The automotive industry is undergoing radical change, and most automakers agree that the next 10 years will see more changes than the previous two decades. The next target date, cited as a turning point by automakers, is 2025, when everything from materials and fuel to costs and the companies that build cars will look dramatically different. In this report, the J.P. Morgan Research Team on the rise of the electric vehicle and what the industry will look like by 2025.
Switching to electric vehicles
Automakers are preparing to phase out cars powered solely by internal combustion engines (ICEs) as governments scramble to tackle fuel emissions. The growth in electric vehicles (EVs) and hybrid electric vehicles (HEVs) is increasing and by 2025 EVs and HEVs are estimated to account for30% of all vehicle sales.This compares to just under 1 million vehicles, or 1% of global auto sales, in 2016 from plug-in electric vehicles (PEVs).1
JP Morgan estimates this will grow to nearly 8.4 million vehicles by 2025, or a 7.7% market share. While this jump is significant, it doesn't compare to the growth expected in HEVs - cars that combine a fuel engine with electric elements. This sector is forecast to grow from just 3% of global market share to more than 25 million vehicles or 23% of global sales over the same period.1This leaves the market share of pure internal combustion engines at around 70% in 2025, with this share falling to around 40% by 2030, mainly in emerging markets.
The EV dictionary
EV:Electric vehicles, including BEV, PHEV, FCEV and HEV
BEV:battery electric vehicle
HEV:hybrid electric vehicle
FCEV:Fuel cell electric vehicle
EIS:combustion engine
NEV:New electric vehicle (BEV & PHEV)
PEV:Plug-in Electric Vehicle (BEV & PHEV)
PHEV:Plug-in Hybrid Electric Vehicle
Click to expand
GLOBAL ELECTRIC VEHICLE FORECAST
In both North America and Europe, hybrids and BEVs will lead the way over the next decade as plug-in hybrids don't prove too popular in either region. In Europe, plug-in electric vehicles (BEVs and PHEVs) will grow from around 2% of total new sales in 2017 to around 9% by 2025, eclipsing almost 1.5 million vehicles by the middle of the next decade. A dramatic shift away from pure ICE vehicles is expected, and by 2025 only plug-in electric vehicles and HEVs are likely to be sold. JP Morgan forecasts plug-in electric vehicle sales in Japan and Korea of 384,000 vehicles over this period, accounting for a 6% market share, while HEVs will account for 1.8 million vehicles, or 27% of total sales. Meanwhile, in the US, tighter fuel-economy regulations are likely to push automakers to expand their EV offerings, but not with the same urgency as in Europe, where CO2 emissions targets and fines are looming. Still, it is estimated that total EV sales – including BEV, PHEV and hybrids – will account for over 38% of total sales in 2025.1
Driving into 2025: The future of electric vehicles
Natasha Kaneva, Head of Metals Research & Strategy, and US Auto Analyst Ryan Brinkman discuss how the rise of EVs will impact the automotive industry.
ESTIMATED LIGHT VEHICLE SALES IN NORTH AMERICA BY POWER TYPE
Source: Estimates by J.P. morgan
CHINA AHEAD
In terms of electric car production and sales, no other nation comes close to China. By 2020, according to data from J.P. Morgan is expected to account for a staggering 59% of global sales before falling slightly to 55% by 2025. The rise of mini EVs with smaller battery packs designed for short-distance driving (around 100-150km) has helped increase the popularity of EVs in China. Mini EV prices start at around 40,000 RMB or 6,250 USD, making them affordable. The research team at J.P. Morgan predicts that the compound annual growth rate (CAGR) of China's new electric vehicle (NEV) (EVs and PHEVs) market will reach 46% by 2020, with 2.5 million units produced that year -- 25% above the target Government of 2 million units. This forecast is based on a few key drivers:
Fast battery cost reduction
charging options
New subsidies
Two credit policies
public transport
Fast battery cost reduction
Prices are falling 15-20% per year as production scale increases and battery suppliers increasingly give away their margins. This puts China on track to produce EV and ICE technology at cost parity (for compact vehicles) by 2020. Revised subsidy rules for 2018 also mean certain models will reach price parity this year after rebates.
charging options
The State Council's target for 2020 is 4.5 million units of charging stations and 12,000 units of charging stations.
New subsidies
China's NEV market subsidies came into effect in June 2018. All existing government subsidies will expire in 2021, which could trigger some "pre-emption" activity ahead of 2020.
Two credit policies
Retrospective dual-credit policies announced in March are pushing manufacturers to have a larger share of NEVs in their production portfolio. This is to meet China's 2020 fuel consumption target of an average of 5 liters of fuel consumption per 100 km.
public transport
China's local government needs 30% of everything
new buses are said to be NEV.
Fast battery cost reduction
Prices are falling 15-20% per year as production scale increases and battery suppliers increasingly give away their margins. This puts China on track to produce EV and ICE technology at cost parity (for compact vehicles) by 2020. Revised subsidy rules for 2018 also mean certain models will reach price parity this year after rebates.
charging options
The State Council's target for 2020 is 4.5 million units of charging stations and 12,000 units of charging stations.
