Electric Vehicle Market Size, Share & Trends Analysis Report By Product (Battery Electric Vehicles (BEV), Plug-in Hybrid Electric Vehicles (PHEV), Fuel Cell Electric Vehicle), By Vehicle Type (Two-Wheelers, Passenger Cars, Commercial Vehicles), By Vehicle Class (Mid-Priced, Luxury), By Top Speed (Less Than 100 MPH, 100 to 125 MPH, More Than 125 MPH), By Vehicle Drive Type (Front Wheel Drive, Rear Wheel Drive, All Wheel Drive) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2024-2032

Market Overview

The global electric vehicle market revenue was valued at USD 246.98 billion in 2023 and is estimated to reach an expected value of USD 3,237.91 billion by 2032 at a CAGR of 33.1% during the forecast period (2023–2032). Asia Pacific held the biggest market share and is projected to increase at a CAGR of 30% during the projection period. Rising crude oil prices, the benefits of electric vehicles over conventional vehicles, customer price sensitivity and range anxiety, and the maturity of battery technology.

The primary cause of the rise in air pollution is the use of fossil fuel-powered automobiles. Many governments have been forced by this reason to impose stringent pollution laws and regulations on automakers in an effort to lower the emissions from vehicles. Being fuel-free vehicles that don't use fossil fuels like gasoline or diesel, the demand for BEVs has skyrocketed in recent years. A major benefit of electric cars (EVs) over fossil fuel-powered vehicles is their relatively low total maintenance costs.

An electric motor powers an electric vehicle (EV) instead of an internal combustion engine, which produces power by burning a mixture of fuel and gases. Therefore, to solve issues such as increased pollution, global warming, the depletion of natural resources, etc., such a vehicle is considered a potential substitute for current-generation automobiles. Initiatives implemented by governments of various nations to encourage the production and acceptance of electric vehicles are driving the industry (EVs). Customers are being encouraged to embrace electric vehicles by growing knowledge of the environmental dangers posed by emissions from combustion-engine automobiles.

Market Dynamics

Market Drivers

Rising Crude Oil Prices

Petrol and diesel are the most commonly used fuel sources for internal combustion engine vehicles. Although internal combustion engines have a lower purchase price, the overall cost of owning the vehicles includes the fuel costs incurred over the vehicle's lifespan. Thus, the rise in fuel prices ultimately adds up to the vehicle's cost of ownership. Crude oil prices had risen from 36.95 USD per barrel in January 2016 to 61.85 USD per barrel in December 2019. The continuous usage of these fuels on a large scale also leads to the depletion of their reserves. Thus, one of the reasons contributing to the rising prices is the decision to discourage its usage among consumers. The increasing fuel prices contribute to adopting electric vehicles as a substitute for petrol and diesel vehicles. Lithium-ion batteries, which provide a hybrid charging facility, power electric automobiles. These automobiles are pollution-free and environmentally friendly. When in operation, they don't release any dangerous greenhouse gases. These vehicles' operating costs are lower than those of other petrol and diesel automobiles since electricity is significantly cheaper than the cost of fossil fuels. Owing to all the abovementioned factors, rising crude oil prices are expected to drive electric vehicle demand.

Advantages of Electric Vehicles over Conventional Vehicles

Electric vehicles generate power using an electric motor compared to the internal combustion engine, which burns a mix of fuel & gases for power generation. Rising carbon footprints and other environmental impacts of internal combustion vehicles have resulted in the increasing popularity of electric vehicles and a paradigm shift in customers. The shift from conventional vehicles to electric vehicles can be attributed to the following benefits provided by electric vehicles:

• Zero Fuel Emissions: Unlike conventional vehicles with an exhaust system, electric vehicles operate on a closed circuit. As a result, electric vehicles do not emit any greenhouse gases associated with global warming. Zero fuel emissions are a significant reason to promote users who intend to decrease their impact on the environment by opting for electric vehicles.
• Total Ownership Cost: Electric vehicles help significantly reduce the costs associated with the ownership of a vehicle. As compared to conventional vehicles, electric vehicles require lower spending on insurance & financing, fuel costs, maintenance & repairs, and state fees, among others.
• Performance: In terms of the overall operation of a vehicle, electric vehicles have significantly lower engine noise than conventional engine vehicles. Additionally, the wear & tear of the electric vehicle also fare better than their conventional counterparts.

The growing preference for electric vehicles is prompting the leading automotive manufacturers to launch electric vehicles. For instance, Maruti Suzuki, a leader in the conventional vehicle market, has announced its plan to launch electric vehicles for personal use in the following years for the Indian market. The market's lucrative nature is expected to attract more conventional vehicle manufacturers to shift into the electric vehicle space.

