According to a new market research report titled “Electric Cars Market by Propulsion Type (BEV, FCEV, PHEV, HEV), Power Output (Less Than 100kW, 100 kW to 250 kW), End Use (Private, Commercial), and Geography — Global Forecast to 2028”, the electric cars market is expected to grow at a CAGR of 37.1% from 2021 to 2028 to reach $1.9 trillion by 2028. By volume, this market is expected to grow at a CAGR of 36.2% from 2021 to 2028 to reach 69.3 million units by 2028.
Electric cars use multiple traction motors powered either by a rechargeable battery pack through an internal combustion engine that charges the vehicle’s battery pack, which in turn runs the traction motor and propels the vehicle. The growth of this market is backed by supportive government policies and regulations, increasing investments by leading automotive OEMs, rising environmental concerns, and decreasing prices of batteries. Moreover, the growing adoption of autonomous driving vehicles provides significant opportunities in this market. However, the lack of charging infrastructure in developing countries obstructs this market’s growth to some extent. Range limitations of electric vehicles, lack of fast-charging infrastructure, and high cost of electric vehicles are major challenges for the growth of the electric cars market.
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The Impact of COVID-19 on the Electric Cars Market
The COVID-19 pandemic has adversely hit many economies around the globe. To control the spread of this disease and avoid the related consequences, governments across the globe have announced partial or complete lockdowns, majorly impacting many manufacturing and service industries, including electric cars.
In 2020, the outbreak of COVID-19 slowed down vehicle sales, including electric cars. The adoption of electric cars in the U.S. plummeted in the first & second quarters of 2020, while a slight growth was witnessed post the second quarter. Consumer behavior has changed significantly since the pandemic. People reduced the use of shared mobility services, and the total miles driven also decreased in 2020 due to remote working arrangements in most industries. The electric cars market in Asia-Pacific was moderately affected. Developing countries witnessed a sharp decline in their economy due to low consumer demands and increased prices for essential commodities, which directly affected the adoption of electric cars in these countries. The high cost of electric cars also remained a restraining factor for the growth of the electric cars market in these countries.
However, the electric cars market is expected to recover quickly due to China’s strong growth. In China, amidst the pandemic situation, the government announced to phase out conventional internal combustion engine vehicles by 2035 and planned numerous strategies to achieve its target. In 2020, the electric cars market in Europe was moderately affected due to the strong policy support was an important target year for emissions standards. The government supported the automotive industry by regulating policies that benefitted both consumers and manufacturers. Incentives and subsidies were notably increased on purchasing an electric car in Germany, the U.K., and Norway. Besides, the prices for batteries continued to reduce, which helped increase the adoption rate of electric cars in the region. The sale of electric cars was doubled in 2020, as compared to the previous year.
Supportive government policies and regulations drive the demand for electric cars.
Governments worldwide are increasingly investing in electric mobility. The increasing government regulations to phase out fossil fuel-powered vehicles, government investments for improving public EV charging infrastructure, and initiatives in the form of subsidies & tax rebates for the adoption of electric cars are expected to support this market growth.
The COVID-19 outbreak has severely impacted the automotive sector, with major manufacturers either totally shutting down operations or operating with reduced capacities following the directives issued by their respective governments. However, governments worldwide are aggressively investing in electric vehicle ecosystems, either through direct subsidies as an incentive for purchasing electric vehicles or by investing in developing charging infrastructure for electric vehicles and driving adoption. For instance, in 2020, the German government extended the environmental subsidies to purchase electric cars until 2025. The subsidies ranged from EUR 3,000 for battery-electric cars and EUR 2,250 for plug-in hybrid electric cars. To boost the electric car demand, the German government also announced that all fuel filling stations have to set up electric car charging stations. The chargers are installed under its economic recovery plan with ~USD 154.9 billion (EUR 130 billion) to help remove the range anxiety of electric cars and boost consumer demand.
Thus, the supportive government policies and regulations drive the adoption of electric cars, thereby accelerating the growth of the global electric cars market.
To provide efficient analysis, Meticulous Research® has segmented this market based on propulsion type (hybrid vehicles, battery electric vehicles, and fuel cell electric vehicles), power output (less than 100 kW, and 100 kW to 250 kW), end use (private use, and commercial use) and geography (North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa).
Based on propulsion type, the electric cars market is segmented into hybrid vehicles, battery electric vehicles, and fuel cell electric vehicles. The hybrid vehicles segment accounted for the largest share of the electric cars market in 2020. The large share of this segment is mainly attributed to increasingly stringent automotive emission regulations across the world, consumer demand for high fuel efficiency vehicles, increasing investments by automotive OEMs for hybridization of vehicle powertrain, and low cost of hybrid vehicles compared to battery electric vehicles. However, the fuel cell electric vehicles segment is expected to witness significant growth, as fuel cell electric vehicles offer several advantages, such as fast refueling and zero tailpipe emissions.
Based on power output, the electric cars market is segmented into less than 100 kW and 100 kW to 250 kW. The less than 100 kW segment accounted for the largest share of the electric cars market in 2020. The large share of this segment is mainly attributed to increasing use of light electric cars in the central business districts of major cities across the world, increasing implementation of electric cars for shared mobility services in the major cities, falling battery prices, and increasing investments by electric vehicles startups in this segment. However, the 100 kW to 250 kW segment is expected to grow at the highest CAGR during the forecast period. The rapid growth of this segment is mainly attributed to the increasing initiatives by leading automotive OEMs to launch more powerful electric cars and increasing regulations to reduce tailpipe emissions.
Based on end use, the electric cars market is segmented into private and commercial use. The private use segment accounted for the largest share of the electric cars market in 2020. The large share of this segment is mainly attributed to the increasing consumer demand for fuel-efficient and zero tailpipe emission vehicles, government incentives to promote sales and manufacturing of electric cars, tax rebates, a decline in battery costs, and increasing fuel prices. However, the commercial use segment is expected to grow at the highest CAGR during the forecast period. The rapid growth of this segment is mainly attributed to the increasing use of electric cars in shared mobility services and corporate taxi fleets.
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Geographically, the Asia-Pacific region accounted for the largest share of the electric cars market in 2020. The large share of this region is primarily attributed to the increasing demand for EVs and associated charging facilities, growing number of start-ups offering numerous solutions and services in the electric mobility industry, attractive incentive programs for electric car buyers, and the presence of regional core competencies of countries such as India, China, Japan, and South Korea in manufacturing and technological developments. China is expected to dominate the Asia-Pacific market through 2027, mainly due to extensive government support for adopting electric mobility and increasing investments by foreign automotive OEMs in the Chinese electric vehicle industry.
The key players operating in the electric cars market are Nio Inc. (China), Alcraft Motor Company Ltd. (U.K.), BMW Group (Germany), BYD Company Ltd. (China), Daimler AG (Germany), Faraday & Future Inc. (U.S.), Ford Motor Company (U.S.), General Motors Company (U.S.), Honda Motor Co., Ltd. (Japan), Hyundai Motor Company (South Korea), Nissan Motor Co., Ltd. (Japan), TATA Motors Limited (India), Tesla, Inc. (U.S.), Volkswagen AG (Germany), and Mahindra and Mahindra Ltd. (India).
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