Global EV Market forecast to 2024

Introduction

The Modern world as we know today is the culmination of rapid Globalization, Consumerism, Urbanization, Technological advancements, growing Data Science, and the Internet. All of these combined with the progress in Communications and Information & Technology has transformed the world into a one big Global Market Economy, which can be translated to ‘a place where all the economies of the world merge and transactions of goods and services are carried on at the international level’. In the Global market goods and services of one country are traded (purchased or sold) to people, organizations, or even governments of other counties.

Global market culture has led to the integration of niche markets into the global stream, the EV market is an exemplar.

EV or Electric Vehicle runs on electricity unlike its counterpart, which operates on fossil fuels. These run on Electric motor which needs to draw constant electric supply from batteries. There can be one or more than one electric motors used for propulsion.

The most common battery type in modern electric cars are lithium-ion and Lithium polymer battery, because of their high energy density compared to their weight, some other common battery types are Molten Salt (Na-NiCl2), Nickel Metal Hydride (Ni-MH) and Lithium Sulphur (Li-S).

Electric Mobility is expanding at a rapid pace but as of now, it is in its nascent stage of development. The market is expected to grow rapidly and drive reforms in Societies, Cultures, Industries, and Politics worldwide. The market was valued at $162.34 billion in 2019. The People’s Republic of China is the world’s largest electric car market, followed by Europe and the United States.

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Norway is the global leader in terms of electric car market share. In India the industry is in first stage with mere market penetration and mostly is made up of E rickshaws.

The adoption of electric vehicles is majorly motivated by several factors, including strong technological progress in battery technology, cost reductions, purchase incentives, and government policy supports and the presence of monetary and non-monetary government subsidies. The air pollution rising in India coupled with the everyday rising petrol and diesel prices promises a sprouting of a strong EV market. The Indian government has launched favourable policy interface such as FAME I and FAME II and is pushing the adaptation of EVs through embellished incentives for end users. The expanded version of the present scheme FAME India I (Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles (FAME) which was launched on April 1, 2015, with a total outlay of Rs 895 crore, while the FAME II came into effect in 2019. These policies are bound to create an environment for successful EV adoption in India.

Key Players

The world has over 190 EV automakers spread unequally over North America, Asia and Europe; and just one being in Africa. With Asia being the leader , followed by Europe and North America.

The market is dominated globally by established players such as Tesla, BYD, BMW and Nissan. These companies developed new products, adopted expansion strategies, and undertook collaborations, partnerships, and mergers & acquisitions to gain traction in this high-growth electric vehicle market.

Tesla

Tesla, Inc. (formerly Tesla Motors, Inc.), is an American electric vehicle and clean energy company based in Palo Alto, California. Tesla is the world’s largest EV automaker, surpassed China’s BYD; based on cumulative sales as it surpasses China’s BYD even when accounting for the latter’s plug-in hybrid sales. Tesla’ Model 3 is the world’s is the most popular EV in the world. Tesla has a functional or U-form organizational structure. The unitary-form (U-form) structure uses organizational function as the main defining factor. In this company analysis case, grouping based on business function stands as the most significant feature.

Tesla, Inc. uses centralization in its corporate structure. The emphasis of centralization is managerial control on the entire organization through decisions that a central group or team generates. Tesla has been in the business for around 16 years while its first car launched in 2008, Roadster. Tesla’s generic competitive strategy is broad differentiation. The basic generic strategy used by Tesla builds competitive advantage based on the development of products that differentiate the company from other firms in the industry. Market Penetration is its primary intensive growth strategy. While secondary and tertiary being Product Development and Market development respectively to stay ahead of the others and grow sales.

BYD

BYD Auto Co., Ltd. is the automotive subsidiary of the Chinese multinational BYD Co Ltd,[2] which is based in Xi’an, Shaanxi Province.[3] It was founded in January 2003, following BYD Company’s acquisition of Tsinchuan Automobile Company in 2002. Build Your Dreams or BYD is a Chinese Supergiant EV automaker. It is the world’s second largest EV Automaker only after Tesla. The company is highly active in both passenger and commercial EV’s, which does give it an advantage over its competitors. Not much is known about its exact organizational structure but it does follow grouping based on business function, and follows centralized approach with a space to modify for regional markets.

