The Electric Car Revolution: Market Forecasts and Technological Advancements
Despite current market challenges, battery electric cars are poised to dominate the automotive industry, with the question being when, not if, they surpass internal combustion engine (ICE) vehicles globally. This report, authored by Mika Takahashi and Dr. James Edmondson of IDTechEx, provides an in-depth analysis of the plug-in hybrid and battery electric car market, offering a granular 20-year forecast from 2025 to 2045. It delves into key technologies, including powertrains (BEV, FCEV, PHEV), battery chemistries (LFP, NMC, NCA), electric motors (PMSM, WRSM, ACIM), and regional markets (USA, EU+UK+EFTA, China, and the rest of the world).
The automotive sector is the largest transport sector globally, with over 90 million vehicles sold in 2023, highlighting the enormous potential of electric vehicles. The industry is also a significant contributor to road transport greenhouse gas emissions, driving a strong push for vehicle decarbonization. Battery electric vehicles (BEVs) are a critical pathway to achieve this, offering zero tailpipe emissions and an established market presence, as evidenced by the over 10 million BEVs sold in 2023. The growth of electric cars is also a key driver in the development of vital components such as lithium-ion batteries, electric motors, power electronics, and the critical materials that power these supply chains.
IDTechEx research examines the rising sales of both BEVs and PHEVs since 2011, although figures for the first half of 2024 are slightly below the same period in 2023. This report contains detailed global market analysis based on sales data and technical insights. It includes breakdowns of top-selling models, average battery capacities, and motor trends. IDTechEx analyzes the 14.4 million plug-in vehicles sold in 2023 to reveal underlying market dynamics.
Key market aspects addressed in the report include:
- The slowdown in growth of the European EV market and its relationship to the economic situation, particularly in Germany.
- The increasing popularity of plug-in hybrid electric vehicles (PHEVs) worldwide, especially in China, now the largest EV market worldwide.
- The rise of electric pickup trucks in the US, and how this sector is mirroring the successes of traditional pickup trucks.
- Upcoming major changes in regulations starting in 2025, particularly within Europe, which signal the decline of the combustion engine.
Regulatory Impacts and Market Shifts
Historically, the electric car market has benefited from customer interest and government financial initiatives. These incentives have greatly helped early adopters; however, EVs have primarily resided in the premium luxury segment, outside of China. The landscape is changing, especially in Europe. Governments are moving away from financial incentives, or the ‘carrot’, and using stricter CO2 regulations, or the ‘stick’. As a result, manufacturers must increasingly sell zero-emission cars to avoid significant penalties.
The EU will implement new regulations in 2025 and impose even stricter rules in 2030, before a complete ICE ban in 2035. There are divisions among manufacturers and countries regarding these rules, with some businesses challenging the regulations, while others are adapting. IDTechEx forecasts that EV sales must improve significantly in the near future to avoid billions of dollars in fines, absent any significant regulatory adjustments. The report estimates the possible fines for major manufacturers in 2025 if they don’t raise their EV market share from 2023 levels, with Volkswagen being particularly exposed. It’s worth noting that, in Europe, supercar manufacturers are working to avoid the ICE ban.
While Europe has strict CO2 policies, the United States has sets of policies from both the Environmental Protection Agency (EPA) and the California Air Resources Board (CARB). These will encourage more electric car sales in the second-largest car market in the world. The report also suggests that China, the biggest automotive market by volume, could achieve the remarkable milestone in 2024 of electric vehicles making up 50% of all new vehicle sales (including both BEVs and PHEVs). This has surpassed government predictions and required changes to the country’s dual-credit program.
Technology Analysis
Electric vehicle technology is principally driven by three key areas: lithium-ion batteries, traction motors, and power electronics. The shift to LFP batteries continues, driven by the lower-cost segment, as well as the Chinese market.
Technology diversification has become a key strategy to reduce the effects of supply chain instability and shortages. EV manufacturers have long sought greater vehicle driving ranges. Many went with types of nickel-manganese-cobalt (NMC) batteries due to their high energy density. However, NMC has shown itself to have sensitive supply networks because of the concentration of nickel, cobalt, and manganese. LFP’s popularity has recently resurged, and its low cost is enabling vehicle manufacturers to enter new segments of the market. Lower-cost models with a smaller driving range present a positive outlook for LFP batteries.
Cathode Market Shares: Since 2019, LFP’s share has increased, while NMC-type batteries have moved to higher nickel contents. The report splits these out by key regions, highlighting the differences in the utilization of cathode materials.
Market Forecasts
This research analyzes the market with granular 20-year forecasts, including:
- Electric car sales by powertrain (BEV, PHEV, FCEV).
- Electric car sales by region (USA, China, Europe, and Rest of World).
- Average battery pack capacities, both historical and forecasted.
- Li-ion cathode forecasts.
- Battery demand forecast for electric cars (GWh).
- Electric car market value (US$).
This in-depth report provides critical market intelligence across the electric car market and includes data up to H1 2024. It includes:
- Global and regional market analysis.
- Global BEV, PHEV, and FCEV sales figures up to the first half of 2024.
- Regional breakdowns for Europe, USA, and China. Sales by market penetration rate and EV sales by manufacturer.
- Reviews of how major OEMs are approaching EV sales.
- Current and future regulations that will affect EV acceptance (such as the EU’s CO2 limits, EPA and CARB rules, and the dual-credit system).
- IDTechEx assessment of how these regulations will likely affect EV sales in 2025 and beyond.
This research also offers granular 20-year forecasts for global car sales by powertrain and discusses technology trends, including:
- Coverage of the significant three elements of EVs: batteries, engines, and power electronics.
- Li-ion battery market by cathode chemistry.
- Outlook for Li-ion batteries, including solid-state batteries.
- Traction motor types, including current market analysis and IDTechEx outlook.
- Power electronics, including the emergence of 800-volt architecture, silicon carbide (SiC), and gallium nitride (GaN).
- Fuel cell electric vehicles (FCEVs), sales performance by region, and IDTechEx market outlook.
Data and market information includes:
- Historical Data: 2011 – 2024
- CAGR: The electric car market will reach US$ 2.83 trillion by 2045. This represents a CAGR of 7.6%.
- Forecast Period: 2025 – 2045
- Forecast Units: Units, US$, and GWh.
- Regions Covered: Worldwide, Europe, North America (USA + Canada), and China
- Segments Covered: Plug-in electric cars. Plug-in hybrid electric vehicles, battery electric vehicles, fuel cell electric vehicles.
Analyst access from IDTechEx: All report purchases include up to 30 minutes of a telephone call to an expert analyst to help you link key findings in the report to business issues you’re addressing.
