Electric Vehicle Market

[355 Pages Report] The global electric vehicle market size is valued at USD 388.1 billion in 2023 and is expected to reach USD 951.9 billion by 2030 at a CAGR of 13.7% during the forecast period 2023-2030.With advancements in technology, increasing environmental consciousness, and supportive government policies, EVs have gained significant traction as a viable and sustainable transportation option. As concerns over climate change and air pollution intensify, consumers and industries are increasingly turning to electric vehicles to reduce their carbon footprint and contribute to a greener future. This growing global momentum has propelled the EV market into a transformative phase, with innovations and investments driving the expansion of EV adoption across the world.

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Market Dynamics:

Driver: Reducing prices of EV batteries will increase demand for EVs by making them cost effective

Due to technological advancements and the production of EV batteries on a mass scale in large volumes, the cost of EV batteries has been decreasing during the past decade. This has led to a decrease in the cost of electric vehicles as EV batteries are one of the most expensive components of an electric vehicle. The prices of EV batteries fell significantly in the last decade, from USD 1,200/kWh in 2010 to USD 160/kWh in 2023 and is expected to decrease in the coming years. Meanwhile the price is as low as USD 100 per kWh in China. This is because of the reducing manufacturing costs of these batteries, reduced cathode material prices, higher production, etc. The prices of EV batteries are expected to fall to approximately USD 60 per kWh by 2030, which is expected to significantly reduce the prices of EVs, making them cheaper than conventional ICE vehicles. The price of EV batteries is expected to reach around USD 80 per kWh by 2025. This will bring the price of EVs to the same level as that of ICE vehicles in the market and start a big shift to EVs. From 2025, we can expect EVs to get cheaper than some ICE vehicles. The improvement in battery technology is the main reason for this fall in battery prices. Once Solid-State Batteries enter the EV market, we can expect another price fall (per kWh) by the end of this decade.

Restraint: High initial investments for installing EV fast charging infrastructure

The initial investment in setting up a fast-charging system is significantly higher compared to petrol, CNG, or LPG fuel stations. This has been a major restraint for countries around the world in adopting EVs on a higher scale during the past decade. Technological enhancements are expected to negate this restraint, leading to decreasing costs. The cost for EV fast charging is high due to the higher equipment costs and the requirement for an additional fast charger to install a transformer to connect the grid and charging system. This has led to the slower development of charging networks around the world which have gained traction during the past few years due to vehicle emission concerns.  The high initial investment required for EV infrastructure is one of the key factors influencing EV sales. Setting up a comprehensive and efficient EV charging station can incur significant costs. For instance, in India, a single DC fast charger setup could cost more than USD 12,193, and if multiple chargers are installed, the initial investment could easily go up to USD 48,772, taking into account the cost/rent of the land. The type of chargers installed also impacts the investment, with different charger types having varying costs.  In APAC region for instance prices vary by charger type and have additional costs. These include additional expenses such as that for obtaining a new electricity connection, civil works, EVSE management software and integration (approximately USD 9,145), and technicians, manpower, and maintenance (around USD 4,267 yearly). Advertising and promotion costs (about USD 609) and land lease expenses (around USD 7,316 yearly if the land is leased) further add to the total. Consequently, the total approximate cost for the first year, including setup and leased land, could reach USD 487,72. Subsequent operational costs, starting from the second year, amount to USD 12,193 annually, including land lease expenses. Operational costs include software maintenance, technical maintenance, and manpower expenses, all contributing to the significant investment required for establishing and running an EV charging station. These high initial and operational costs create barriers for businesses and individuals looking to invest in EV infrastructure, which in turn can impact the growth and adoption of EVs in the market. Nevertheless, as the demand for EVs rises and technology improves, we can expect to see potential reductions in these costs over time.

