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The global electric vehicle market size was USD 246.70 billion in 2020. The global impact of COVID-19 has been staggering and unprecedented, with Electric Vehicles witnessing a progressive demand shock in all regions amid the COVID-19 pandemic. Based on our study, the global market exhibited a growth of -9.7% in 2020 as compared to the average year-on-year growth during 2017-2019. The market is anticipated to grow from USD 287.36 billion in 2021 to USD 1,318.22 billion in 2028 at a CAGR of 24.3% in the 2021-2028 period. The sudden rise in CAGR is attributable to this market’s growth and demand, returning to pre-pandemic levels once the coronavirus crisis is over.
The environmental impact of traditional gasoline vehicles and the upsurge in fuel prices have opened the door to alternative fuel vehicles on the market. Buyers are gradually inclined to use battery-powered or hybrid automobiles, which is anticipated to drive the market. All models use one or more electric motors for propulsion. Electricity is the main energy source for EVs. There is no internal combustion engine among them.
Around the world, traditional fuel vehicles are one of the main causes of air pollution. Therefore, it forces many governing bodies to impose strict emission regulations on car market manufacturers to curb vehicle emissions. In recent years, the demand for PHEV, Fuel Cell Electric Vehicle (FCEV), and BEV is increasing considerably among consumers because these vehicles do not use traditional fuels such as gasoline or diesel as power. The maintenance cost of EVs is also considerably less, which gives it an advantage over traditional fuel-based vehicles.
Market to Show Positive Signs of Recovery Post COVID-19 Lockdown
The coronavirus crisis had a severe impact on the worldwide automotive industry. The lockdown caused due to the COVID-19 crisis led to the closure of several automotive production facilities. However, the improved sales of all types of EVs post-June 2020 as the lockdown lifted in most of the countries. Particularly the sales of BEV & HEV were dominant. The 2022 to 2024 period is considered to be the most optimistic period for electric vehicle sales as OEMs are planning to launch new EV models in the coming years. Furthermore, the positive government support for vehicle electrification and the decline in battery prices are expected to keep the market growth buoyant over the forecast period.
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Increasing Investment in Electric Cars is a Prominent Trend
The growing investment in the electric mobility space is considered to be a driving force for the electric vehicle market growth. Market players such as Daimler AG, Ford Motor Company, and Groupe Renault are increasingly investing in their plans to produce EVs. For instance, Ford Company announced its plan to invest USD 300 million to develop a new light commercial vehicle in 2023 at its plant in Romania. Major companies such as Daimler AG and Mercedes Benz are also investing heavily to produce EVs. Therefore, the market is expected to experience long-term growth during the forecast period.
Favorable Government Subsidies and Policies to Promote Sales
Governments are offering attractive incentives and policies to encourage the sales of EVs. It provides consumers with multiple benefits, such as reduced selling prices, zero or low registration fees, and the free charging infrastructure of EVs at multiple charging stations. Moreover, several governments across the world exempt road tax, import tax, and purchase tax based on different subsidies. These subsidies have also stimulated automobile manufacturers to upsurge their EV production. In addition, the government has also invested in infrastructure construction and formulated favorable policies. For instance, the U.S. government is planning to invest USD 287 billion in highway developments over the next five years. In addition, the government shall also be developing EV charging stations across the United States to support the development of these vehicles in the country.
Strict Government Regulations on Vehicle Emissions to Boost Growth
In order to reduce the amount of greenhouse gas emissions in the atmosphere, governments of many countries in the world have implemented strict vehicle emission regulations. In Europe, the European Union has formed a regulation to reduce the CO2 emissions of light and medium commercial vehicles by 15% before 2025. The Petroleum Ministry of India mandated all automotive manufacturers to start manufacturing BS-VI vehicles post 1 April 2020. The decision was aimed at reducing air pollution in the country. The stringent steps taken by several regulatory bodies to curb air pollution are expected to boost this industry in the upcoming years.
High Manufacturing Cost to Hinder Market Growth
EVs are superior as compared to traditional fuel automobiles, but the cost is higher than that of gasoline-powered vehicles. These vehicles have not yet achieved economies of scale as they are not mass-produced. In addition, the absence of charging infrastructure associated with the development of EVs has proven to be a negative factor, which has affected the growth of the market. Likewise, the manufacturers need a lot of investment and assets, which may also hamper the growth of the market. However, owing to the increased production of EV batteries on a mass scale in large volumes and technological advancements, the cost of batteries is expected to decrease in the upcoming years.
