LONDON--(BUSINESS WIRE)--Technavio market research analysts forecast the global electric vehicle (EV) battery market to grow at a CAGR of close to 42% during the forecast period, according to their latest report.
The market study covers the present scenario and growth prospects of the global EV battery market for 2017-2021. The report also lists hybrid electric vehicle (HEVs), battery electric vehicle (BEVs), and plug-in hybrid electric vehicle (PHEVs) as the three major segments based on vehicle type. In 2016, the global EV battery market by HEVs accounted for 77% of the overall market share.
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Technavio analysts highlight the following three market drivers that are contributing to the growth of the global EV battery market:
- Decline in price of electric vehicle batteries
- Increasing demand for HEVs and EVs
- Government subsidies and incentives driving the sales of electric vehicles
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Decline in price of electric vehicle batteries
The major cost-consuming factor of EVs is the battery. If the cost of EV batteries could be brought down, then the total cost of the vehicle would see a significant decline. This would lead to a shift of the global EV market toward mainstream automotive business. It is estimated that an EV battery can be produced at USD 150/kWh or even less, which would be cost-competitive to gasoline-powered vehicles. The Tesla Model S 90D can cover 270 miles on its 85kWh battery.
According to Raj Gaurav Singh, a lead analyst at Technavio for automotive electronics research, “The cost of EV batteries has dropped significantly since 2010 owing to improvements in the chemistry and the manufacturing process of the battery. Moreover, manufacturers can attain economies of scale as the factories become larger owing to aggressive pricing by major battery makers. It is expected that by 2030, 58% of the total lightweight automotive market would be EVs.”
Increasing demand for HEVs and EVs
The hybrid and EV markets will register growth due to several factors such as the enforcement of stringent emission norms by countries across the globe. Such efforts are being made to minimize the negative effects of global warming and reduce GHG emissions. The 2009 EU norms set CO2 emission level for new passenger cars at 130g/Km. The target is to reach 95g/Km by 2020. These targets can be achieved only by employing hybrid or EVs.
In addition, many countries are providing various incentives and tax benefits to increase the use of green vehicles. Almost all top vehicle market regions have introduced fiscal incentives and subsidies to attract manufacturers to produce more hybrids and EVs locally. This is further encouraged by the rapidly decreasing cost of batteries. The battery market has been witnessing a decline in cost since 2013, owing to the increased production volume.
Government subsidies and incentives driving the sales of electric vehicles
The standards set by regulatory bodies are to benefit customers and reduce the impact of automobiles on the environment. This is a prime reason for the increased market traction of electric, hybrid, and alternative fuel vehicles. Governments of various countries are aiming to reduce their dependency on oil. To achieve this goal, they are marketing and providing benefits to increase the production and sale of EVs.
Currently, the global electric two-wheelers market is well-established. The market share of electric cars is also increasing every year. Electric buses and heavy-duty vehicles are still at the development stage and have a relatively low market share. However, as several countries are tightening their standards, the use of electric buses is expected to increase as they help in reducing emission, maintain fuel economy, and lowering operating cost advantages.
“Government agencies, such as the US Environmental Protection Agency, are focusing on encouraging green public transport solutions by providing subsidies. Investments in the development of infrastructure are expected to increase the use of EVs. This would directly impact the global EV battery market,” says Raj.
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