Opportunity: Rising demand for electric vehicles in the automotive and transportation sectors

Increase in the adoption and demand for electric vehicles has accentuated the need to develop charging infrastructure and the EV market. Leading markets for electric vehicles such as China, US, and Germany are investing significantly in electric vehicles and EV charging infrastructure along with research & development for faster and efficient charging methods, longer range EVs, and lower cost batteries. Significant investments by automakers are expected to cater to the rising demand for EVs. Countries across North America and Europe along with many Asian countries have adopted measures to reduce emissions during the coming decades and replace their vehicle fleets for lower emissions by varying numbers by 2035. This is expected to lead to a significantly high demand for electric vehicles. OEMs offer a wide range of vehicles, from small hatchbacks such as Leaf to high-end sedans such as Tesla model 3. The wide range of product offerings has attracted a high number of consumers, resulting in an increased market for electric vehicles. For instance, in January 2018, Ford announced plans to increase planned investments to USD 11 billion by end of 2022 for the development of EVs. The company introduced 40 EVs in 2022, of which 16 are expected to be fully electric and 24 are expected to be plug-in hybrid vehicles. The investment is higher than the previously announced target of USD 4.5 billion. Further, Stellantis also plans to come with 29 new EVs by 2030. Launched in September 2020, SAIC-GM-Wuling has a range of 106 miles on a single charge and was one of the highest selling EVs in 2021 and 2022.

Challenge: High cost of electric vehicles (compared to ICE)

The high manufacturing cost of EVs has been a major concern in their widespread adoption. The expected reduction in battery prices and reduced R&D costs are expected to lead to the reduction in the overall cost of purchasing electric hatchbacks, crossovers, or SUVs to reach the levels of ICE vehicles, leading to the rising demand for EVs. The cost of EVs is significantly high compared to that of ICE vehicles due to the high price of rechargeable lithium ion batteries required for these vehicles. The price of the cathode affects the price of the batteries to a high extent. This is because materials such as cobalt, nickel, lithium, and magnesium used in these batteries is high-priced. The cost of the production of EVs is also significantly high compared to ICE vehicles due to the expensive process involved in developing these vehicles. The cost of the development of higher range EVs is significantly higher due to the requirement of higher specification batteries, advanced technology used for production, and highly expensive components used in the vehicles.

Market Ecosystem

FCEVs to be the fastest growing segment during forecast period

The FCEV uses fuel cells to generate electricity for powering the vehicle. Fuel cells in a vehicle generate electricity from the oxygen in the air and compressed hydrogen. FCEVs are completely emission-free as they emit water or heat. FCEVs have been introduced in the US, majorly in California. Many renowned truck manufacturers have already developed fuel-cell electric trucks. For instance, in September 2022, Toyota Motor Corporation (Japan) and Kenworth (US) designed heavy-duty Class 8 FCEVs. Similarly, in January 2023, Adani Group (India) signed an agreement with Ashok Leyland (India) and Ballard Power (Canada) to launch a pilot project for a hydrogen fuel cell electric truck in India Japan and Europe are focusing on the launch of FCEVs. Top FCEVs on the road that are commercially available include Hyundai Tucson FCEV, Toyota Mirai, Hyundai Nexo, and Honda Clarity. Fuel cell vehicles have higher fuel economy and can travel approximately 300–400 miles with a full fuel tank. The best FCEVs can have a range of more than 500 miles on a single filling. The refueling time for fuel cell-powered vehicles is approximately three to five minutes. This makes FCEVs an ideal option for transportation on definite or fixed routes. However, the availability of infrastructure such as hydrogen refueling stations and hydrogen production facilities supporting fuel cell technology is very limited worldwide due to the high cost of the fuel cell stack and system. Hydrogen is also difficult to store and transport which adds to the cost of the system. However, governments of various regions are increasingly investing in the development of hydrogen-powered vehicles and hydrogen infrastructure. For instance, in November 2022, the Government of Alberta in Canada announced an investment of USD 300 million from the Strategic Innovation Fund's Net Zero Accelerator initiative, along with a provincial contribution of USD 161.5 million, to back a substantial USD 1.6 billion project led by Air Products Canada Ltd. The project aims to drive the advancement of clean fuels and clean energy in Canada while creating numerous middle-class job opportunities. The funding will specifically support the construction of a hydrogen production and liquefaction facility in Edmonton. The facility will utilize auto thermal reforming and carbon capture technology, further emphasizing the commitment to sustainable and environmentally friendly solutions.

