The global electric vehicle (EV) market continues to rise despite facing significant challenges. According to BloombergNEF forecasts, electric car sales are expected to reach around 17 million in 2024, including battery electric vehicles (BEVs) and plug-in hybrids (PHEVs), with projections climbing to about 30 million by 2027.
In emerging economies with substantial automotive sectors, electric vehicle adoption remains relatively nascent but shows promising growth potential. In emerging economies with large car markets, electric vehicle shares are still relatively low, but several factors point to further growth. Policy measures such as purchase subsidies and incentives for electric vehicle and battery manufacturing are playing a key role. For instance, India’s Production Linked Incentives (PLI) Scheme supports domestic manufacturing, while Mexico’s EV supply chains are rapidly developing due to subsidies from the US Inflation Reduction Act (IRA). Additionally, stringent EU policy on banning petrol and diesel cars is also propelling market demand in the region.
4 Key Market Trends to Watch
Advances in Battery Technology Driving Affordability
Lithium-iron phosphate (LFP) batteries, known for their cost-effectiveness compared to lithium-nickel-manganese-cobalt oxide counterparts, saw their global EV sales share by capacity exceed 40% in 2023, more than doubling from 2020 levels, based on the research of International Energy Agency (IEA).
The decreasing affordability of electric vehicles owes much to advancements in battery technology. The adoption of LFP batteries, which are cheaper to produce, has substantially lowered EV costs. Innovations in LFP technology, including rapid charging capabilities and enhanced performance, are driving its market share growth, where they have contributed to significant reductions in battery prices. For instance, LFP cell prices in China averaged $53/kWh from January to April 2024, marking a 44% year-on-year decline. This intense competition in the battery market is likely to persist, particularly if raw material costs remain stable.
By the end of 2025, global lithium-ion battery manufacturing capacity is expected to exceed expected global demand by more than five times. In addition to the rapid growth of LFP, future attention must still be paid to the overcapacity issue.
Lithium iron phosphate (LFP) battery cell prices
Secondhand EV Market Accelerates Mass Adoption
The expanding secondhand electric vehicle market offers a more affordable option for consumers seeking cost-effective entry into electric mobility. IEA conducts statistics on this potential market. In 2023, the market for used electric cars was sizable: approximately 800,000 in China, 400,000 in the United States, and over 450,000 across France, Germany, Italy, Spain, the Netherlands, and the United Kingdom. In China, where used EV sales grew by over 40% in 2023, constituting 4% of all used car sales, the average price was around $11,000, significantly lower than new models. In Europe, about 90% of low and middle-income earners choose secondhand cars, and in the US, 70% of lower-income households follow suit, highlighting the potential for secondhand EVs to drive adoption among these demographics. However, realizing this potential hinges on overcoming challenges such as enhancing EV servicing capabilities, developing battery recycling infrastructure, and expanding public charging networks in emerging economies. As the secondhand EV market evolves, prices are rapidly decreasing, enhancing competitiveness against traditional combustion engine vehicles. Future growth is expected in the international trade of used electric cars, expanding beyond established markets like China to include emerging economies worldwide.
Plug-in hybrids (PHEVs) are experiencing a resurgence
Future Market Insights projects significant growth, foreseeing the plug-in hybrid electric vehicle market reaching a market value of US$ 186,450 million by 2034. This segment is poised for a robust compound annual growth rate (CAGR) of 17.9% through 2034. The increasing adoption of PHEVs is anticipated to continue due to their cost-effectiveness and flexibility, particularly appealing to traditional automakers striving to meet stringent emissions regulations.
The latest generation of plug-in hybrids offers substantially extended ranges, including range extender configurations, contributing to a rising global average. In 2023, the average electric range of PHEVs increased to 80 km and is expected to surpass 100 km soon. BloombergNEF estimates that by the end of this year, approximately one in 25 cars worldwide will either be battery electric or plug-in hybrid. Moreover, projections suggest that by 2027, around a third of all car sales will include a plug-in option, up from about 20% this year.
Difference in annual vehicle kilometers traveled compared to ICE vehicles by drivetrain and market
Scaling Public Charging to Support Rapid EV Growth
By far, around 65% of electric vehicle (EV) charging takes place at home or at the workplace. While residential and workplace charging remain predominant, there is a critical need for a robust public charging infrastructure to facilitate the widespread adoption of EVs. This is especially crucial for accommodating large vehicles and long-distance travel. Projections indicate that by 2035, public charging capacity will need to increase sixfold to meet future market demands.
In 2023, the global number of installed public charging stations experienced a significant increase of 40%, with fast chargers outpacing the growth of slow chargers. Despite slow chargers comprising about 97% of installations, they only fulfill roughly 50% to 55% of total charging requirements. In contrast, fast chargers, which range from 50 kilowatts to 1 megawatt, represent only 3% to 5% of installations but manage around 40% of the charging demand. This highlights the growing importance of fast chargers, which will be a key focus for future development in the industry.
The evolution of battery technology, expansion of the secondhand EV market, the resurgence of PHEVs, and scaling of public charging infrastructure will play pivotal roles in shaping the future of electric mobility worldwide.
