EV sales poised to set a record in 2021, forecast to reach a 20 percent market share by 2025

EV sales poised to set a record in 2021, forecast to reach a 20 percent market share by 2025

Energize Weekly, November 24, 2021

A booming global electric vehicle (EV) market is forecast to post more than 7 million in sales of battery-electric and hybrid plug-in cars in 2021, double 2020’s performance.

EVs will account for one in 10 new car sales for the year, according to an analysis by Rystad Energy.

Using a stricter definition of zero-emission vehicles – just battery-electric and fuel cells, which have no internal combustion engines or tailpipes – BNEF projects 5.6 million in 2021 sales, up from 3.1 million in 2021 and 2.1 million in sales in 2019.

A combination of government policies, automakers growing commitment to EVs and falling battery prices are all contributing to the surge, BNEF said.

In September, nearly 700,000 vehicles were sold. It was the second consecutive month where EV sales were more than 10 percent of the market,” Rystad said. Total EV sales for the first three-quarters of 2021 stood at 4.72 million cars.

“This year’s fourth quarter is set to see a huge increase in the number of EVs sold, mirroring trends from 2019 and 2020, as electric car makers like Tesla traditionally tend to push out maximum deliveries at the end of the year,” Abhishek Murali, a Rystad energy transition analyst, said in a statement.

“In addition, buyers are expected to try to take advantage of government incentives before they start being phased out as a result of strong market adoption of EVs,” Murali said.

China is leading the growth in sales, with more than 340,000 vehicles sold in September alone and EVs reaching a 19.5 percent market share. In 2020, China officials set a target for EVs of 40 percent of all sales by 2025.

A number of other countries showed strong EV market performance in September. Germany registered 56,000 new EVs, 30 percent of all cars sold, and in Sweden, the 12,264 EVs sold accounted for 50 percent of total sales.

Europe and China accounted for 82 percent of global EV sales in 2020 and 84 percent in the first half of 2021.

Overall, in the first half of 2021, EVs, including hybrid plug-ins, accounted for 7.2 percent of global sales, up from 4.3 percent in 2020 and 2.6 percent in 2019, according to BNEF data.

The market is showing such strength and moving so quickly that BNEF revised its projection for 2040 EV market share to 70 percent from the previous 50 percent target.

There are a number of factors driving the rapid growth in EV sales, according to a BNEF report prepared for the recently concluded United Nations Climate Summit.

One is government policies, such as China’s 2025 sale target or Europe’s tougher fuel economy standards requiring a 37.5 percent reduction of CO2 emissions from 2021 levels by 2030.

To meet the European fuel standard would require EVs to reach about a 42 percent share of the market by 2030, BNEF said.

“Proposed and confirmed rules in the U.S., EU and China imply that EVs will be roughly 20-30 percent of car sales in those markets by 2025,” the BNEF report said.

Auto manufactures are also making a greater commitment to EVs creating more models – a 37 percent increase since 2019 – and they are generating a larger portion their sales from them.

At the end of 2019, there were 264 battery-electric, 109 plug-in hybrid and 7 fuel-cell models available worldwide. By the first half of 2021, there were 362 battery-electric, 151 plug-in hybrid and 9 fuel-cell models on the market.

For some automakers, EVs have become a significant portion of their business. For example, in Europe in the first half of 2021, 20 percent of BMW sales and 20 percent of Daimler sales were EVs.

EV revenues for automakers – that had sold more than 250,00 vehicles a year and provided transparent financial information – rose from $81 billion in 2019 to $111 billion in 2020, BNEF said.

EVs are also showing increasing competitivity with internal combustion engine cars. In 2020, EV sales were up 47 percent, to 3.1 million vehicles, even as there was an overall decline in the passenger vehicle market of 14 percent due to the pandemic.

“Record high EV sales in 2020 put a dent in sales of internal combustion engine vehicles,” BNEF said. “These were down 16 percent globally in 2020, allowing for EVs to gain market share.”

One aspect in EVs’ increased market strength has been the falling price of batteries, the single most expensive part of an electric vehicle.

Since 2010, the volume-weighted average battery pack price in BNEF’s annual survey has dropped 89 percent to $137 per kilowatt-hour (kWh) with a projection of reaching $58 a kWh in 2030.

“Battery prices are falling for a number of reasons, including growing global manufacturing capacity, growing order sizes from leading manufacturers, increasing energy density and introduction of new cell and pack designs,” BNEF said.

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