per new EV (varies with size of vehicle and capacity of battery) purchased.
This tax credit will be available until 200,000 qualified EVs have been sold in the U.S. by each manufacturer, at which point the credit begins to phase out for that manufacturer. Tesla (TSLA), which has been the biggest contributor to the EV growth in the U.S., touched this crucial milestone in 2018.
Norway is the undisputed leader when it comes to the percentage of EVs in the country. Every second new car sold in Norway is electric. The Norwegian Parliament has set a national goal that all new cars sold by 2025 should be zero emission. The current Government has decided to keep the incentives (such as VAT exemption) for zero emission cars until the end of 2021.
In July 2018, United Kingdom launched its road to zero strategy that targets at least 50 percent new car sales to be ultra-low emission by 2030. The government’s mission is to put the UK at the forefront of an industry that is estimated to be worth up to £7.6 trillion per year by 2050. During 2018, there were 141,234 registrations for plug-in and hybrid vehicles vis-à-vis 116,858 in 2017, an increase of almost 21 percent. Overall, electric cars (plug-in and hybrid vehicles) represented 5.7 percent of the total new car market in the UK.
India is promoting electric vehicles to achieve the objective of fuel security, an important element for its economic health, and ensure a cleaner and greener environment for its people. The electric vehicles industry is at a nascent stage in India; however, the government is working on incentivizing the use of electric vehicles.
Company roadmaps for EV production
A Bloomberg forecast shows that sales of electric vehicles will reach 11 million in 2025 before surging to 30 million in 2030. While Tesla is a dominant player in the electric vehicle segment, OEMs are shifting gears towards electric versions of their conventional models.
- Volkswagen plans to electrify its entire model portfolio by 2030, meaning that by then there will be at least one electric variant of each of the Group’s around 300 models. It plans to spend over €50 billion on battery cells.
- General Motors (GM), which announced plans of accelerating its transformation, is laying emphasis towards next-generation battery-electric architectures. The company plans to double resources allocated to electric vehicle program in the next two years.
- Ford (F) plans to release 16 fully electric vehicles within a global portfolio of 40 electrified vehicles by 2022.
- Under its ‘Environmental Challenge 2050', Toyota (TM) aims to achieve annual electrified vehicle sales of 5.5 million units by 2030.
- Nissan aims to sell one million electric vehicles by 2022.
- Honda is striving to electrify two-thirds of global automobile unit sales in 2030.
- Group PSA set up a low emission vehicles business unit in 2018 to develop an electric offering covering its entire range by 2025, with implementation starting in 2019.
Additionally, automakers including Volvo, BMW, Daimler, Hyundai, Audi, and FCA have charted out respective plans of going electric.
While EVs have a promising future, the current pace of transition is largely supported by a number of government incentives and favorable policies. As these start to phase out, the pace of adoption is likely to undergo a slowdown due to cost constraints. This would come in the backdrop of obstacles such as an infrastructural ecosystem that needs to be created for the seamless adoption of electric vehicles to get close to fossil-run vehicles, which have existed for more than a century.