Affordable evs and mass adoption: the industry challenge

The global market for battery electric vehicles has grown enormously in the past years. Both consumers and governments have become more aware of the immediate action needed to fight the climate crisis. As a consequence, OEMs all around the world have adapted their business models, focusing investment toward the development and production of new and enhanced EVs, instead of traditional ICE vehicles. However, EVs are often still more expensive than their ICE counterparts, slowing the adoption of EVs among entry-level consumers. This report analyzes government and industry efforts with current trends and market insights to help manufacturers in the collective effort to drive EV adoption across the globe.

Changed EV incentives since 2021

Thanks to its costly incentive programme, China is the world’s largest market for electric vehicles. Subsidies for all electric vehicles are set to expire at the end of 2022. Earlier in 2022, these were reduced by 30% from 15,840 CNY to 11,088 CNY. Due to the ongoing impact of COVID-19 and wider economic slowdown, however, it seems that subsidies will continue to be available to consumers in 2023.

In the US, the Inflation Reduction Act has significantly altered the incentives landscape. In this new system, buyers are eligible for a tax credit of up to $7,500 for an electric sedan priced under $55,000, or for trucks and SUVs priced under $80,000.

In Europe there has also been a noticeable shift over the course of 2021, with some countries taking steps to decouple the growth in uptake of EVs from the support of incentives.

 

Affordability of EVs

When it comes to the pricing of EVs, there is an opposing trend between Europe and the US on the one hand, and China on the other. Where prices in Europe and the US have continued to rise since 2015, prices in China have steadily declined.

EV prices in Europe, United States & China
Source: Affordable evs and mass adoption: the industry challenge | JATO

 

SUVs vs city cars

The last couple of years have seen a substantial growth in SUVs among consumers in Europe, US and China. In 2021, these vehicles accounted for no less than 37% of the global EV sales. The fact that OEMs are actively targeting the segment in their electrification efforts has had a significant impact on pricing.

China’s global ambitions

Producing affordable, entry-level cars has been a driving factor behind China’s success in enabling widespread EV adoption. EVs still have a high cost of development. Realizing this, China’s OEMs prioritized high production volume to ensure profitability. Moreover, many established car manufacturers, like SGMW, BAIC, Changan, GAC, BYD, and Chery, alongside many start-ups, have introduced cars in the smaller segments. As a result, prices have fallen.

Source: Affordable evs and mass adoption: the industry challenge | JATO

 

Battery technology

Driving range has often come up as one of the main reasons for many consumers to hold off on transitioning from an ICE to an EV. Even though there is still some discrepancy between real-world range and the official figures published by manufacturers, there has undoubtedly been significant progress in recent years.

Emerging markets

China, Europe and the US currently dominate the global EV market. This might change, however, as greener, sustainable transport becomes more attractive to consumers and fleets across the globe, more countries begin to ramp up production efforts and sales of EVs in their markets grow.

The future of the industry

Since the internal combustion engine went into mass production in the early 1900s, the global automotive industry has not experienced a more intense period of transformation and innovation. Moving away from traditionally powered engines toward zero-emissions transport has created new opportunities for both established OEMs and emerging players. Moreover, it has brought with it the development of an entirely new ecosystem, requiring a whole range of new services, solutions, and technologies in the near future.

 

Get ‘free of charge’ access to more than 400 valuable EV Market Insights via evmarketsreports.com, the world’s largest e-Mobility Reports and Outlooks database. Enjoy reading!

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