The compliance to the stringent emission norms across the globe, combined with government incentives and subsidies for electric vehicle (EV) adoption, is positively influencing the electric car market. In 2017, 927,485 electric cars were sold, and the market is expected to progress at a 33.6% CAGR during the forecast period (2017–2023). An EV is an automobile that uses electric energy as fuel, which is stored in battery packs which are rechargeable.
A shift toward battery electric vehicles (BEV) from plug-in hybrid battery electric vehicles (PHEV) is being observed in the electric car market. BEVs, being eco-friendlier, are compelling the governments to offer subsidies and incentives for their adoption. In the U.S., car companies are motivated to sell more BEVs than PHEVs, owing to the fact that the former vehicle type gets them more Zero Emission Vehicle (ZEV) credits. Likewise, in France, the provision for more tax exemptions exists for electric cars emitting up to 20 g CO2/km than those emitting 21 to 60 g CO2/km, where the former and latter figures usually correspond to BEVs and PHEVs, respectively.
To increase their electric car market presence, automakers are seeking expansion by acquiring small local players and engaging in joint ventures (JV). Foreign companies are rapidly entering the Chinese market through collaborations with regional players. For instance, Volkswagen Group is collaborating with SAIC Motor to develop electric cars in China. By 2022, the Renault–Nissan–Mitsubishi Alliance aims to launch 12 new electric vehicle models. Similarly, BMW Group, in 2018, entered into a JV with Great Wall Motor Company Limited in China for the production of electric cars under the Mini brand.
Further, stringent emission norms are driving the electric car market forward. With increasing global concerns about the rising greenhouse gas levels in the environment, and automobile fuel being one of the major contributors to that, many countries are imposing strict regulations to limit these harmful emissions. For instance, in keeping with the Europe 2020 strategy, the European Union aims to cut down the CO2 emissions by 20.0% by 2020 from the levels reported in 1990.
Another contributing factor in the growth of the market is the reducing prices of battery packs, as they hold a significant share in the pricing of an EV. To help BEVs compete with conventional cars in terms of pricing, the cost of battery packs should be lower than $120/kWh. During the 2010–2016 period, their cost dropped to $227/kWh. The market would benefit by the decreasing costs of battery packs, which combined with improved battery range and capacity, would further drive the electric car market growth.
Based on technology, the electric car market classifications are PHEVs and BEV. BEV’s dominance in China and higher subsidies provided for their adoption compared to PHEVs contributed to their larger volume share in the market during the historical period (2013–2017). Owing to their better eco-friendliness as compared to PHEVs, they are projected to be the faster growing category in the forecast period as well, leading the market in 2023.
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On the basis of segment, the categories are premium, medium, low, and economy. In 2017, the economy category held the largest volume share in the electric car market,with the low category coming in second.The sales of the cars under these categories were observed to be higher than the others during the historical period owing to their affordability and popularity in key markets such as China. The fact that China is the largest market for EVS further substantiates this finding.
Hence, the market is slated to advance owing to the surging concerns about air pollution.
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