As we enter 2024, we are witnessing the arrival of a new mobility paradigm led by electric and hybrid vehicles. This shift is not merely the result of technological progress but is driven by environmental sustainability, changing consumer expectations, and strengthened government policies and regulations. This article begins with market trends and forecasts, examining where electric and hybrid vehicles currently stand and how they will evolve. It also analyzes why OEM companies consider electric vehicles to be the market of the future.
The article’s outline includes:
- Market Trends and Forecasts
- Environmental Impact
- Policy and Regulatory Changes
- Why OEMs View the Electric, Mobility Market as the Future
- Implications
1. Market Trends and Forecasts for Electric and Hybrid Vehicles
You might have heard reports stating that while electric vehicle (EV) sales are increasing, the growth rate has decelerated. Indeed, internal combustion engine vehicles currently outnumber EV sales, evident from the sales volumes of companies like Volkswagen Group, Mercedes-Benz AG, Ford Group, Hyundai Group, etc. However, the steady rise in EV sales is undeniable.
According to Canalys, the global EV market is expected to reach 17.5 million units, projecting a growth rate of 27.1%. This research highlights China’s leading role in the EV market, outlining the challenges and opportunities faced by automakers.
Furthermore, S&P Global’s 2024 EV forecast emphasizes strategic decisions on capital expenditure in electrification, predicting that battery electric passenger vehicles will hit 13.3 million units globally by 2024, accounting for approximately 16.2% of global passenger car sales.
This article provides a comprehensive overview of the rapidly evolving EV market, driven by technological advancements, shifts in consumer preferences, and supportive government policies, offering a deep understanding of the current state in 2024 and future prospects for the electric and hybrid vehicle market.
2. Environmental Impact
Fundamentally, electric vehicles play a crucial role in mitigating global warming and facilitating the transition to sustainable mobility. According to Carbon Brief, EVs significantly lower emissions over their lifecycle compared to internal combustion engine vehicles across Europe. Notably, in the UK, the lifecycle emissions per kilometer of a Nissan Leaf EV were about three times lower than the average combustion engine vehicle in 2019, expected to improve further as the carbon intensity of power generation decreases.
However, the environmental impact of EVs should not be considered solely based on operational emissions. A study published in Nature Scientific Reports utilizes Life Cycle Assessment (LCA) methods to evaluate the energy demand and emissions arising from the production and use of electric vehicle batteries. This study comprehensively assesses the environmental impacts of various battery types and regional power structures during EV usage.
Furthermore, research published in Environmental Sciences Europe provides a detailed analysis of the technical components and environmental impacts of electric vehicles. It explains how major components like batteries, electric motors, and motor controllers contribute to the environmental impact of EVs. The use of high-energy-density batteries, such as lithium-ion batteries, while promoting the adoption of EVs, also presents significant environmental considerations.
Evaluating the environmental impact of EVs requires a comprehensive consideration of the power source used by EVs, the battery production and recycling process, and the emissions from manufacturing EV components. Through multifaceted analysis, a more accurate understanding of how EVs can contribute to the transition to a sustainable future can be achieved.
3. Policy and Regulatory Changes
Globally, various policies and regulatory changes are being implemented to spur the growth of the EV market. Initially, policy demands for EV adoption were crucial motivators, but now, major automotive manufacturers’ strategic shifts to incorporate EVs as a core part of their product portfolios emphasize market share acquisition and maintaining competitive advantages. These policies manifest in various forms, supporting the adoption and deployment of EVs, including the development of charging infrastructure, significantly impacting the global growth of the EV market.
- Policy trends and corporate strategy shifts: The rapid increase in EV sales has led major automotive manufacturers to adopt EVs as a core part of their product portfolios to maintain a competitive edge. The emergence of new entrants, especially in markets like China, is accelerating the industry’s carbon reduction efforts.
- Policy focus on light and heavy electric vehicles: EV support policies primarily target the electric light-duty vehicle (LDV) sector, where the greatest vehicle availability exists. Interest in policies related to Electric Vehicle Supply Equipment (EVSE) is growing, with charging infrastructure shortage recognized as a major barrier to EV adoption.
- Increase in EV sales due to policy support during the pandemic: In 2020, EV sales broke all records, increasing by over 40% despite the coronavirus pandemic, thanks to existing policy support and pandemic-related economic stimulus measures. In countries like Germany, France, and Italy, incentives for purchasing EVs increased. (https://www.iea.org/reports/global-ev-outlook-2023/policy-developments)
- Global EV Policy Explorer: This resource highlights key policies and measures supporting the deployment of Electric Vehicles (EVs) and Zero Emission Vehicles (ZEVs) by region and country. Policies vary in form, including fuel economy standards, CO2 emission standards, deployment roadmaps, sales or stock targets, etc. (https://www.iea.org/reports/global-ev-outlook-2021/policies-to-promote-electric-vehicle-deployment)
4. Why Do OEMs Consider the Electric, Mobility Market as the Future?
The reason is quite straightforward. Major global automotive manufacturers (OEMs) are banking on the electric and mobility market to earn more money and based on the potential for sustainable value creation. Additionally, relatively smaller companies are moving quickly to capture the market. According to McKinsey’s analysis, the automotive industry’s shift to electrification will cause major changes across the entire supply chain, with essential components for electrification expected to account for more than half of the total market size by 2030. This suggests a significant reduction in the market size for components used in traditional internal combustion engine vehicles. Moreover, the connectivity associated with electric vehicles is transforming vehicles from mere means of transport into information platforms, offering new experiences to drivers and passengers and opening new value creation opportunities for businesses.
Research by Bain & Company indicates that reductions in battery costs and technological optimizations will lower the costs of specific components for Battery Electric Vehicles (BEVs), eventually leading to high-value mass automation production. This means electric vehicles could generate equal or higher profits compared to internal combustion engine vehicles.
Accilium emphasizes that OEMs must reassess their supply strategies and current value chains concerning electric vehicle batteries. EV batteries constitute a significant portion of the total vehicle cost, with cell production becoming a key stage in the value chain.
These analyses clearly demonstrate why the electric and mobility market is considered the future’s core market. Technological advancements, shifts in consumer demand, and investments in electric vehicle production and battery technology suggest this market has significant growth potential. OEMs are investing in new strategies and innovations to secure a competitive edge in this changing market, making the electric and mobility market a key driver of the future.
5. Implications
OEM companies, which previously only sold vehicles, are creating new business models. Beyond mere sales, these companies are becoming creators of new value. This requires addressing various challenges such as consumer perception analysis and acceptance, technology development, and government policies. The new mobility concept provides existing brands with a golden opportunity to showcase their technological prowess, similar to the emergence of the smartphone market, offering meaningful opportunities for completely new companies to lead the market. For companies aiming to be at the forefront of technological innovation, this represents a golden time to enhance brand value and strengthen their market position, while also providing unique opportunities for emerging companies with new ideas and innovative
