BY Ravi K

The global electric vehicle market size was valued at USD 388.1 billion in 2023 and is expected to reach USD 951.9 billion by 2030 at a CAGR of 13.7% during the forecast period 2023-2030. 

With advancements in technology, increasing environmental consciousness, and supportive government policies, EVs have gained significant traction as a viable and sustainable transportation option.

As concerns over climate change and air pollution intensify, consumers and industries are increasingly turning to electric vehicles to reduce their carbon footprint and contribute to a greener future. This growing global momentum has propelled the electric vehicle market into a transformative phase, with innovations and investments driving the expansion of EV adoption across the world.

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Driver: Reducing prices of EV batteries will increase demand for EVs by making them cost effective

Due to technological advancements and the production of EV batteries on a mass scale in large volumes, the cost of EV batteries has been decreasing during the past decade. This has led to a decrease in the cost of electric vehicles as EV batteries are one of the most expensive components of an electric vehicle. The prices of EV batteries fell significantly in the last decade, from USD 1,200/kWh in 2010 to USD 160/kWh in 2023 and is expected to decrease in the coming years.

Meanwhile the price is as low as USD 100 per kWh in China. This is because of the reducing manufacturing costs of these batteries, reduced cathode material prices, higher production, etc. The prices of EV batteries are expected to fall to approximately USD 60 per kWh by 2030, which is expected to significantly reduce the prices of EVs, making them cheaper than conventional ICE vehicles. The price of EV batteries is expected to reach around USD 80 per kWh by 2025.

This will bring the price of EVs to the same level as that of ICE vehicles in the market and start a big shift to EVs. From 2025, we can expect EVs to get cheaper than some ICE vehicles. The improvement in battery technology is the main reason for this fall in battery prices. Once Solid-State Batteries enter the electric vehicle market, we can expect another price fall (per kWh) by the end of this decade.

Opportunity: Rising demand for electric vehicles in the automotive and transportation sectors

Increase in the adoption and demand for electric vehicles has accentuated the need to develop charging infrastructure and the electric vehicle market. Leading markets for electric vehicles such as China, US, and Germany are investing significantly in electric vehicles and EV charging infrastructure along with research & development for faster and efficient charging methods, longer range EVs, and lower cost batteries.

Significant investments by automakers are expected to cater to the rising demand for EVs. Countries across North America and Europe along with many Asian countries have adopted measures to reduce emissions during the coming decades and replace their vehicle fleets for lower emissions by varying numbers by 2035.

This is expected to lead to a significantly high demand for electric vehicles. OEMs offer a wide range of vehicles, from small hatchbacks such as Leaf to high-end sedans such as Tesla model 3. The wide range of product offerings has attracted a high number of consumers, resulting in an increased market for electric vehicles.

Commercial vehicles to be the fastest growing market by volume during forecast period

The commercial vehicle segment includes LCVs and HCVs. HCVs combine two categories of vehicles − heavy trucks and buses & coaches. The nature of these vehicles limits their production volumes and growth rates as they are used in specific applications such as logistics, construction, and mining industries. On the other hand, LCVs have come a long way from having bare-essential features to full-blown utility vehicles that can be used for passengers as well as commercial purposes.

Many used LCVs and HCV’s include vans, mini-buses, pickups, trucks etc. Various companies such as Volvo Group, Daimler AG, Traton Group, BYD, Nikola Motor, Tesla, DAF Trucks, etc. already have EV models available or are currently under development. For instance, in May 2022, Stellantis and Toyota Motor partnered to develop a new large-size commercial van, including a battery electric version.

This collaboration completes a full lineup of light commercial vehicles (LCV), consisting of compact, mid-size, and now a large-size LCV. Similarly, ZF's Commercial Vehicle Solutions (CVS) department unveiled 'AxTrax 2' and 'AxTrax 2 dual’ electric central drive system designed for various types of vehicles, ranging from light delivery vans to heavy-duty trucks and trailers. Increasing sales of electric buses, particularly in China, has contributed to the growth of the electric bus segment.

Mid-priced EV segment to be the largest market during the forecast period

A mid-priced vehicle is considered to have a price of USD 30,000 to USD 45,000. This vehicle class has limited features with low emphasis on features such as infotainment, instrument cluster, and other expensive features. China is one of the leading markets for the mid-priced segment. Established automotive manufactures such as Hyundai, General Motors, Honda, and Nissan are also manufacturing mid-priced EVs to acquire higher market shares.

Some other mid-priced EVs include BMW 3 Series PHEV, Zeekr One, Ford Mustang Mach-E, Volvo XC40, Renault Megane EV, Hyundai Ioniq 5, Volkswagen ID 4, Kia Niro EV, etc. In 2022, BYD Song Pro/Plus was the best-selling mid-priced EV in Asia Pacific region, followed by Tesla Model 3 in Europe and North America. The electric vehicle market forecast for the mid-priced segment is the largest in the Asia Pacific and European regions due to the demand for low-emission vehicles at reasonable prices. Various top EV models such as Nissan Leaf, Renault Zoe, Mitsubishi Outlander, Volkswagen Passat, Hyundai Kona, etc.

Asia Pacific to be the largest and the fastest growing market by value during the forecast period

The region is home to some of the fastest-developing economies, such as China and India. The governments of these emerging economies have recognized the growth potential of the electric vehicle market trends and, hence, have taken different initiatives to attract major OEMs to manufacture electric vehicles in domestic markets. The region is home to 93 of the world’s most polluted cities and has a high energy demand.

As of 2022, the transportation sector in the region accounts for around 14% of overall emissions. Thus, countries in the region are planning to reduce emissions in the coming years. China, the e-mobility leader in the region, had set a target of over 20% EV sales by 2025, which it had already achieved in 2022 and is expected to have around 35% in 2023. Similarly, countries such as South Korea, Japan and India have also announced plans to shift to EVs in coming years. India for instance, plans to have 30% of its passenger car sales to be electric by 2030.

South Korea and Japan are also aiming to be among the world’s top 5 EV producers by 2030. China is also investing significantly in the production of both electric passenger as well as commercial vehicles, with plans for export. OEMs such as BYD plan to open plants in other parts of the world to manufacture electric buses and electric trucks to meet regional demand.

Key Market Players

The electric vehicle market is dominated by BYD (China), Tesla (US), Volkswagen AG (Germany), SAIC Motors (China), and Stellantis (Netherlands), among others. These companies have worked with other players in the EV ecosystem and developed best-in-class EV technology.