Light Duty EVs Primed for Growth Over Next Decade

Global sales of light duty (LD) EVs grew by nearly 1 million vehicles from 2018 to 2019, which represents a sales increase of nearly 25%. Coupled with strong hybrid EV (HEV) sales, this success led to positive growth in the 2019 EV market—albeit with some areas of the market slowing, such as plug-in EV (PEV) sales in North America. Prior to the coronavirus outbreak, the introduction of several new SUV and crossover PEV models in North America in 2020 and additional 48 V mild-hybrid vehicles coming to market in Europe were expected to propel adoption. However, market conditions have changed substantially in the last 2 months. 

Beyond COVID-19, Sales Growth Is Expected

While the global vehicle market is in a period of decline due to the pandemic,  continuous improvements to vehicle technology economics are anticipated to propel sales growth in the future. These improvements include battery innovations and government transportation policies that incentivize adoption of low emission vehicles and low carbon fuels. Growing interest in carbon pricing and increased charging infrastructure investments are expected to also improve PEV economics.

Guidehouse Insight’s report, Light Duty Vehicle Electrification Overview, forecasts that annual EV sales are estimated to account for more than 21% of global LDV sales by 2030. This penetration produces a global EV population of 171 million by 2030. Plug-in EVs (PEVs) are expected to account for more than 80% of EV sales by 2030, up from 45% in 2018. Guidehouse Insights expects China, Europe, and North America to maintain leadership in EV sales growth throughout the forecast period.

How Can Stakeholders Ensure EV Market Adoption Continues?

Each year, the disruptive potential of EVs gains momentum as stakeholders begin to make big investments and commitments to electrification. Policy, infrastructure investments, battery pack cost decline, and increased availability are driving the EV market forward in large automotive markets around the world. From a policy perspective, 2019 saw the potential ramifications of incentive rollbacks with China decreasing the available subsidies for EVs. However, as the market progresses and awareness and availability increase, large LDV markets are expected to see sales increase even after incentives are rolled back.

Utilities are critical in the expansion of charging point access to people without dedicated parking by deploying at workplaces or apartment complexes. This market trend is beginning to take place in North America and is likely to expand to other markets. Utilities are also beginning to explore providing fleet electrification services, although it is mostly centered around medium and heavy duty vehicles at this point. Electric utilities and regulatory entities should begin developing intervention strategies for vehicle-grid integration opportunities to make the business case for charging operators more viable.

Automakers are also taking part in charging infrastructure developments with the rollout of ultra-fast charging networks, namely Electrify America, IONITY, and Porsche requiring dealers to install 350 kW units onsite. The role of these companies is to create the market for their PEVs.