The global EV market has been registering an upward trend, with more than a 100% rise in the sales of EVs worldwide; in 2021, the year saw sales rise to 6.6 million. Presently, there are close to 16 million EVs on roads worldwide. There has been a consistent rise in the adoption of EVs, and the trends being recorded in the global EV market are a testament to this.
The recent geo-political concerns have certainly put pressure globally on oil prices, making consumers re-think their mobility options. Keeping these in mind, there is a growing consensus among mobility professionals that the future of vehicles is electric.
The Current Global Market Size of the Electric Vehicles Market
Higher registrations for EVs: Despite a negative market outlook due to the multifaceted implications of the Covid-19 pandemic, more than 3 million new electric cars were registered in 2020, with Europe accounting for almost 47% (1.4 million) of the demand. The car registrations in Europe that year represented a more than 100% rise compared to the corresponding figures for 2019. The EV market in India is on the rise as well. According to India Energy Storage Alliance (IESA) report, the Indian EV market is projected to grow at a CAGR of 36% by 2026. In addition to this, the NITI Aayog and the Rocky Mountain Institute have projected the growth of the country's EV Finance Industry to Rs. 3.7 lakh crores by 2030.
Rise in Consumer Spending on EVs: The year 2020 saw consumers spend USD 120 billion on electric cars, reflecting a 41% rise in sales and a 6% increase in the average prices of EVs. Despite higher average prices for EVs than in Asia, Europe emerged as the leader in new registrations for electric cars in 2020.
What’s driving the growth of EVs?
Although EVs have been around for a while, it is only in recent years that the global EV market has gained momentum. The rise in the international sales numbers and the future demand for electric cars indicates newer, higher, and brighter prospects on the horizon for EVs.
Rising fuel costs: With the constant rise in the prices of conventional fuels, the usage of vehicles that run on them is becoming expensive by the day. Moreover, the existing geo-political concerns between Russia and Ukraine have disrupted supply chains, particularly crude oil, leading to rising fuel costs worldwide.
Increasing consumer awareness and climate consciousness: With consumers becoming more climate-conscious and realizing that conventional vehicles fuelled by fossil fuels such as petrol and diesel are not favourable for the environment, more people are switching to EVs. Even in India, the sentiment towards climate consciousness and overall awareness is making Indians prefer EVs significantly. Based on the EY Mobility Consumer Index survey, among car buyers in India, 3 in 10 respondents would prefer to buy an electric or hydrogen vehicle, and 90% of consumers in India are willing to pay a premium for buying an EV and over 40% of respondents are ready to pay a premium of up to 20%.
Government incentives for EVs: Governments across the globe are supporting the move to EVs positively with aggressive funding attached to it. In European nations, in 2020 alone, governments spanning international borders spent USD 14 billion on direct purchase incentives for electric cars. This included tax benefits to incentivize the purchase of electric vehicles. These spendings represent a 25% year-on-year rise. In India, there has been a reduction in the prices of Electric Vehicles under the FAME-India scheme and various incentives under various State Governments. The incentives mentioned above are determined based on the battery capacity of an EV - Rs. 10,000 per KwH for three-wheeler EVs and incentives of up to 20% on the cost of a four-wheeler EV.
The expansion of the EV range: The rise in the global demand for electric cars has been driven by the development the catalogue of EV options. In 2015, less than 100 models of electric vehicles (including Battery Electric Vehicles and Plug-in Hybrid Vehicles) were available across the globe. In 2020, more than 350 electric cars models will be available in various parts of the world. Therefore, customers have had a wider pool of EVs to choose from overtime.
The projections for the growth of the global EV market are quite promising. According to the Standard Policies Scenario, there will be 145 million electric vehicles across the globe by the year 2030, constituting 7% of the global market share for vehicles. These figures are only indicative that the future is electric, and the present and the past trends suggest that the EV bandwagon is on charge. Stay tuned to learn more about the mobility space!
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