Electric Car Market to Grow Exponentially; China and Germany to Lead the Way

The 2019 edition of United Nations (UN) Climate Change Summit has begun in Madrid, and it will aim to better implement the policies and decisions, deliberated as part of the Paris Agreement, which, in turn, aims to restrict the global temperature rise to 2 degree Celsius from the levels recorded before industrialization. Ozone depletion and greenhouse effect caused due to air pollution is the primary reason behind global warming, and this is what countries across the world are toiling to check. The quintessential step in limiting air pollution is reducing the burning of fossil fuels, in homes and vehicles.

This is why the government in several countries has imposed strict emission norms on diesel and petrol cars and started offering manufacturing and purchase incentives and subsidies on electric cars, which are among the key electric car market drivers. One example is of the European Union (EU), which, through its Europe 2020 strategy, has set a 20% reduction target for carbon dioxide (Co2) emissions by 2020, from the levels registered in 1990. Similarly, targets for increasing the fuel efficiency of fossil fuel-powered cars have also been set. Achieving these would require the incorporation of more- advanced automotive technology in conventional cars, thereby increasing their prices and driving consumers toward electric cars.

Another factor expected to encourage the adoption of electric cars is the continuously falling price of the battery, which is one of the costliest and most important components of such vehicles. If automakers want to make their electric cars cost-effective for buyers, it is essential that the price of the battery is below $120/kWh. What comes as good news for automakers is that the electric car battery price has dropped more than 75% between 2010 and 2016, and the slump continues, which is further expected help increase the electric car sales. As a result, the global electric car sales are predicted to touch 5.3 million units in 2023.

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There are two major types of electric cars: battery electric cars (BEV) and plug-in hybrid cars (PHEV). The former type are solely driven by an electric battery, while the latter type have a battery as well as an internal combustion engine. Between 2013 and 2016, BEVs comfortably outsold PHEVs, and the same trend is expected for 2017-2023. This is because the subsidies and incentives offered on BEVs are higher than PHEVs, as the latter type are less fuel-efficient. In France, for example, BEVs, with emissions of up to 20 grams of CO2 per km traveled, enjoy higher tax exemptions than PHEVs, which emit between 21and 60 grams of CO2 per km.

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Currently, China is the largest market for such cars, and it is expected to maintain its dominance through 2023. But the electric car market growth prospects are the brightest in Germany, which already enjoys a large share in the global automotive market. This growth would be a direct result of the emission reduction and fuel efficiency targets set by the EU. Several of the largest automakers in the world, including BMW, Daimler, and Volkswagen, are headquartered in Germany, making the country a hub for innovation in the field of automotive technology.

Thus, it is clear that as more countries wake up to the menace of air pollution and the price of electric batteries witnesses another slump, the sale of electric cars would surge across the globe.

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This release was published on openPR.