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Global Electric Vehicle Market Growth Has Slowed Significantly

What’s happening? Strong performance in Europe over 2019 and Q1 2020 was not enough to offset global falls in EV sales growth, with declines in China and the US resulting in YoY growth of just 9% in 2019, compared to 65% the previous year, according to McKinsey’s Electric Vehicle Index. Global EV sales reached 2.3 million units in 2019, reflecting an overall decline in light vehicle sales. In Europe, EV sales rose by 44% to 590,000 units in 2019, while Chinese figures were restrained by subsidy cuts, and the US market fell by 12%. EV penetration has now grown to 2.8% globally.

Why does this matter? China started to phase out EV subsidies in 2019 as it moved towards non-monetary incentives to reach a 20% penetration of EVs by 2025. The Covid-19 outbreak then resulted in extensions of the tax exemptions and subsidies until 2022, which could see the market rebound in 2020, while an investment of $1.5bn in 200,000 charging points by the year’s end could incentivise take up further.

EV sales grew in most European countries, meanwhile, led by Germany and the Netherlands, and are likely to increase further, boosted by EU emission standards. Several countries have also included EV support in their Covid-19 recovery packages, such as France and Germany, although the economic fallout will likely hurt uptake.

The US EV market, meanwhile, faces headwinds from government plans to relax fossil fuel regulations as well as from low oil prices. The adoption of California’s Zero Emission Vehicle (ZEV) programme by other states may be crucial to bolster the sector, according to McKinsey. In June, Nevada became the 14th state to adopt California's standards, which mandate carmakers gradually increase the share of ZEVs to 22% by 2025.

McKinsey calls 2019 a tipping point for major markets due to both EV regulation and technology advances. By 2022, 450 EV models will be launched, while battery manufacturing is expected to reach 1,000 GWh by 2025. The supply chain has, meanwhile, begun to localise in both China and central Europe.

Nick Finegold is Founder & CEO of Curation Corp, an emerging and peripheral risks monitoring service.

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