Passenger Car Segment to Hold the Largest Market Share
Based on the vehicle type, the market is segmented into commercial vehicles and passenger cars.
The passenger car segment dominated the market with a market share of more than 90% in 2020 owing to increased demand and sales for passenger cars in Asia-Pacific. The adoption rate of EVs in Asia-Pacific is high owing to the presence of EV manufacturers' original equipment manufacturers and other automakers in the region. These factors will help promote the growth of this segment during the forecast period. Further, the commercial vehicle segment is estimated to experience growth in the coming years owing to the ever-increasing innovations in the battery of EVs to improve the load capacity of the commercial vehicle.
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HEV Segment to Dominate Market Due to High Sales Volume
Based on the type, this market is segmented into HEV, PHEV, and BEV.
The HEV segment dominated the market with a revenue share of more than 65% in 2020. The HEV provides the dual option as fuel-based as well as electric driving, particularly in regions with inadequate charging infrastructure availability. The demand for battery electric vehicles is gaining attention as private entities as well as governments are planning to deploy a web of charging infrastructure across the globe in order to support the usage of green energy. Further, the PHEV segment is developing at a steady pace. The declining prices of these vehicles are predicted to boost the demand in the coming years.
Asia Pacific Electric Vehicle Market Size, 2020 (USD Billion)
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Asia Pacific is expected to show significant growth in this market owing to the growing demand for passenger cars in developing nations. China accounts for the largest share in terms of passenger cars and other automobiles. Moreover, North America is expected to witness the highest growth in the market. The regional growth can be attributed to growing initiatives by the Department of Energy (DOE) to build charging infrastructure throughout the U.S. to support the growing number of EVs in the region.
Further, Europe is expected to become the main region. The steps taken by the regional government to reduce carbon emissions have been the driving factor for the growth of the market in Europe. The important countries contributing to the growth of the region are the U.K., Germany, and France. Besides, the rapid adoption of fuel-efficient vehicles will augur well for the market in Europe. Moreover, it has been observed that countries in the rest of the world are clearly far behind in estimated the market share due to the lack of charging infrastructure and capital available in less developed countries.
Key Players Focus on Collaborations Strategies to Gain a Competitive Edge
The market is highly competitive and fragmented in nature, with the presence of key players such as the General Motors Company, Nissan Motors Co. Ltd., Tesla, Inc., Toyota Motor Corporation, BYD Company Ltd., Daimler AG, and Ford Motor Company, among others.
Tesla Inc. is a California-based EV manufacturing company, and the Tesla cars are well known for their autopilot mode allowing semi-autonomous features in their car range. Tesla Inc. is known for its innovative product designing, technological enhancements, and quality assurance. In order to fulfill the charging station gap in North America, Tesla constructed a web of charging stations across the U.S. and Canada. The company also built solar power generation plants to make green energy available for the charging stations.
Daimler AG is one of the largest manufacturers of commercial vehicles and high-end automobiles in the world. The company has launched a range of passenger cars, commercial vehicles, and electric buses to support the growing EV demand. Few prominent EVs launched by Daimler include EQC, Smart EQ, GLC F-Cell, and Concept EQV. Moreover, Daimler AG also provides financing, insurance, fleet management, leasing, and innovative electric mobility services.
An Infographic Representation of Electric Vehicle Market
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The research report provides a detailed electric vehicle market analysis and focuses on key aspects such as leading companies, vehicle types, and fuel types. Besides this, the report offers insights into the market trends and highlights key industry developments. In addition to the factors above, the report encompasses several factors that have contributed to the growth of the market over recent years.
Value (USD Billion) & Units (Thousands Units)
By Vehicle Type
Fortune Business Insights says that the global market size was USD 246.70 billion in 2020 and is projected to reach USD 1,318.22 billion by 2028.
In 2020, the Asia Pacific market value stood at USD 118.08 billion.
The market is projected to grow at a CAGR of 24.3% and will exhibit exponential growth during the forecast period (2021-2028).
The HEV segment is expected to lead in this market during the forecast period.
Strict government regulations are expected to propel market growth.
Tesla Inc. is a major player in the global market.
Asia Pacific dominated the market in terms of share in 2020.
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