Electric Vehicles Market and its Challenges
The electric vehicles (EVs) market is expected to witness significant growth owing to rising awareness of climate change and the technological advancement in passenger cars segment. The EV market is forecasted to reach 25 million units in 2030, from an estimated unit of 2.9 million units in 2019 with a compound annual growth rate of 22 percent. The EV market is expected to face unique challenges during its growth stage; however, the market seems to be providing lucrative opportunities.
Governments of various countries has framed stringent rules and regulations for emission of CO2 reduction, which has increased the demand for EVs. Many countries have started following the U.S. and European emission regulations; for instance, China has adopted the European stage V emission standards, Taiwan and Korea have adopted U.S.-based standards. Several governments have exempted import, purchase and road taxes for EV purchases, and established charging infrastructure for EVs.
China has great potential in the EV market; it is expected to dominate the passenger EV segment with a 48-percent share of the overall EV market by 2025. In Norway, electric and hybrid cars accounted for around 52 percent of the new car sales in 2017 owing to its policy of reaching zeros emission by 2025. The Asia-Pacific is expected to witness the fastest growth, followed by Europe and North America. The Asia-Pacific region has its presence among most EV manufacturing original equipment manufacturers such as BYD, BAIC, SAIC and Geely, combined with high technology-adoption rate. The U.S. has few positive dynamics on both the EV market and industry side. Europe is expected to witness steady growth, since countries such as Norway, Germany and France have seen continuous transformation from gasoline to electric vehicles.
The EV market faces many challenges, especially in its development stages, such as lack of standardization of charging infrastructure and high cost of EV. Charging of EVs requires a standard mode irrespective of vehicle type to allow charging stations to communicate with any vehicle. Certain EV charging stations may only be compatible for a specific range of voltage, such as 120 VAC through level 1 charging stations or 208/240 VAC through level 2 charging stations. Additionally, the type of chargers and the location of charging are infrastructure challenges. There is an urgent need for governments to standardize EV charging stations. Developing fast chargers and charging stations can improve EV infrastructure further.
Based on the vehicle type, EVs are classified in to plug-in hybrid, hybrid and battery types. In 2018, battery EVs dominated the market, with a 68 percent share of total sales. These types are expected continue dominating the EV market. The plug-in hybrids follow, with a share of 32 percent. In 2019, 43 EV models are expected to roll out, and these include hatchback cars, SUVs, and performance vehicles.
Electric buses are also expected to push the growth of EVs in the commercial vehicles market. China and India already shifting to electric buses. Indeed, China leads the world in the number of EV manufacturers, which include BYD, SAIC motor, FAW group, BAIC group, and GAC.
Many large companies are now seeking joint ventures/partnerships to increase their market revenue from EVs. For example, Magna, BAIC, and Zhenjiang government have entered into a joint venture partnership to set up a manufacturing plant that can produce up to 180,000 vehicles per year. This project is expected to start in 2020. In July 2019, Renault invested 128 million euros in partnership with Chinese EV manufacturer Jiangling Motors to help it access the world’s largest EV market. Volkswagen has been retooling its 16 factories to build EVs and has planned to start producing 33 different electric cars.
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