Electric Vehicles – We are at the very beginning of the EV cycle

Today, there are 3m electric vehicles on the world’s roads, but this could rise to 300m by 2040. This implies EVs, as a proportion of new registrations of the world’s passenger vehicles, will rise from barely 1% in 2017 to over 15% by 2030. Large scale commercial production of EVs by the big car makers is unlikely to take off until 2025. EVs still cost at least 30% more than ICE vehicles and the world lacks charging stations. But things are changing fast. By 2025, expect to see a further 40%-50% fall in battery prices, a build-out of charging stations in China, Europe and the US, and a serious effort by all the major motor manufacturers to bring EVs to market.

Cyrus Mewawalla, Head of Thematic Research at GlobalData, comments:

“Over the next five years, we expect stress, strain, margin evaporation, and shake out across much of the legacy automotive industry and its Tier-1 parts suppliers as a slow growth industry incurs the expense of conversion to electric vehicle and autonomous driving technology.”

Cyrus Mewawalla concludes:

“We are at the very beginning of the cycle, but over the next decade the automotive value chain will be transformed by the electric vehicle theme.”

The China Factor

In 2017, China accounted for around half of the 1.2m battery electric vehicles (BEVs) sold worldwide. China’s thirst for world domination of high-tech sectors like automobiles is forcing a global automotive industry reset. China accounts for 48% of the global auto market and is likely to do so for the next five years. Under the auspices of its “Made in China 2025” program, China’s government has mandated wholesale vehicle electrification by 2025, with one in five new vehicles sold in China to be either BEVs or PHEVs by then. China is putting increasing pressure on the entire auto industry to go electric and, in the process, create a platform for Chinese companies to dominate the global auto market.