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Vehicle electrification is the future of mobility. The dire consequences of climate change have at last forced governments across the world to enact lasting regulations that are having a profound impact on the automotive industry. Automakers have no choice but to adapt and adopt this changing environment, commit new investments, and formulate strategies for electrification. 

Leading this charge are China, Europe and the United States. About 2.1 million Battery Electric Vehicles (BEVs) were sold globally between January and July of this year, which nearly equals the entire volume of 2020, according to data provided by JATO Dynamics and national automotive industry associations. Sales were driven by China’s booming NEV (New Energy Vehicles) market along with strong demand from Europe and the US.  

LMC Automotive forecasts global BEV sales to double from a year ago to around 4.05 million vehicles in 2021. Were it not for the chip crisis, this figure may be higher still, but we believe that most of the impact is on the non-BEV sector.

Analysis from LMC Automotive’s Global Hybrid & EV Bulletin suggest that China’s NEV market is operating at an all-time-high level, bolstered by city level incentives (alongside national ones) such as free parking, cheap and plentiful charging plus grants for switching from ICE (internal combustion engine) to BEV. As a result, small BEVs are once again selling in big numbers, as they did in the subsidy-boosted market of the past. Indeed, the ‘Technical Roadmap 2.0’ has set goals of NEV share of car sales at 20% in 2025, 50% in 2035 with no pure-ICE after then.

BEVs is also the fastest growing technology in Europe. In recent times, Germany has become the powerhouse of European battery electric car demand. Strong incentives that are guaranteed to be in place for at least the next four years plus new products from domestically strong brands are doing the trick.

Importantly, the European Union has proposed that by 2035 all European markets (and we assume the UK as well) will only be able to sell ZEV (Zero Emissions Vehicles) cars, which in this case means 99% BEV. This has convinced several European OEMs to put a far greater focus on BEV in recent strategy announcements, which have been accompanied in many cases by an accelerated roadmap to the point where they are ready to switch completely to BEV sales for those markets that require such a move.

The pace of vehicle electrification in the US remains consistent, but more policy clarity is needed to kickstart mass adoption. For now, hybrid vehicles growth in particular PHEV (Plug-in Hybrid Electric Vehicle) continues to outstrip that of BEV as more models come to market and circumvent the range issues that long-distance US drivers have with BEVs.

In India, the vehicle electrification industry is, of course, still taking root. Both the national government as well as an increasing number of state governments have put policies in place to promote Electric Vehicles. These include the Delhi National Capital Region, as well as the automotive manufacturing hubs of Haryana, Maharashtra and Tamil Nadu. 

In response, homegrown players Tata Motors and Mahindra & Mahindra have announced plans to expand their BEV portfolio. We estimate BEV share of Tata’s Passenger Vehicles at 15% by 2028, while Mahindra’s BEV volume is predicted to be 15-20% of its SUV sales by the same year. 

Hyundai also sees BEVs playing a most important role in its strategy for India. It is considering partnerships with local governments to build charging infrastructure to support BEV adoption. The company announced a huge investment plan in India, to the tune of INR 3,200 crore in the next four years. One third of this budget will be allocated towards BEVs, as the company bets on e‐mobility to strengthen its local operations in this market.

Meanwhile, market leader Maruti-Suzuki is taking a slow approach to BEVs, at least in the short term. This could slow the pace of adoption in the Indian market. 

All these developments especially in the mature global markets beg a fundamental question: How soon are we likely to witness the end of ICE vehicles? 

Our projections for the European markets are aligned with the EU’s proposal to allow sales of only ZEVs by 2035. Our forecast trajectory thus indicates close to 100% ZEV by 2036 in Europe, as we assume a one-year phase-in period for this policy. Amongst these, we expect Norway to be at or very close to 100% BEV by 2028. Netherlands and Sweden should achieve it by 2032 or sooner.

Achieving 100% ZEV sales is likely to take place by circa 2040 onwards for other major global markets while a few others may take another 10+ plus years to get there. 

For its part, India, certainly has a long way to go. Nevertheless, we estimate that close to 70% of Passenger Vehicle sales in India will be hybrids and electric vehicles by 2050, with around 40% of these being BEVs. 

Ammar Master is Senior Manager, Asia Pacific Vehicle Forecasts, LMC Automotive.