The driving factors behind electric vehicle growth projections
In 10 years, electric vehicle production is projected to account for 10% of light duty vehicle production, up from 4% last year (2019). Additionally, electric vehicles are expected to surpass traditional vehicle market share with 51% of all light duty vehicles sold. In order to understand these growth projections, we looked at what’s driving EV adoption across the globe.
1. EV automakers introduce new electric car models
One of the biggest contributing factors to EV growth projections is the increase in automakers entering in the electric vehicle car market. In the past few years, traditional automakers such as Volkswagen, Ford, BMW, and Nissan have made heavy investments in battery electric vehicles and plug-in hybrids, making electric cars more available alternatives to traditional commercial vehicles.
Both new and existing EV automakers have more than 100 electric vehicle models in the pipeline for the next three to five years. In fact, Bloomberg predicts that there will be over 500 EV models globally by 2025. In addition to developing new models, many automakers have also made heavy investments in EV charging infrastructure across North America to accommodate the influx of new EVs on the roads.
Here are a few of the automakers across the world who are currently manufacturing electric vehicles:
Automakers who manufacture electric vehicles
Tesla, Ford, Chevrolet, Lincoln, Dodge, General Motors, Rivian
BYD, SAIC, Dongfeng, Chana, BAIC
BMW, Volkswagen, Daimler
Nissan, Toyota, Honda, Mitsubishi
Renault, Citroen, Peugeot
2. Falling battery costs make EVs more affordable
The number of EV automakers isn’t the only thing fueling EV market growth. Many traditional automakers have recently entered the market due to falling battery costs. Because EV batteries are the single most expensive component of an electric vehicle, the lower battery prices open up opportunities for more affordable EV models.
Traditionally, high battery prices have prevented or de-incentivized manufacturers of traditional vehicles to dive into EV production. However, lower battery prices have lowered the barrier to entry and made EVs a more profitable business.
From 2010 to 2019, lithium-ion battery pack prices have fallen from $1,100 per kilowatt-hour (kWh) to $156/kWh—an 87% decrease. By 2023, Bloomberg New Energy Finance predicts that prices will fall below $100/kWh, making electric cars an even more attractive option for carmakers and consumers.
3. Government policies and tax incentives lower entry costs
To help lower the costs of electric cars, many governments in countries such as the United States, China, Germany, France, and Japan, have implemented subsidies and financial incentives for consumers and businesses. Some more extreme policies even prohibit the registration of internal combustion engine vehicles, forcing consumers and fleets to switch to EVs.
In the United States, all-electric vehicles and plug-in hybrid electric vehicles purchased in or after 2010 were eligible for a federal tax credit of up to $7,500, depending on the capacity of the vehicle’s battery. But starting January 1, 2020, Congress suspended the incentive program.
Despite losing the federal incentive program, automakers like Tesla and General Motors are optimistic that state incentives will not dampen sales. States like California and Colorado offer electric car tax credit programs, allowing electric vehicle owners to claim tax credits of $5,000 per battery electric vehicle (BEV) and plug-in hybrid vehicle (PHEV). Learn more about tax credit programs in your state here.
4. Increase in charging infrastructure
In recent years, both governments and Original Equipment Manufacturers (OEMs) have invested in the development of charging stations. In fact, since 2010 the U.S. has added more than 55,000 new charging stations. Increasing charger availability will help fuel EV market growth by increasing accessibility and consumer confidence in charging infrastructure.
5. Environmental benefits of zero-emissions vehicles
Due to the sharp rise in greenhouse gases associated with traditional internal combustion engine vehicles, consumers, businesses, and local government fleets are more motivated than ever to switch to zero-or low-emissions vehicles.
With zero CO2 emissions, battery electric cars are better for the environment and can help improve air quality in cities and municipalities. Similarly, hybrid vehicles and plug-in hybrids emit far fewer emissions than traditional vehicles. What is the future of electric vehicle sales?
What is the future of electric vehicle sales?
Annual electric car sales are expected to reach 10 million in 2025. One of the biggest drivers of this projection is price parity between EVs and traditional internal combustion engine vehicles. At the current rate, parity is expected to be reached by the mid-2020s, depending on the region. For example, Europe is expected to reach price parity as soon as 2022.
