Summary
- EV sales slump last year was a slowdown in acceleration, not a turn away from electric mobility
- Internal combustion engine vehicle sales dropped from 78% to 63% in just 2½ years
- EV market share almost doubled in the same period, reaching 17.4%, with plug-in hybrids accounting for 25.7% of sales
- Policy plays a key role in EV sales, with some markets seeing declines due to lack of incentives
- Decline in EV battery costs will make EV ownership cheaper, with battery replacements becoming cheaper than engine replacements by 2030
Article
Over the past year, there was a slight slowdown in the growth of electric vehicle (EV) sales, but this does not indicate a lack of interest in electric mobility. According to data from AutoMotive, sales of internal combustion engine vehicles have decreased from 78% to 63%, while EVs have increased their market share from 10% to 17.4% over a 2.5 year period. When plug-in hybrids are included, cars with plugs accounted for 25.7% of car sales, showing a significant increase from the previous year.
While there were some declines in certain markets, overall, the trend is positive for EVs. Policy plays a crucial role in influencing EV sales, as seen in Romania and Iceland, where government incentives or lack thereof impacted buyer confidence. In the US, the potential elimination of the EV tax credit by President-Elect Trump could have a negative impact on the EV market, as it is currently the second largest EV market after China.
Interestingly, Tesla has supported the elimination of the federal EV tax credit, despite being the best-selling EV maker in the US. California, as a major influence in the US auto market, is considering introducing a state-based EV tax credit if the federal credit is removed. This move would benefit automakers with smaller market shares, rather than those like Tesla, which already dominate the EV market in the state.
The cost of EVs is expected to continue decreasing, driven by falling battery prices. Battery technology advancements and an oversupply of EV batteries are contributing to this trend. It is predicted that the upfront cost of buying an EV will be comparable to that of a gasoline vehicle by 2026. Additionally, EVs have lower maintenance costs and may even be more cost-effective when considering total cost of ownership.
As battery technology improves, the need for battery replacements in EVs is expected to decrease significantly. While concerns about the longevity of EV batteries exist, data shows that most electric cars won’t need their batteries replaced at all. By 2030, replacing an EV battery may be cheaper than replacing a combustion engine, further lowering the barriers for prospective EV buyers. This shift in cost dynamics is expected to drive increased adoption of EVs in the coming years.
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