The global electric vehicle market demand was estimated at 2,373.5 thousand units in 2019 and is expected to witness a CAGR of 41.5% 2020 to 2027. The market is driven by initiatives taken by governments of various countries to promote the manufacturing of electric vehicles (EVs). For instance, in 2019, the government of Germany and auto manufacturers agreed to raise cash incentives under the “Environment Bonus” plan for battery powered cars. The incentives will reach USD 6,680 per vehicle and the auto industry to cover half the cost. Additionally, the government plans to implement these incentives by 2025. Similarly, in 2019, the government of India announced its plans to spend USD 1.4 billion to subsidize sales of hybrid and electric vehicles until 2022. The incentives are applicable only on vehicles that cost less than USD 21,177, thereby resulting in increased demand for EVs from 2020 to 2027.
Stringent vehicle emissions regulations have led to the rise in demand for electric vehicles. For instance, the European Union set itself a target of net-zero greenhouse gas emissions by 2050. Electric vehicles produce lower emissions as compared to conventional vehicles. This has led governments around the world to increase awareness and promote the adoption of EVs to reduce oil consumption, air pollution, and related emissions. Some of the most comprehensive promotions are done in the Netherlands and Norway. Thus, the market will grow at a notable rate during the forecast period.
Rising investments in electric vehicles is considered a major driver for the market. Companies such as Daimler AG, Ford Motor Company, and Groupe Renault are investing heavily in their plan to manufacture EVs. In December 2018, Daimler AG announced investments worth USD 20.0 billion in the purchase of battery cells for electric vehicles. The company aims to electrify its Mercedes Benz portfolio until 2022 with around 130 EVs. Similarly, Ford Motor Company announced its plans to invest USD 11.0 billion to manufacture 40 electric vehicles by 2022. Thus, the market is anticipated to rise over the forecast timeframe.
Lack of charging infrastructure is expected to hinder electric vehicle market growth over the estimated period. Variations in charging load and lack of standardization are major drawbacks for the market. Different countries have their own standards such as CCS (Europe, the U.S., and Korea), CHAdeMO (Japan), and GB/T (China). Some electric manufacturers such as Tesla, Inc., are focusing on overcoming this obstacle by having their own charging network. Thus, market players are planning to overcome these challenges and expand their business.
Increasing adoption of electric vehicles in the commercial and government sectors is anticipated to drive the market. In 2020, the “Department for Transport” in U.K. allocated around USD 65 million for all electric bus towns. The transport department estimated that 200 electric buses can save around 7,400 tons of CO2 annually, which is considered to play a vital part in bringing down emissions. Furthermore, in 2020, Uber announced its partnership with Nissan wherein the auto-manufacturer will make 2,000 EVs for Uber drivers in London. The partnership was done with Uber’s aim to make all its vehicles emission free by 2025. Thus, the market is anticipated to rise over the coming years.