Looking further ahead, by 2040, Bloomberg expects 57% of all passenger vehicle sales and over 30% of the global passenger vehicle fleet to be electric.
Electric vehicle market challenges
Survey infographic - https://www.samsara.com/fleet/research/electric-vehicle-benefits
Cost of ownership: Although the total cost of ownership for electric vehicles has dramatically decreased over the past decade, the cost of EVs is still prohibitive for many consumers and businesses. Despite tax incentives that can bring the cost down, traditional vehicles still have lower upfront costs, which make them more affordable options in the short-term.
Charging station infrastructure: Charging station infrastructure and access will need to significantly ramp up to accommodate the influx of electric vehicles on the roads in the coming years.
Limited inventory: Until EV automakers ramp up production, inventory remains a challenge for fleets looking to add EVs in the coming months.
Limited miles of range: The limited range of electric vehicles makes them difficult to replace vehicles used for longer distances. With a standard range of about 200 miles per charge, fleets and businesses who travel longer may not be suitable for EVs given charging infrastructure limitations. Despite these challenges, there are many upsides to electrification that your fleet could benefit from.
Why should your fleet care about electric vehicle market growth?
Whether your fleet is looking to lower emissions or reduce costs, the growth of the EV market is good news. As automakers scale up production and offer new models, prices will continue to drop and the adoption of electric vehicles will become a more realistic option for your fleet. Here are some of the biggest benefits of fleet electrification:
Lower operational costs: By eliminating or reducing your fleet’s dependency on fossil fuels, you can drastically reduce fuel costs—often the highest cost for commercial fleets behind driver pay. According to the US Department of Energy, all-electric vehicles and plug-in hybrid electric vehicles have a typical energy cost of $50-80/month, compared to the ICE gasoline cost of $160-200/month. This means you could save up to $200 per month on fueling alone by switching from a gas-powered car to an electric car. A report by Deloitte also predicts that owning an EV will be significantly cheaper than owning a gasoline or diesel vehicle by 2030, saving you upwards of $1,300 per vehicle per year.
Fewer maintenance issues: With fewer moving parts to maintain, electric vehicle owners save thousands of dollars per year on maintenance costs. In fact, electric car owners report spending one third of the cost to maintain their EVs than traditional ICE vehicles.
Environmental benefits: With zero tailpipe emissions, electric cars are better for the environment and can help improve air quality in cities and municipalities.
Vehicle safety: Electric vehicles have been shown to be safer than internal combustion engine vehicles for a few reasons: lithium-ion batteries are less flammable than gasoline, and the vehicles are less likely to roll over in a collision due to their lighter weight. Electric car automakers have begun to strategically place EV batteries further away from the vehicles’ “crumple zones”—or areas that are susceptible to getting smashed in a crash—in order to mitigate risk of fire in the case of a collision.
Organizations and local governments, such as the City of Boston’s public works department, have had success using electric cars to improve citizen services and reduce their environmental impact. With miles of range between 200 and 350 miles, local government fleets and organizations with light-duty vehicles should consider electrification to replace their current vehicles for shorter trips.
As the automotive industry continues to expand their EV offerings and your fleet considers electrification, be sure to have a telematics solution in place to make EV fleet management simple and efficient.
3 reasons to choose Samsara to monitor your electric vehicle fleet
1. Samsara gives you remote visibility into your electric vehicles’ real-time state of charge: With State of Charge Reports, you can view current and historical vehicle state of charge to help inform fleet dispatching and operational decisions. You can also easily monitor charging status to determine if your electric vehicles are plugged in and charging.
2. Samsara helps you stay charged and reduce costs: With the Samsara EV Charge Stations Map Overlay, you can see nearby charging station information including open hours, available charging types, and more so you can find the closest station available and plan routes accordingly. Additionally, with the Charging History report, you can identify when vehicles are charging at peak times and coach your team to charge in off-peak hours to reduce costs.
3. Samsara is one unified platform for all of your vehicles: Whether you have electric vehicles, hybrids, or gasoline powered vehicles, Samsara allows fleet managers to monitor all of their vehicles in one, easy to view dashboard. With features to assess the suitability of electrifying your fleet, Samsara provides our customers with the tools they need to reach their sustainability and cost savings goals.
Learn more about how Samsara can help you build your electrification strategy with our new eBook today.