The research study covers the present scenario and growth prospects of the global electric vehicle market for 2016-2020. To determine the market size, the study considers revenue generated from battery electric vehicle (BEV), and extended range electric vehicle (EREV).
With rising fuel costs and global warming, pure electric vehicles (EV) will be the preferred mode of travel in the future. They are expected to reduce air and noise pollution, and offer improved overall performance. They have the added advantage of having a long lifespan and low maintenance costs.
Various countries are actively looking to increase investments to develop better infrastructural capabilities for their EV market. Governments around the world are offering incentives are adding to awareness and market growth of EVs. Additionally, original equipment manufacturers (OEMs) have been investing to expand production capacity and automate the production process, which will significantly reduce the EV cost, thus attracting a wider range of customers.
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Technavio analysts highlight the following four factors that are contributing to the growth of the global electric vehicle market:
- Stringent regulations on emissions and fuel efficiency
- Tax rebates and credits from governments
- Automakers collaborating with infrastructure developers
- Reduction in Li-ion battery cost
Stringent regulations on emissions and fuel efficiency
“Countries worldwide have come up with stringent emission norms to lower the green-house gas (GHG) emissions, reducing the cause of global warming to an extent. The development and adoption of green vehicles are major solutions to reduce GHG levels in the atmosphere to an acceptable level. These vehicles run on alternative sources of energy such as electricity, hybrid energy, and other power sources such as solar or wind energy or biofuels”, says Siddhath Jaiswal, one of the lead analysts at Technavio for automotive manufacturing research.
By 2020, CO2 emissions should be an average of 95g/km globally. To adhere to that standard, there is a need for wide scale adoption of EVs and zero emission vehicles (ZEVs). The European Union, the US and other countries like India and China are bringing in stringent regulations to curb global warming. This is expected to directly boost the global electric vehicle market.
Tax rebates and credits from governments
Various countries promote the production and purchase of EVs to reduce GHG emissions and petroleum dependence. Governments are investing in the EV market in the form of subsidies, tax credits, and charging infrastructure development. In 2014, the US government invested USD 5 billion in electric vehicles to benefit automakers, battery manufacturers, and end-users.
The government of India, announced a total subsidy of USD 14.25 million for electric vehicles in 2016. Similarly, the Jordanian government has reduced customs and sales tax for all EVs. These subsidies and tax incentives from various countries will fuel the production of EVs locally, increasing the sales of EVs among end-users.
Automakers collaborating with infrastructure developers
The main power source of EVs is the battery pack, which is mainly charged from an external power source. Considering that EVs have lesser range compared with a hybrid and ICE vehicle, they need increased the number of charging facilities to improve the adoption rate of EVs by end-users. Charging locations are segmented as home and on the road based on their location, and private and public based on the infrastructure providers.
“Recently, many OEMs have partnered with charging infrastructure developers to increase the public and private charging facilities. In 2016, BMW, Volkswagen, and ChargePoint network established nearly 100 DC fast charging stations on the East and West coasts in the US. In addition, the five-year corporation of BMW with the UK's leading infrastructure developers, Chargemaster, to establish 30,000 private BMWi fast charging units in parking stations” says Siddharth, summarizing that his will help the OEMs to increase their EV sales in these regions during the forecast period.
Reduction in Li-ion battery cost
The battery is the most expensive component in EVs. Manufacturers were unable to bring down manufacturing costs due to the expensive Li-ion batteries. Since 2012, there has been an increased production volume, and combined with crucial advances in battery technology, the prices of these batteries have come down greatly. Another important reason for decline in costs is the shift of manufacturing bases to Japan and China. These regions have naturally abundant reserves of rare earth materials required in production, along with an availability of a cheap labor force. This will help the OEMs to reduce overall vehicle cost and drive the global EV market.
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