Electric vehicle sales are rapidly increasing in Europe, and an increasing number of governments have established targets for the phase-out of new internal combustion vehicle sales. The rate at which battery electric vehicles can achieve price parity with their internal combustion counterparts is a critical factor in determining the viability of such policies. Further advancements in lithium-ion battery technology will be critical, as will manufacturing strategy. This report depicts the cost development trajectories for battery electric vehicles and internal combustion engine vehicles, as well as the implications for the adoption of electric vehicles in Europe.
Electric vehicle sales are rapidly increasing as a result of favourable policy, technological advancements, urban air quality concerns, and increased consumer awareness. In 2020, over 3 million passenger electric vehicles were sold, a 47% increase over 2019, and the market is expected to grow rapidly again in 2021. The Covid pandemic has roiled global auto markets, with total passenger vehicle sales expected to fall 16% by 2020. Because of additional policy support and a wide range of new models hitting the market, EVs have largely avoided this.
From 2017 to 2019, China accounted for more than half of global EV sales, but that dynamic shifted in 2020 as EV sales in Europe more than doubled. Various policy mechanisms on both the demand and supply sides are being used to support this growth. EV sales in North America are slowing, but the Biden Administration is proposing $174 billion in investments to accelerate the EV market, which, when combined with new fuel economy targets, could help close the gap with China and Europe. The majority of plug-in vehicles sold globally are battery electric vehicles (BEVs), though sales of plug-in hybrids (PHEVs) are increasing rapidly in Europe.
The total number of light-duty EVs on the road worldwide is expected to reach 10 million by the end of 2020, up from 3 million in 2017. Electrification is also spreading to other modes of road transportation, with over 500,000 e-buses in operation. Commercial EV truck sales are still low, but nearly 350,000 are on the road, mostly in China and Europe. The majority of these are in the light commercial segment, though larger vehicles are being electrified. At the end of 2020, there were approximately 190 million electric two-wheelers worldwide, which included electric motorcycles, mopeds, and scooters.