Surging EV demand - over 7 million EVs on the road by 2021

The development of electric vehicles (EVs) has entered a new phase with the recent announcement by Volkswagen to invest US$ 84 billion in EVs and batteries in order to bring 300 EV models to market by 2030. This declaration far exceeds investment plans by other major car manufacturers such as Daimler which recently earmarked US$ 11 billion for EV investments or Ford’s US$ 4.5 billion investment plan for EV development.  

While EVs began to commercialise in the late 1990s, the recent explosive growth can be clearly linked to China’s determined push to make EVs the technology choice for future mobility. However, several bottlenecks such as battery and charging technology and the lack of charging infrastructure have hampered even faster adoption.

Since early 2010, the penetration EVs began to rapidly increase as there was an increasing number of manufacturers starting to offer EV models and the price of an EV started to decrease. Today a number of different EV models are available in the US$ 30,000 range. Apart from the decrease in the price of EV, the rapid expansion of charging stations and intense government support for EVs also act as key growth drivers in supporting the global EV market.

APAC holds a dominant position in the global EV market

China’s total EV stock expected to increase by almost 1.5 million units over the next four years to 2021.

The total global EV stock recorded an increase at a CAGR of approximately 82.2% from 2012 to 2016. In addition, APAC has held a dominant position in the global EV market, with the increase in the total number of EV stock from 61.1 thousand to 816 thousand during the same period, at a CAGR of approximately 91.2%. Within APAC, China has taken the lead in the overall growth at a CAGR of approximately 148.9% from 2012 to 2016. During the forecast period, the APAC market is expected to remain strong, with the strongest growth rate at a CAGR of approximately 33.2% among the regions.

Positive government policies and regulations are beneficial to the EV market 

China has taken the lead in the overall growth of the number of EV stock, which has been closely related to the government’s favourable policies and subsidies. Since 2007, the Chinese government started creating an EV market development plan directly targeting the development of the battery electric vehicles (BEV) market, which has stimulated the massive growth of the Chinese EV market seen over the past five years. 

In addition, according to the revised policy of ‘Planning for the Development of the Energy-Saving and EV Industry’ in 2017, China’s government will invest US$ 360 Billion by 2020 to be a global leader in the renewable energy industry. Furthermore, on the national, provincial and municipal levels, the Chinese government has implemented a series of subsidies for the purchasing of domestically manufactured electric vehicles. At the same time, the Chinese government is also supporting the expansion of charging stations. For example, in terms of the national EV charging infrastructures, over 180,000 EV charging points have been installed up until the early 2016. Moreover, the Beijing government plans to have 400,000 charging points in metropolitan area by 2020.    

Besides China, many European governments have also made relevant policies on the development of electric vehicles.

Key EV types and technologies

There are four types of EVs with different propulsion devices and energy sources. These four types of EVs are: (1) BEV, (2) plug-in hybrid electric vehicle (PHEV), (3) hybrid electric vehicle (HEV), and (4) Fuel-cell electric vehicles (FCEV).

In the following infographic, we use BEV and PHEV as an example to better illustrate the power system:

EVs receive energy from the power grid, the batteries transfer the electricity, which operates in direct current (DC), to the power inverter to transform the energy to alternative current (AC). The electricity is then fed into the electric motors of the vehicles in order to propel the vehicle. When a vehicle brakes, however, the regenerative braking system within the vehicle transfers the collected kinetic energy from braking back to the battery.

The powertrain system of a BEV is different from a PHEV in terms of the adoption of an internal combustion engine, which utilizes gasoline or diesel to propel the vehicle. Whenever a PHEV brakes, the energy from the internal combustion engine (ICE) is passed through the generator to feed back to the battery. 

Future trends and development of the global EV market

1、Rapid development in EV battery density and capacity

Catering to market demand, battery manufacturers have been continuously developing lithium-ion batteries’ density. Given one of the key barriers to higher EV penetration in the market is anxiety over the lack of charging facilities, the improved driving range will contribute to mitigating the barriers. EV’s driving range can be extended by increasing energy density, which is measured by gravimetric power density, of battery packs. With recent breakthroughs in battery technology from some EV manufacturers, which lead to immense success in the market, it is expected that the EV manufacturers will continue to develop high- density and high capacity batteries.

2、Vertical integration in upstream value chain

To further reduce cost and better advance EV component technology, EV manufacturers are beginning to vertically integrate their value chains.  Many EV manufacturers are establishing subsidiaries or partnerships with component manufacturers, such as power inverter manufacturers, to directly engage in in-house research and development (R&D) and production. The in-house R&D activities allow EV manufacturers to better advance and adopt the technology of components, making them more competitive in the market. Given the success from market players, it is expected that the integration in the value chain will continue in the future.

3、Adoption of semiconductor technology in power module system

In response to the rising demand for size reduction and improved efficiency of power modules, such as power inverters and conductors, power module manufacturers are gradually adopting more advanced semiconductor technology. To improve the modules’ ability to transfer electricity between the battery and the electric motor, power module manufacturers are moving to adopt and to develop advanced semiconductor technology. For instance, some power module manufacturers are now adopting Silicon carbide semiconductors over Silicon semiconductors, causing a 40% size reduction and 10% efficiency improvement. Given the success from these manufacturers, it is expected that development in new materials will continue in the future.

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