Global EV sales hit a coronavirus speed bump, but how big a bump is a question

Energize Weekly, May 27, 2020

Electric vehicle (EV) sales are hitting a pandemic speed bump in 2020, but whether it’s a small bump, a big bump or a huge pothole depends on who is doing the forecasting.

The projections for the year range from a modest 4.5 percent increase in sales over last year to a 43 percent drop in the market.

Between 2015 and 2019, passenger EV sales soared to 2.1 million from 450,000, with an average yearly increase of 60 percent. The smallest year-on-year growth, 6 percent, was posted in 2019 as China, the largest EV market, revised its subsidies for the vehicles.

That much everyone agrees on.

The consensus numbers also show that the novel coronavirus, COVID-19, had an early impact on the two largest EV markets – China and the U.S.

In February, Chinese EV sales plunged 60 percent to 16,000 vehicles compared with the same month in 2019, according to the International Energy Agency (IEA). The pandemic effect hit the U.S. in April when sales were halved from the 2019 April numbers to about 10,000.

“The first lockdown in the U.S. did not start until 20th March but the effects have already begun to show in EV sales,” Ram Chandrasekaran, Wood Mackenzie principal analyst, said in a statement. “General Motors is offering a discount of $10,000 for its Chevrolet Bolt. Further such rebates are sure to follow to move inventory as demand drops further.”

The third biggest market went against the trend bolstered by new European Union standards limiting carbon dioxide emissions per kilometer for new cars and increased German subsidies for EV purchases.

As a result, sales for the first four months in Germany, France, Italy and the United Kingdom collectively reached 145,000 electric cars – 90 percent higher than the same period in 2019.

Chinese sales also saw a rebound in April reaching about 80 percent of the April 2019 level.

What comes next is where there is a huge divergence, though analysts generally agree there will be a market recovery in the second half of the year.

The most pessimistic projection for the year comes from Wood Mackenzie, which forecasts an overall decline in sales of 43 percent to 1.3 million vehicles for 2020 compared to 2019.

This includes fleet vehicles, whose purchases may be delayed as a result of the low oil prices.

Bloomberg New Energy Finance (BNEF) projects an 18 percent drop year-on-year for global sales of passenger EVs to 1.7 million.

“The COVID-19 pandemic is set to cause a major downturn in global auto sales in 2020,” Colin McKerracher, head of advanced transport for BNEF, said in a statement. “It is raising difficult questions about automakers’ priorities and their ability to fund the transition. The long-term trajectory has not changed, but the market will be bumpy for the next three years.”

EVs, however, will still outperform sales for combustion engine cars, which are set to decline 23 percent for the year. Sales of combustion engine cars peaked in 2017, according to a BNEF analysis.

In the long term, falling prices for lithium-ion batteries and increasing battery energy density – enabling long journeys without charging – will continue to boost the EV competitvity and sales, BNEF said. EVs are expected to make up 10 percent of new car sales by 2025 and 38 percent by 2030.

Wood Mackenzie’s Chandrasekaran agrees that the long-term trend for EVs is upward and that pent-up demand will help the sector bounce back in the second half of the year.

The most optimistic forecast for 2020 comes from the IEA, which sees a modest 4.5 percent increase in EV sales.

“Car sales can generally be expected to pick up in the second half of 2020,” the agency said in a market analysis. “The extent and pace of the rebound will depend on a range of factors, including the pace at which confinement measures are eased, potential second waves of the pandemic, the pace of economic recovery and the willingness and ability of consumers and businesses to purchase new cars.”

Government policy will also be key. “Stimulus measures, if adopted, can boost car sales, although their impact can be difficult to foresee,” the IEA said.

“Our central estimate today is for global electric car sales to slightly exceed 2019’s total to reach more than 2.3 million and achieve a record share of the overall car market of more than 3 percent,” the IEA said. “This brings up the total number of electric cars on the road worldwide to a new record of about 10 million, around 1 percent of the global car stock.”

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