A wave of electrification in transportation is now underway. In 2023, one in five cars sold globally will be an EV. This is a substantial jump from 2016, which saw only about 1 in 10 electric vehicles being sold. As EVs continue to climb up the sales chart, more countries are likely to adopt them and set targets for their adoption.
EV adoption has been accelerated by policy, especially when backed up by financial incentives or bans on the sale of non-electric cars. Policy pushes were first triggered during World War II to save fuel prioritised for the military, followed by curbs on emissions aimed at local air quality and then to mitigate climate change.
The price of EVs has also come down. The cost of batteries has fallen, while the costs of car production have dropped due to efficiencies in vehicle design and manufacturing. The cost of a range-extended electric SUV has closed to that of an equivalent petrol or diesel model, while the price of small EVs has become competitive with traditional vehicles, particularly after factoring in their purchase subsidy.
However, the overall price of a fully electric car remains high, which is a key barrier to mass market adoption. This is driven by the need to incorporate larger batteries for greater range and the addition of digital technology, equipment and luxury features that are marketed to consumers on top of the base vehicle. This, combined with the high initial investment in charging stations and geopolitical tension, trade and supply chain disruptions has delayed the pace of further cost declines in EVs.
Another issue is the limited availability of charging points, which has been a restraint for EV adoption in several countries. A survey found that the United States has the most charging stations per capita, but that many people are reluctant to buy a new EV due to concerns over where they will be able to charge it. The cost of installing a fast charger is higher than for a gas station, and it can take longer to set up and connect to the grid.
As the EV market becomes more crowded, companies may struggle to find enough revenue to compete and stay profitable. This can lead to industry consolidation, as Electric vehicle trends manufacturers acquire or partner with other companies in order to enhance their technological capabilities. Acquisitions can also help companies scale up their production capabilities to meet consumer demand, and ensure they have access to the resources needed to develop their technology. However, a growing EV industry requires significant capital investment, which can be challenging for smaller or less established companies to finance. This can lead to financial pressures, and some companies may be forced to merge or acquire to secure financing or strategic partnerships. This can lead to volatility in the EV market, as the results of these deals are not always immediately evident.