Market Restraint

Price Sensitivity and Range Anxiety Amongst Customers

Although an electric vehicle's total overall ownership cost is lower than conventional vehicles, an electric vehicle's initial purchase price is considerably higher than combustion vehicles. According to an article published by Natural Resources Defense Council, the average purchase price of an electric vehicle is USD 19,000 more than a gasoline vehicle. Due to such a high disparity in the vehicle's initial purchase price, price-sensitive customers find it challenging to choose an electric vehicle while making a purchase decision. With increasing awareness and understanding of the overall benefits and low ownership cost of an EV, this scenario is expected to change over the coming years. Moreover, as the battery technology matures and production volume increases, the difference in purchase prices of the vehicles is expected to nullify in the next few years.

In addition to the high purchase price, another prominent factor affecting the electric vehicle market growth is range anxiety among customers. Range anxiety is the worry that an electric vehicle won't have ample charge to complete its duty. Range anxiety stems from earlier EV models' significantly lower battery backup and would not last for more than 70 miles on a single charge. As a result, customers fear that if the battery backup is exhausted in the middle of a journey, with no proper charging infrastructure developed in most countries, it may result in a bad experience. However, electric vehicles have come a long way since their inception. Manufacturers have made tremendous progress in developing new-age lithium-ion batteries that can propel a light-duty EV for almost 300 miles on a single charge. For instance, Tesla Model 3 has an estimated range of 310 miles on a single charge. Similarly, Jaguar I-pace has a range of 292 miles. Other manufacturers such as Kia, Hyundai, Mercedes, Nissan, and Audi also have vehicles that have a range of more than 200 miles. Thus, price sensitivity and range anxiety are the challenges faced by the market owing to the perception that has been established in customers' minds. With awareness advertisements and other modes of educating customers, the market is expected to overcome these challenges in the near future.

Market Opportunities

Battery Technology's Maturity

Battery pack accounts for most shares, accounting for almost a third of the overall price of an electric vehicle. Thus, the high purchase price of an EV, which is a significant challenge to market growth, is primarily attributed to battery packs' high prices. Although the electric vehicle battery costs have reduced significantly over the last ten years, it has a long way to go to match its internal combustion engine counterparts. Companies are investing heavily in research & development to come up with technologies that reduce battery prices. In September 2020, Elon Musk, CEO of Tesla, Inc., suggested that technological innovations and a shift to in-house manufacturing are crucial to reducing electric vehicle prices by almost half.

Statistics and expert opinions suggest that reducing battery costs significantly addresses EVs' price concerns. The battery prices are high due to the use of expensive metals such as cobalt, manganese, lithium, and nickel. One of the techniques adopted by manufacturers to reduce costs is to replace high-cost cobalt with nickel. In addition to being cheaper, nickel also holds more energy than cobalt. Panasonic Corporation has announced its plans to commercialize cobalt-free high-energy batteries in the coming years. Other means manufacturers adopt to reduce battery prices are producing low-energy batteries and simplifying the battery designs. According to a research paper published by the international council on clean transportation, battery pack prices in the U.S. are expected to drop from USD 11,500 in 2018 to USD 8,000 in 2025.

Apart from reducing costs, another factor contributing to the battery technology's maturity is the capacity of the batteries used in EVs. High capacity battery improves the range of vehicles that addresses the concerns of range anxiety among customers. The statistics reported by the International Energy Agency state that, according to the Stated Policies Scenario, battery capacities are expected to rise from 170 GWh per year today to 1.5 TWh per year by 2030. Thus, the market is expected to record substantial growth as battery technology matures over the forecast period.

Regional Analysis

By region, the global electric vehicle market is segmented into North America, Europe, Asia Pacific, Latin America, the Middle East & Africa.

Asia Pacific's electric vehicle market share is estimated to grow at a CAGR of 30% during the forecast period. The Asia Pacific is anticipated to rank among the revenue-producing areas. This increase results from China, Japan, and India's rising demand for electric vehicles. Approximately 45.0% of all-electric vehicles on the road in 2018 were in China, up from 39.0% in 2017. Additionally, several businesses are concentrating on producing electric automobiles in China. For instance, the Volkswagen Group intends to produce 22 million electric vehicles (EVs) by 2026, half of which will be produced in China. Similarly, Tesla, Inc. intends to produce approximately 150,000 3s Model vehicles in Shanghai, China. Additionally, the Indian government promised tax breaks for electric cars in 2019. The government intends to deduct interest paid or loans taken to purchase electric vehicles from income tax.