BYD Company Limited has devised what they denominate as a “7 + 4 strategy”, also known as Green Mobility Strategy which is a diversification strategy, which consists of electrifying all transportation currently dependent on fossil fuels. The 7 refers to on-road transportation (urban transit, taxis, private cars, tourism and commuting coaches, garbage trucks, urban goods logistics and urban construction logistics) and the 4 refers to off-road environments (harbor, warehouse, mining and airport). Their primary strategy is Market Penetration and Cost Leadership. BYD sold its first EV in 2008 and has never looked back since then and has been in the business since 2002.

BMW

Bayerische Motoren Werke AG, translated in English as Bavarian Motor Works, commonly referred to as BMW, is a German multinational company which produces luxury vehicles and motorcycles. The company was founded in 1916 as a manufacturer of aircraft engines for World War I and resumed production for World War II. BMW became an automobile manufacturer in 1928. It is the Fifth largest producer in EV segment. It holds about 6% of the total new registrations by brands globally only after Tesla(18%) and BYD(11%). BMW leadership structure and BMW organizational structure is highly complex reflecting the massive size of the business and the global scale of its operations.

BMW AG Supervisory Board sits on the top of the organizational structure. It has under itself various committees specifically looking after certain areas BMW Group organizational structure also integrates the components of project-based structure. BMW has been researching and testing electric cars for over 40 years. The first mass produced modern EV was BMW i3 in 2014 and has been in the market since then. Electrification is one of the central pillars of the BMW Group’s corporate strategy. Company’s focus is on electrifying more and more models to provide a range of options.

Market Segmentation

Market Segmentation of the EV market is done on many fronts, by Type features different types of EV’s while the prominent ones being Battery EV’s, Hybrid cars and Plug-in-Hybrid EV’s. The market can also be segmented upon the basis of the nature of their purpose; Passenger; Commercial and Two Wheelers. Price divides the market into Luxury and Mid-priced segments. And finally, on the basis of region, we have North America; Europe; Asia-Pacific & LAMEA. In the current scenario, the Pure electric vehicles (BEVs) currently make up more than 50% of the global EV market. However, specific markets have very different powertrain preferences, which are influenced by regulatory actions, customer choice, and the availability of specific models.

Reasons for the growth of EV market

EV market is experiencing an increase in popularity owing to the advancement in technology. It is believed that people consider EV’s superior to their counterparts, as theses are today’s vehicles and trendy, and a change in consumer behaviour is expected & marketers believe that the social need to belong to the community will drive consumers to buy EV’s. The superior nature of EV’s is somewhat practically true as EV’s have higher fuel economy and are more economical for the common man.

Increasing Petrol and Diesel prices has spiked the demand for EV’s owing to their fuel-efficient aspect. Also they have a higher performance as they have a conversion rate of energy to power of over 50% from electric grid to wheel base while a fuel run Vehicle generally has a conversion rate of 20%. Another factor for their popularity is the low emission they produce; it is very less as compared to that of fuel engines and thus is eco-friendly. As more and more people are becoming environment conscious and practicing environmental advocacy, this change in attitude has added to the demand of EV’s. Rising Global Temperature and increasing greenhouse gases in the environment as a direct result of pollutants emitted by internal combustion based vehicles has the World Governments to pass out stringent rules and regulation on vehicular emission level.

The U.S, Germany, China, France and Norway have implemented these rules, making it necessary for the automobile manufacturers to use advanced technology curb the emissions in vehicles. Similarly the UK government has ordered to ban the use of all sorts of fossil fuel powered vehicles by 2035 and has instructed the same to the automobile companies to shift to cleaner and greener sources of energy. These rules and along with the schemes, tax cuts and subsidies the government is giving to the consumers to shift to the Electric segment is expanding the demand. Norwegian government is driving the electric vehicles market attractiveness with the measures like access to bus lanes or free parking across the country. Chinese government is also providing support for electric scooter market development by banning conventional scooters from mega cities in order to reduce emissions.

High manufacturing costs of the EV’s compared to the ICE’s; and to add the low availability of the charging infrastructure and serviceability of EV’s are the hindering factors for their growth. But these are low maintenance vehicles and the fact that large scale production hasn’t started yet which implies that economies of scale would lower the costs once the mass production begins; these factor add to the appeasing and growing EV market.

Even with such benefits and hype of the EV’s the question remain why hasn’t the Indian consumers responded to the transition to the EV?