Mid-priced EV segment to be the largest market during the forecast period

A mid-priced vehicle is considered to have a price of USD 30,000 to USD 45,000. This vehicle class has limited features with low emphasis on features such as infotainment, instrument cluster, and other expensive features. China is one of the leading markets for the mid-priced segment. Established automotive manufactures such as Hyundai, General Motors, Honda, and Nissan are also manufacturing mid-priced EVs to acquire higher market shares. Some other mid-priced EVs include BMW 3 Series PHEV, Zeekr One, Ford Mustang Mach-E, Volvo XC40, Renault Megane EV, Hyundai  Ioniq 5, Volkswagen  ID 4, Kia  Niro EV, etc. In 2022, BYD Song Pro/Plus was the best selling mid-priced EV in Asia Pacific region, followed by Tesla Model 3 in Europe and North America. The electric vehicle market forecast for the mid-priced segment is the largest in the Asia Pacific and European regions due to the demand for low-emission vehicles at reasonable prices. Various top EV models such as Nissan Leaf, Renault Zoe, Mitsubishi Outlander, Volkswagen Passat, Hyundai Kona, etc. fall under this category. These were also some of the largest selling EVs in these regions excluding Tesla in 2022. Thus, the demand for mid-priced EVs has been high in the past few years and is expected to keep rising in the coming decade. The market in the MEA is expected to grow at the highest rate in this segment as there is expected to be rising new demand in this region for these vehicles in the next decade.

Asia Pacific to be the largest and the fastest growing market by value during the forecast period

The region is home to some of the fastest-developing economies, such as China and India. The governments of these emerging economies have recognized the growth potential of the electric vehicle market trends and, hence, have taken different initiatives to attract major OEMs to manufacture electric vehicles in domestic markets. The region is home to 93 of the world’s most polluted cities, and has a high energy demand. As of 2022, transportation sector in the region accounts for around 14% of overall emissions. Thus, countries in the region, are planning to reduce emissions in the coming years. China, the e-mobility leader in the region, had set a target of over 20% EV sales by 2025, which it had already achieved in 2022 and is expected to have around 35% in 2023. Similarly, countries such as South Korea, Japan and India have also announced plans to shift to EVs in coming years. India for instance, plans to have 30% of its passenger car sales to be electric by 2030. South Korea and Japan are also aiming to be among the world’s top 5 EV producers by 2030. China is also investing significantly in the production of both electric passenger as well as commercial vehicles, with plans for export. OEMs such as BYD plan to open plants in other parts of the world to manufacture electric buses and electric trucks to meet regional demand. The country supports EV usage by offering a subsidy for buying EVs. The country is also encouraging manufacturers to develop better EV technology. Various EV charging stations are set up across the country due to the subsidy for setting up EV infrastructure. The country has promoted the development and use of EV buses and trucks. In 2020, a low-cost EV passenger car, Wulin Hongguang Mini EV, was developed in China, costing less than USD 5,000. The vehicle sold majorly in the domestic market, but its gross sales were the second highest of the total EV sales in 2022. The demand of Mini-EVs has been growing in the country, with more choices available with other leading Chinese manufacturers entering the mini-EV space. Luxury EVs have also increased in demand in the country, with major domestic OEMs in China have grabbed the electric vehicle market share. According to various official estimates, the market share is expected to be around 35% of the total vehicle market in 2023.

Key Market Players

The electric vehicle market is dominated by BYD (China), Tesla (US), Volkswagen AG (Germany), SAIC Motors (China), and Stellantis (Netherlands), among others. These companies have worked with other players in the EV ecosystem and developed best in class EV technology.