Europe is the second largest region. It is estimated to reach an expected value of USD 400 billion by 2030 at a CAGR of 32.2%. The synchronized advances in the implementation of stringent immigration laws by the European Union and the addition of attention to reducing the number of conventional buses are primarily responsible for the uptick in the growth of the electric vehicle market in the European region. Norway is paving the way for Europe to abandon electric mobility.

North America is the third largest region. The growth in North America is linked to the U.S.'s rising desire for electric automobiles. A new non-profit group called "Veloz" has also been established by charging network firms, non-profit organizations, legislators, and automobile manufacturers. This new company wants to increase the use of electric vehicles in North America through marketing, innovation, and investment. In addition, Electrify America, a business established to encourage EV adoption, declared in 2018 that it would invest USD 200.0 million in California. Thus, throughout the projection period, there will be an increase in demand for electric vehicles in North America.

Segmental Analysis

The global electric vehicle market is segmented by product.

By product, the global electric vehicle market is segmented into Battery Electric Vehicles (BEV) and Plug-in Hybrid Electric Vehicles (PHEV). The Battery Electric Vehicles (BEV) segment accounted for the largest market share and is estimated to grow at a CAGR of 30% during the forecast period. Battery Electric Vehicles need to be plugged into a power source to charge, and depending on the vehicle, they have varying charging times and driving ranges. BEV has no internal combustion engine or fuel tank at all and runs on a fully electric drivetrain powered by rechargeable batteries. The dominance of this segment is attributed to the increasing environmental awareness and benefits of BEV among people.

The Plug-in Hybrid Electric Vehicles (PHEV) segment is the second largest. Plug-in Hybrid Vehicles (PHEV) is a hybrid electric vehicle that uses rechargeable batteries or another energy storage device that can be recharged by plugging it into an external electric power source. These vehicles also consist of internal combustion engines, which run on commercial fossil fuels such as petrol or diesel. The government-led efforts to encourage the use of electric vehicles in developing nations like India and China are to blame for the increase. Additionally, organizations like the Volkswagen Group are concentrating on boosting sales of plug-in electric vehicles. The business announced in January 2020 that plug-in electric car sales had increased roughly 60.0% from the previous year. Such changes fuel the segment's expansion.

Impact of covid-19

The automotive industry is critical to the economy's growth. However, during the second and third quarters of 2020, the COVID-19 outbreak impacted the whole automotive supply chain, affecting new car sales in FY 2020.

South America is most affected by COVID-19, with Brazil leading the way, followed by Ecuador, Chile, Peru, and Argentina. South America's government (SAM) has taken a number of steps to protect its citizens and stem the spread of COVID-19. South America is expected to have fewer export revenues as commodity prices fall and export volumes fall, particularly to China, Europe, and the United States, which are all significant trading partners. The manufacturing industry, especially automotive manufacturing, has been damaged by containment measures in various South American countries. Due to the pandemic, major automotive manufacturers have also temporarily halted manufacturing in the region as a cost-cutting move. Furthermore, the automobile disc brake industry has been significantly affected in 2020 due to a lack of raw materials and supply chain disruption.

The Automotive Brake System control module of a vehicle is meant to alert the driver with a warning light if the system fails. The module itself is rarely defective; instead, the sensors or the wiring to the sensors are frequently defective. The most typical cause of dysfunction is when the Automotive Brake System is contaminated with particles or metal shavings. There is no signal continuity when sensor wiring is destroyed. Brake fluid becomes contaminated in corrosive situations, and the hydraulic unit fails to function.

Recent Developments

• October 2022 - Ford Motor Company is opening the Ford Atlanta Research and Innovation Center (FARIC) to advance the company's digital transformation in areas such as software-led connected vehicles, artificial intelligence, university research, and more.
• September 2022 - Today, Ford, America's truck leader, introduced the all-new 2023 F-Series Super Duty lineup of pickup trucks and chassis cabs. Redesigned inside and out, every Super Duty is built with unprecedented work capability, ingenious new technology, and a suite of cloud-based services for new productivity levels.
• September 2022 - Ford Motor Company is investing $700 million in new investment and creating 500 additional hourly manufacturing jobs in Kentucky to support new vehicle production. The new investment in Kentucky -- part of the company's Ford+ plan for growth and value-creation – will support an all-new F-Series Super Duty pickup built at Ford's Kentucky Truck plant in Louisville.