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Advances in battery and charging technologies, wider product range, and continued government support to push sales past 2.8 million mark

The scorching pace set by the global electric vehicle (EV) market is laudable. In 2007, just about 100 EVs were sold worldwide. By 2017, this figure had risen to one million, doubling over the course of the year to reach sales of two million units in 2018. The market is on track to break new records in 2019. According to Frost & Sullivan’s Global Electric Vehicle Market Outlook, 2019, over 2.8 million EVs are expected to be sold this year.

An Electrifying 2018

Last year was a marquee year in many ways. About 2.1 million electric vehicles (EVs), that included battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs), were sold globally. Sales in Asia Pacific accounted for 60.3% of the market, followed by Europe with 22.0%.

With sales of 1.1 million EVs, China achieved a milestone in becoming the first country to cross over a million in EV sales. Of this, 75% were BEVs and the remainder were PHEVs. China stamped its continued dominance over global EV sales, singlehandedly accounting for more than 55.5% of market share and leading the market for the fifth successive year. It recorded strong year-on-year growth of 63.5%.

Globally, the big winners were BEVs which comprised 68.7% of total EV sales, followed by PHEVs with 31.3%. Consumers benefited from wider choice; the number of EV models for sale rose from 165 (109 BEVs and 56 PHEVs) in 2017 to nearly 207 (143 BEVs and 64 PHEVs) in 2018.

There was something to cheer about in an otherwise difficult year for Elon Musk. Tesla emerged as the market leader with the launch of its much awaited Model 3. The company racked up the highest sales of about 231,850 units, cornering 11.8%of the total market. Nipping at its heels was BYD with 222,743 in unit sales and a market share of 11.3%.

In other positive developments, BMW led the charge in becoming the first automaker to offer inductive charging on its BMW 530e iPerformance model.

More in Store in 2019

An overarching theme in 2019 will be the transition of the EV market from an incentive propelled one to a regulation/ mandate driven one.

The momentum will continue building with over 2.8 million electric vehicles anticipated to be sold globally in 2019. Of this, 68% will be BEVs and 32% will be PHEVs. With this, the EV market will eke out a 3% share of the total passenger car market.

China will extend its lead, capturing almost 58% market share, followed by Europe and North America. Among the high growth potential markets will be Africa, Middle East, Latin America and South Asia. Here, government backed incentives and subsidies for manufacture and purchase of EVs will promote rapid market expansion.

Simultaneously, incentives on EVs will taper off in China, UK, and the US. In the US, government incentives will end for some OEMs once they reach their quota of 200,000 in EV sales.

In the meantime, foreign automakers in China will need to grapple with intensifying competition as the country prepares to introduce a credit system wherein automakers will be required to earn credits on EV production in order to produce conventional vehicles. For example, an automaker will need to manufacture 2,000 EVs to earn 10,000 credits which will then allow them to produce 100,000 conventional vehicles.

There will be a flurry of activity as more than 43 new models—including small city cars, SUVs and performance vehicles—are slated to flood into the market in 2019. Of these, 25 will be BEVs, and the remainder PHEVs.

Tesla and RNM will slug it out for market dominance even as over 270 start-ups shake up the EV market. North America, Western Europe and Asia-Pacific will emerge as major hubs of EV market related start-ups. The principal areas of focus will be charging solutions, battery technology and light EVs. Several start-ups are already working on developing EVs with a range of over 300 miles, as well as on EVs with autonomous driving capabilities. These vehicles will target the luxury and sport segments, competing directly with premium OEMs.

Advances in battery and charging technologies will lay a solid platform for the take-off of the EV market. The market is moving towards higher battery capacities of over 60kWh to increase the range of EVs to up to 200 miles on a single charge. This increase in battery capacity will have a cascade effect on demand for smart active battery thermal management systems that help maintain optimal operating temperatures.

In conjunction, giga-factories for battery production are likely to become the norm as demand from EV manufacturer’s spikes. Companies like BYD, LG Chem, Samsung SDI and CATL are set to fight it out in the battle of battery suppliers.

One of the main challenges faced by the EV market has been slow charging systems. This is set to change as premium OEMs such as Audi, BMW, Daimler, and Porsche will push forward on 250kW+ ultrafast charging systems to compete with Tesla’s proprietary super-charging system.

Looking Ahead

As opportunities explode, market participants should target emerging markets with high growth potential such as Africa, Middle East, Latin America and South Asia.
They should also look at expanding their product portfolios. For instance, as demand for SUVs and C-SUVs surges, EV manufacturers could consider developing a mid-sized CUV based PHEV for European and US markets.

As industries and processes become digitized, it will become crucial to develop new business models. In this context, selling has become as much about the customer experience as it has about the product itself. EV manufacturers, therefore, need to develop innovative business models that better engage with customers.

For more information on the Global Electric Vehicle Market Outlook, 2019, please write to Prajyot Sathe, Industry Manager- Powertrain and Electric Vehicles, Automotive & Transportation at Prajyots@Frost.com

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