Automotive: EVs on growth trajectory path; Asia jumps on bandwagon, too

Electric vehicle (EV) growth has jumped by an astronomical 140% in 2021 as automotive makers target 40 million units/year by 2030, with 32% of the global market now covered by commitments to end sales of fossil fuel-powered vehicles, and 20% covered by national policies. Meanwhile, Thailand and Indonesia are poised to be EV hubs in Asia.

Growth spurt based on commitments

Passenger electric vehicle (EV) sales are set to jump over 80% in 2021, to 5.6 million units, against the back of unprecedented industry and government commitments around the world over the last two years, according to the Zero-Emission Vehicles Factbook, a report published by BloombergNEF (BNEF), at the request of the UK COP26 Presidency and in partnership with Bloomberg Philanthropies.

The Factbook documents the progress that has been made towards global net-zero emissions in the road transport sector, and shows that the future is brighter than ever for zero-emission vehicles.

In the first half of 2021, sales of passenger EVs (including battery electric, plug-in hybrid and fuel cell vehicles) were 140% higher than the same period in 2019, reaching 7% of global passenger vehicle sales. This compares with just 2.6% in 2019, the year of the last UN Climate Change Conference.

Fleet growth of vehicles

The total global fleet of passenger electric and fuel cell vehicles now totals nearly 13 million, of which 8.5 million are true zeroemission vehicles (ZEVs), either battery electric or fuel cell (still, fuel cell vehicles account for a fraction of that total). The latter figure is up from just 4.6 million at the time of COP25

Figure 1: Global passenger ZEV fleet

At the same time, by 1H 2021, the global fleet of zeroemission buses has increased by 22% since 2019, and it is expected that 18% of all municipal buses on the road to be zero-emission at the end of 2021.

What is more, the future looks brighter than ever. A review of industry outlooks shows that zero-emission vehicle forecasts have been raised across the board.

BNEF says its own forecast for the global ZEV fleet in 2040 has been raised from 495 million vehicles in its 2019 forecast, to 677 million in its 2021 Electric Vehicle Outlook

The International Energy Agency (IEA) has raised its 2030 battery EV fleet forecast by 7% since 2019, while the Organisation of the Petroleum Exporting Countries (OPEC) has raised its 2040 estimate for the global electric and fuel cell vehicle fleet by 11%.

Factors pushing growth

Underpinning these stronger forecasts are a range of factors, including improving battery technology and costs, faster roll-outs of charging infrastructure, a wider range of vehicle models on offer to customers, and longer range and faster charging speeds available on the newest vehicles. Each of these factors is discussed in detail in the report.

The report was launched in time for Transport Day of COP26, where a coalition of government and global car industry leaders working towards 100% zero-emission new car, van and HGV sales by 2040, will come together, helping to keep 1.5 degrees within reach.

In an Annex to the report, BNEF finds that automotive makers committed to reaching 100% zero-emission vehicle sales by 2035 and now account for 32% of the global market. The Annex finds that similar national targets account for 20% of passenger vehicle sales.

US state-level targets to phase out sales of internal combustion engines now cover a quarter of automotive sales in the country (which currently does not have a national phase-out target). Additionally, the combined national targets, ICE phase-out targets and interim ZEV sales targets of China, India, and the US, reach nearly 41% of the global passenger vehicle market. This is up from just 8% in 2019.

Figure 2: National and region internal combustion engine vehicle phase-out targets

Ambitious targets are increasingly being matched by policies and regulations stimulating market growth for zero-emission vehicles. The European Union’s proposed CO2 emissions standards imply that EVs should account for 25%-32% of sales in the bloc by 2025, and 60%-83% by 2030.

Proposed fuel economy rules in the US imply a 24% market share for EVs by 2026, on the way to a 50% share by 2030 under US President Biden’s executive order.

Elsewhere, China is targeting 20% new energy vehicles by 2025, increasing to 40% by 2030.

Thailand/Indonesia to be EV hubs in Asia

It is not just in China that the momentum is rising. In Southeast Asia, Thailand and Indonesia are positioned to become EV ecosystem hubs, according to Roland Berger’s 10th edition Automotive Disruption Radar (ADR).

The Thai government’s National Electric Vehicle Policy Committee had set the new EV policy in March 2021, which provides clear emphasis on zero-emission vehicles (ZEVs). This announcement is designed to enable 50% of vehicles produced in Thailand to be ZEVs by the end of this decade and 100% by 2035.

Recently, Thai Prime Minister Prayut Chan-o-cha had reiterated this ambitious goal at the 2021 COP26 in Glasgow, Scotland.

The Thai government’s commitment to promoting ZEVs has sparked interest among industry players, with talk on potential investment on EV-related joint-ventures and plant investments.

Most recently, Taiwanese electronics firm Foxconn announced plans to produce up to 200,000 EVs/year in Thailand, in a joint venture with Thai-based gas and petroleum business company PTT Public Company Limited, to start in 2023/4.

Indonesian EV regulations attract industry players

The Indonesian government has announced a national strategy with targets to achieve 2.2 million EVs and 13 million electric bikes on the road by 2030.

The country is slated to benefit from US$1 billion worth of investment following plans by Hyundai Motor and LG Energy Solutions to build a battery cell manufacturing site with 10 GWh capacity in Karawang. The plant is due to open in the first half of 2024 and aims to leverage Indonesia’s significant raw material resources, especially nickel.

In the electric two-wheeler segment, Gojek and Gogoro in cooperation with state-owned oil/gas firm Pertamina will conduct a pilot of four battery swapping and 250 electric scooters in Jakarta, with an eventual scale of up to 5,000 units.

“Keen industry interest and activities are a clear signal that Thailand and Indonesia would be very interesting to watch in their journey towards automotive and transportation electrification and transformation,” said Roland Berger Southeast Asia Partner, Udomkiat Bunworasate.

Sales demand-driven not based on environmental concerns

On the demand side, customers are showing strong interest to purchase EVs. In general, short-distance car trips are the main reason for wanting to buy an EV, and action for the environment comes second. Interestingly, the environment was not a key concern based on the ADR survey results in 2020.

Based on the latest ADR survey, 80% of Thai respondents and 75% of Indonesian respondents indicated interest to purchase a battery electric vehicle as their next car. Thai and Indonesian consumers also scored higher than the global average in listing short-distance car trips and action for the environment as the two top reasons for wanting to buy an EV.

Key concerns in both countries were also in line with global respondents, who were mainly deterred from purchasing an EV due to the higher price tag compared to internal combustion engine (ICE) cars and limited availability of charging facilities.

Roland Berger says its ADR is the only established tool in the market measuring the change in the automotive industry. The platform ranks countries based on 26 indicators to measure the level of innovation, progressive digitalisation, and electrification in the automotive industry.


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