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Before the Covid-19 pandemic shook up the automotive industry – along with every other industry – electric vehicles were moving steadily into the spotlight. The combined annual sales of battery electric vehicles and plug-in hybrid vehicles tipped over the 2m vehicle mark for the first time in 2019. The much-anticipated milestone may have become overshadowed by economic uncertainty and change consumer priorities, but there is value in taking stock of the electric vehicle market even now.

Since Deloitte last presented a forecast for EV sales in January 2019, the EV market has made great strides, and not just in terms of sales. Original equipment manufacturers (OEMS) have invested billions to deliver new electrifed models, from R&D to factory redesign. Consumer attitudes have evolved. Government interventions have pushed forward and pulled back. In this context, Deloitte felt a revised forecast based on updated data was necessary.

According to Deloitte, the significant growth of EVs leading up to 2030 will present major opportunities and challenges for traditional OEMs, new-entrant OEMs, captive finance companies and dealerships.

With this in mind, Deloitte has published an up-to-date prediction of the EV market for the next 10 years. The company expects BEVs to account for 81% (25.3m vehicles) of all new EVs sold. By contrast, PHEV sales are expected to reach 5.8m by 2030. A recovery from Covid-19 will see ICE vehicles return to growth, up to 2025 (81.7m), then experience a decline in market penetration thereafter.

Deloitte anticipates a compound annual growth rate of 29% over the next 10 years, with total EV sales growing from 2.5m in 2020 to 11.2m in 2025 – before reaching 31.1m in 2030. As a result, EVs would secure approximately 32% of the total market share for new car sales. By 2030, Deloitte predicts that China will hold 49% of the global EV market, Europe 27% and the US 14%.

Source: Deloitte analysis, IHS Markit, EV-Volumes.com

Jamie Hamilton, head of electric vehicles at Deloitte, identified a key factor in driving EV growth over the next ten years as changing consumer sentiment, as many barriers to adoption gradually dissipate.

He said: “The price premium attached to many electric vehicles restricted some early adopters but, as the cost of EVs have converged with petrol and diesel equivalents, the pool of prospective buyers is set to increase. A wider range of new electric vehicles, combined with a growing second-hand market, means EVs are becoming a more viable option for many.

“However, overcoming consumer concerns around driving range and perceived lack of charging infrastructure will be important factors as more drivers consider the practicalities of switching to electric.”

Additional factors driving growth include a favourable regulatory environment, be it financial incentives or emissions targets, and the development of new EV models that span both affordable and luxury ends of the market. Similarly, as company cars and fleet continue to represent the majority of all new car sales, a shift to EVs at a corporate level will further the global transition to electric.

Lockdown measures in response to the outbreak of COVID-19 saw major disruption to international supply chains and the temporary closure of dealerships.

Hamilton said: “Whilst overall car sales plummeted during this time, EVs have shown resilience in some regions compared to the rest of the market. Consequently, the outbreak of COVID-19 means we have likely seen petrol and diesel vehicles reach their sales peak, albeit relatively unnoticed. With total annual car sales unlikely to return to pre-pandemic levels until 2024, even if sales growth in the petrol and diesel market returns, it is likely to experience a decline in market share thereafter.”

In the UK, a mix of favourable government policies and greater consumer awareness on climate change have been catalysts for EV growth to date, said Deloitte. With ambitions to meet wider net zero emissions by 2050, and a proposed ban on the sale of polluting vehicles brought forward to 2035, the stage is set for further adoption.

Deloitte’s analysis found that 50% of UK consumers would consider an EV as their next vehicle purchase. However, 33% indicate that a lack of charging infrastructure remains the greatest concern when considering the switch to full electric.

Hamilton said: “Continued investment in charging facilities and overcoming consumer concerns around their availability and accessibility could see the UK surpass the 32% global EV market share by 2030, reaching as much as 65% of the domestic market in the same period.”

Source: Deloitte analysis, IHS Markit, EV-Volumes.com