Global Electric Vehicle Sales To Increase Exponentially In The Decade Ahead

Sales of electric vehicles (EVs) surged in 2020, globally, though there was a drop in total passenger vehicles (PVs) sales. However, EV sales was up 39% at a global scale, reaching almost 3.1 Million cars, while PV sales dropped nearly 14%. Moreover, electric cars segment accounted for around 5% of overall new vehicle sales last year. The Europe electric vehicle market accounted for highest sales in global market in 2020, contributing 11.5% of overall automobile sales in the region. This can be due to properly placed emission-related regulations, ban of internal combustion engine-based vehicles, penalties, incentives, proper EV charging infrastructure, availability of various EVs to choose from, initiatives taken to spread customer awareness, among others.

In 2020, total of 83% of EVs were sold globally, out of which, 42% were sold in Europe and rest 41% were in China.  New and stringent standards regarding emissions by fuel-run vehicles played an important role in EV sales in Europe. Automobile manufacturers had to make changes in already produced vehicles or sell them before 2020, as they knew that the new set of rules and regulations were being set for 2020 and further. Additionally, if these new standards are not meet, the penalty for manufacturers is hefty. Similarly, stringent regulations by authorities in China resulted in high sales in the country. Another reason for high EV sales is that the customers or EV buyers were mostly working population such as from IT industry, as their source of income was strong. Work from home transition, increased purchasing power, clubbed with steady income were factors that enabled pacification of one of the worst economic impact of global pandemic for buyers as wee as sellers.

Sales of electric vehicles in the US were as low as 2.4% of new car sales, which was up by 4% in 2019. This is due to minimal demand for EVs in the country, and lack of options, particularly in highly popular vehicle segments that are SUVs and pick-up trucks. This factor is putting the US customers off and pushing to switch, which is working as a restraint for US EV sales.  However, new series of electric vehicles are set to be launched this year and next year, which means customers will have a wide range of vehicles from numerous brands to choose from. This is projected to accelerate the sales of electric vehicles in the country in 2022 and years ahead. Moreover, stringent federal policies has compelled the automobile manufacturers to launch more electric vehicles and offered subsidies and incentives to customers to increase sales. The cost of making Lithium-Ion batteries for electric vehicles has reduced, however still expensive compared to fuel-based vehicles, and fuel economy standards are easier to achieve. On the other hand, fuel prices are still relatively lower and lack of incentive for buyers is hindering shift over to EVs. Automakers are now more committed towards electric vehicle production, which is expected to result in increasing pace of EV adoption in the US.

Production of electric vehicles rely majorly on electronics and semiconductor, and currently, the automotive industry is facing semiconductor shortages. Moreover, disruptions is supply of chips used in power electronics, processors due to Covid-19 pandemic could pose as a restraint for EV sales. Thus, resolving future supply chain issues, could help increase sales. Last year, demand for personal computers, laptops and smartphones skyrocketed due to pandemic and work from home trend, due to this, the chip manufacturers shifted the focus to produce chips for electronics industry, adversely impacting automobile production. Nevertheless, demand for EVs is expected to increase, and slow but steadily chip manufacturers will be supplying chips to automotive industry.

Global electric-vehicle sales is projected to increase continuously throughout the next ten years, with EVs accounting for 48% of total new cars sold by 2030. This can be attributed to launch of new and technologically advanced electric vehicles and government policies across various countries to encourage electric vehicle production and sales. Eradicating the fact that there are less options to choose from by increasing number of EV production and enhancing charging infrastructure is of utmost importance currently to entice higher number of buyers.