The electric vehicle market is set to grow at a remarkable CAGR of 41.6% over the 2021 to 2028 forecast period and to reach a valuation of $ 1.212.2 billion in 2028.
The global market size of electric vehicles was estimated at USD 2,373.6 thousand units by 2020, according to a new report from Vision Research Reports.
Why an electric car?
An electric vehicle, compared to a fuel vehicle, runs on electricity. Instead of an internal combustion engine, these vehicles are powered by an electric motor that requires a continuous supply of energy from batteries. Due to several technological advances, electric vehicles have grown in popularity. Electric cars conquer conventional vehicles in terms of fuel economy, carbon emissions and maintenance as well as the convenience of charging at home, comfortable driving and reduced engine noise. Battery, hybrid and plug-in hybrid electric cars are the three types of electric vehicles. In addition, electric cars do not require engine maintenance, but they are significantly more expensive than their gasoline counterparts.
What are the growth factors in the electric car industry?
Factors such as increased demand for fuel-efficient, high-performance and low-emission vehicles, as well as strict government regulations and regulations for vehicle emissions, all contribute to the growth of the electric vehicle market. Furthermore, factors such as low fuel consumption economy and high production costs are expected to hamper growth in the electric car market. However, factors such as technological advances and proactive government initiatives will help with the growth of the electric car market during the forecast period.
Many countries imposed a two-month complete shutdown due to COVID-19 outbreaks, affecting vehicle production. Factories around the world have been closed and car sales have suffered a lot. However, the majority of car manufacturers resumed vehicle production with limited capacity and necessary safety guidelines. Conditions are expected to improve in the coming years as lockdown restrictions are lifted in various countries. Thus, the production of electric cars has been restarted, which will have a positive impact on the market in the near future.
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The Asia-Pacific had the largest share of the electric car market. As the world’s largest electric car manufacturer and user, China has a monopoly on the region’s electric car market. The governments of China, South Korea and India have taken steps such as subsidizing buyers of electric cars, requiring all car manufacturers to produce electric vehicles based on the number of vehicles produced, providing significant support for installing charging stations for electric cars in major cities and adopting rules against excessively polluting vehicles. This increase is due to the increasing demand for electric cars in China, Japan and India. In 2018, about 45.0% of electric cars were on the road in China compared to 39.0% in 2017. In addition, various companies focus on manufacturing electric cars in China.
The electric car markets in North America and Europe are the fastest growing markets globally. North America had a significant market share of over 15.0% measured in revenue. The government’s initiatives to increase consumer awareness of electric cars as well as the increase in research and development activities create lucrative opportunities for market growth in these regions.
Drivers – Increasing demand for efficient vehicles
As petrol is a fossil fuel, it is not a renewable energy source and is expected to be depleted in the future. It is crucial to develop and use alternative fuel sources to support sustainable development. This involves the use of electric vehicles that do not require gasoline and are more cost effective than conventional vehicles. An electric vehicle converts more than half of the electrical energy from the grid to electricity at the wheels, whereas a gas-powered vehicle converts only about 17-21% of the energy stored in petrol. Due to the recent rise in the price of petrol and diesel, there has been an increase in the demand for fuel efficient vehicles.
Strict state rules and regulations
An internal combustion engine generates power in a traditional fuel-powered vehicle. In a general case, the combustion system burns the fuel completely and produces only carbon dioxide and water as waste; nevertheless, the combustion system produces a variety of toxic gases, resulting in pollution. An electric vehicle, on the other hand, uses an electric motor that is powered by a constant source of electricity and therefore does not emit any pollutants. The governments of some countries such as the United States, China, France and Germany have adopted strict laws and regulations regarding vehicle emissions, paving the way for the growth of the demand for electric vehicles in the market.
Limitations – High production costs
Electric cars are more preferable than regular vehicles, although they are more expensive. The lack of charging infrastructure in connection with the development of electric cars has proven to be an obstacle to the market’s expansion. Similarly, manufacturers require a significant amount of capital and assets, which can stifle market growth. The price of batteries is expected to fall in the coming years as a result of increased production of electric car batteries in huge quantities and technological development. As a result, the manufacture of electric cars necessitates a significant investment, which has a negative impact on market growth.
Opportunities – Technological advances
Car manufacturers are concentrating on the development of improved electric vehicle systems that are expected to emit fewer pollutants at cheaper costs. Companies have also begun to develop reduced engines for use in vehicles, as smaller engines help meet pollution standards. This is because they emit fewer pollutants than heavier and larger engines. The compactness and cost-effectiveness of these engines add another dimension to their usability. As a result, the future development of advanced gasoline direct injection systems (GDI) opens up numerous opportunities for key players in the market.
Challenges – Lack of infrastructure for charging electric cars
The lack of infrastructure to support the growth of electric cars has proven to be a barrier to the growth of the electric car market. Many countries around the world have few charging sockets for electric cars. As a result, charging of public electric car becomes less available, which lowers the demand for electric cars in the market. Despite many governments trying to establish charging infrastructure for electric vehicles, most countries have not been able to develop a sufficient number of charging stations. When a well-developed charging network for electric cars exists around the world, the demand for electric vehicles will increase in the market.
Highlights of the report
The product segment is divided into Battery Electric Vehicles (BEV) and Plug-in Hybrid Electric Vehicles (PHEV). In 2019, the PHEV segment had a market share of over 30.0% measured in revenue. Furthermore, the BEV segment is expected to experience a CAGR of over 25.0% in terms of revenue over the expected time frame. This is attributed to the growing environmental awareness and benefits of BEV among humans.
The PHEV segment is expected to record the highest CAGR of over 45.0% in terms of revenue over the expected time frame. This increase is due to the initiatives taken by the governments of developing countries such as India and China to promote the use of electric vehicles. Furthermore, companies such as the Volkswagen Group are focusing on increasing sales of plug-in electric cars. In January 2020, the company announced a 60.0% increase in its plug-in electric car sales compared to 2018.
The companies operating in the market are BYD Company Ltd. Daimler AG Ford Motor Company General Motors Company Groupe Renault Mitsubishi Motors Corporation Nissan Motor Company Tesla, Inc. Toyota Motor Corporation and Volkswagen Group.
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