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The electric vehicle (EV) market competition is becoming very intriguing as the adoption increases and more players come in. I recently came across a McKinsey article called “The Global Electric-Vehicle Market Is Amped Up And On The Rise” Here are some interesting insights that I want to share with you.
According to the article, in 2017, global sales of new EVs passed one million. The growth trajectory suggests that the sales can go up to 4.5 million units; capturing nearly 5% of the light vehicle market worldwide. Furthermore, the article points out that pure electric vehicle sales are growing faster than plug in electric vehicle sales.
Who is leading the sales? According to McKinsey, China is currently holding the global leadership in EV sales having expanded their EV market over 72% over the previous year in 2017. Whereas, Norway and Germany have the lead in Europe. In fact, China’s EV market currently happens to be larger than Europe and United States EV markets combined. Original Equipment Manufacturers (OEMs) have the majority of the sales share in the Chinese EV market.
Important factors that foster this rapid growth are tight regulations and generous subsidies. The national and local subsidies in Chine are among the world’s highest. Furthermore, EVs have exemption from license plate lotteries and auctions in some cities. The Chinese government also introduced green license plates for new energy vehicles that make these cars eligible for preferential treatment. These incentives are essential in increasing sales since EVs can come with relatively high upfront costs. The government recently raised minimum qualification levels and decreased subsidies to reduce the spending on EV incentives.
Despite the remarkable growth in sales the report points out that the adoption rate still represents 2% nationally which mostly consists of sales in a limited number of large cities (such as Beijing, Hangzhou, Shanghai, Shenzhen, and Tianjin). Another challenge seems to be the costly EV batteries. According to the article, China and Norway have the highest expenditure on supply-side and consumer subsidies (at the tax payers expense).
According to the article, China seems to be developing a long-term plan to abandon fossil fuel powered cars. In addition, international automakers and domestic Chinese brands are starting joint ventures to produce EVs.
EVs are improving and gradually spreading. Governments are becoming increasingly concerned with climate change and taking some action. Consumers are becoming more aware and demanding more environmentally friendly technologies. I believe that this growth will accelerate as the article and various other sources suggest. I also think that the advent of fully autonomous vehicles will support the spread of the EVs.
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