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Scope of the Report

This research report categorizes the electric vehicle market based on Components, Vehicle Type, Vehicle Class, Top Speed, Vehicle Drive Type, EV Charging Point Type, Vehicle Connectivity, End Use, Propulsion and Region.

Based on Components:

• Battery Cells & Packs
• On-Board Charge
• Motor
• Reducer
• Fuel Stack
• Power Control Unit
• Battery Management System
• Fuel Processor
• Power Conditioner
• Air Compressor
• Humidifier

Based on Vehicle Type:

• Passenger Cars
• Commercial Vehicles

Based on Vehicle Class:

• Low-priced
• Mid-priced
• Luxury

Based on Top Speed:

• <125 MPH
• >125 MPH

Based on Vehicle Drive Type:

• Front Wheel Drive
• Rear Wheel Drive
• All Wheel Drive

Based on EV Charging Point Type:

• Normal Charging
• Super Charging

Based on Vehicle Connectivity:

• V2B or V2H
• V2G
• V2V
• V2X

Based on Propulsion:

• BEV
• PHEV
• FCEV

Based on End Use:

• Private
• Commercial Fleets

Based on the region:

• Asia Pacific
  • China
  • India
  • Japan
  • South Korea
  • Thailand
  • Indonesia
  • Malaysia
  • Vietnam
• North America
  • US
  • Canada
• Europe
  • France
  • Germany
  • UK
  • Netherlands
  • Switzerland
  • Austria
  • Norway
  • Spain
  • Denmark
  • Sweden

Recent Developments

• In June 2023,  PowerCo,  a subsidiary of Volkswagen Group,  has partnered with Koenig & Bauer to develop a revolutionary technology for battery cell production. The collaboration aims to create a roller press for powder coating electrodes on a large industrial scale,  eliminating the need for wet-coating and subsequent drying processes. This Dry Coating procedure significantly reduces energy consumption and eliminates the use of chemical solvents. PowerCo is currently testing and optimizing the technology in a pilot line in Northern Germany. The new procedure has the potential to save approximately 30% of energy and 15% of floor space,  and the use of chemical solvents.
• In June 2023,  Stellantis and Foxconn have announced the establishment of a joint venture called SiliconAuto. The 50/50 partnership aims to design and sell advanced semiconductors for the automotive industry,  including Stellantis,  starting in 2026. By combining Foxconn's expertise in the ICT industry with Stellantis' deep understanding of global mobility needs,  SiliconAuto will provide a dedicated source of semiconductors for computer-controlled features and modules
• In May 2023,  BYD and Toyota have formed a strategic partnership to collaborate on the production and sale of electric vehicles (EVs). Toyota aims to leverage the expertise of the well-established local company,  BYD,  and benefit from their advanced battery technology in this joint venture.
• In April 2023,  Tesla has announced its plan to potentially partner with CATL,  a prominent battery manufacturer in China,  to establish a US-based factory to comply with the Inflation Reduction Act set forth by the Biden administration. The specific location of the factory is yet to be confirmed,  but Texas or California are strong contenders due to their proximity to Tesla's assembly lines.
• In April 2023,  Volkswagen has announced a partnership with Shell Germany to expand the charging infrastructure for electric mobility. The collaboration has resulted in the installation of the first 150 kW Elli Flexpole charging station at a Shell service station in Göttingen on May 4,  2023. This innovative charging station,  developed by Volkswagen's brand Elli,  features a unique battery storage system that allows it to connect to a low-voltage grid. This technology enables easy and flexible installation of charging stations while accelerating grid expansion. Following a successful test operation
• In January 2023,  BMW Group and Solid Power have entered into a partnership for the next phase of their joint research and development efforts towards the adoption of solid-state batteries (ASSB) in series production vehicles. As part of an expanded Joint Development Agreement,  BMW will establish an ASSB prototype line at its Cell Manufacturing Competence Center (CMCC) in Munich. This collaboration aims to enhance the design and manufacturing capabilities of all-solid-state batteries,  with both companies conducting complementary cell development and manufacturing activities.

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