New subsidies
China's NEV market subsidies came into effect in June 2018. All existing government subsidies will expire in 2021, which could trigger some "pre-emption" activity ahead of 2020.
Two credit policies
Retrospective dual-credit policies announced in March are pushing manufacturers to have a larger share of NEVs in their production portfolio. This is to meet China's 2020 fuel consumption target of an average of 5 liters of fuel consumption per 100 km.
public transport
China's local government needs 30% of everything
new buses are said to be NEV.
BATTERIES FOR ELECTRIC VEHICLES
EV battery manufacturing is dominated by a relatively small number of players. Asian manufacturers hold the lion's share of global production, with Panasonic holding a 40% share, followed by LG Chem with an 18% market share. CATL is a leader in investments in China and currently accounts for 23% of the global market share. Battery prices have fallen dramatically this decade from around $1,000/kilowatt hour (kWh) in 2010 to around $210-230/kWh last year. For EVs to be cost competitive with internal combustion engines, battery costs need to drop to around $100/kWh, which J.P. Morgan Research could be achieved by the middle of the next decade or sooner.
Global market share for lithium-ion batteries for passenger vehicles
Select to view data
- 18 % LG-Chem
- 23% CATL
- 40 % Panasonic
- 10 % SSDI
- 7 % Guoxuan Hightech
- 1% other
Source: Estimates by J.P. morgan
“Automakers and battery manufacturers are very sensitive to raw material costs.The raw material cost will increase over time in proportion to the total cost of the battery pack. If overall battery pack prices fell from $209/kWh to $100/kWh but raw material costs remained the same, raw material costs would account for 56% of the price, significantly higher than today's 27%.”
NATASCHA KANEVA,
HEAD OF METALS RESEARCH AND STRATEGY,
JP MORGAN
As the composition of EV batteries changes and the industry expands, the demand and price of certain commodities will be affected. According to forecasts by J.P. Morgan Research says global lithium demand, driven primarily by electric vehicle sales in China, is expected to grow 20% through 2025. Increased demand for nickel in EV batteries is also expected to push up prices, with the battery sector on track to become the second largest consumer of nickel after the stainless steel market by the middle of the next decade. Among base metals, copper ranks second after nickel in terms of demand growth potential. The metal is not only used in an entire electric vehicle, but also in charging connectors or stations and cables. Demand for aluminum will also increase significantly as electric vehicles become more popular and vehicles become lighter.
CHARGE
As EV adoption and use increases, charging infrastructure has to catch up, and China is gaining on that front as well. By 2020, the State Council has set a target of 4 million new charging stations and 12,000 charging stations, which state-owned enterprises like China State Grid are investing heavily to support. In Europe, utilities and oil majors will be the main drivers after Shell and Engie entered the market in 2017 with the acquisition of NewMotion and EVBox, respectively. In the US, California is taking the lead with plans to invest $1 billion in the charging network.
AC stage 1
The slowest and least expensive. Mainly used for domestic overnight charging.
AC stage 2
Capable of charging a small to medium sized car (24kWh battery) in 4 to 6 hours.
DC-Stufe 3
Fast chargers that can typically charge a 24kWh battery pack to 80% in about 30 minutes.
According to Bloomberg New Energy Finance, almost 600,000 public charging points were installed worldwide at the end of last year, 320,000 of them in China. The majority of these are AC Level 1 and 2, with only about 20% of all public charging points offering “fast” chargers.
WHICH MANUFACTURERS TAKE THE LEAD?
In China, Beijing Auto Industry Corporation (BAIC), BYD and ZhiDou are among the major manufacturers. BAIC's EC180 was China's best-selling electric car last year, starting at about $7,750 after subsidies, with a range of about 110 miles and a top speed of 62mph. General Motors recently announced plans to launch 10 highly electrified vehicle models in China from 2021 to 2023, in addition to the 10 already planned for 2016 to 2020.
Headquartered in California, Tesla specializes in premium BEVs, with prices closer to $100,000 for the Model S sedan and Model X SUV. The automaker launched the "mass-market" Model 3 last summer for around $35,000, but production delays have hampered its launch. In Europe, the sporty BMW i8 is one of the most expensive electric vehicles on the market, with prices starting at over $140,000. But the Nissan Leaf and Renault Zoe are proving to be the most popular, with 20.6% and 19.3% of the BEV market, respectively, thanks to their long range (250km to 300km) and low cost.
“The market is flooded with numerous opportunities to own electric vehicles.Interestingly, among the premium manufacturers, BMW is first selling smaller electric vehicles before venturing into selling a large SUV electric range. This is in clear contrast to Audi and Mercedes.”
Jose Asumendi,
Leiter European Automotives,
JP Morgan
1Regional Auto Stock Analysis by J.P. morgan
FAQs
What percentage of vehicles will be electric by 2025? ›
Cars with an electrified engine are tipped to account for just under one-fourth of the global market by 2025. It is estimated that pure battery electric vehicles will account for about 7.4 percent of worldwide car sales.
Will all cars be electric by 2025? ›Does everyone's car have to be electric by 2025? Reviewed by Shannon Martin, Licensed Insurance Agent. The short answer is no. It will not be a requirement to have an electric car by 2025.
What is the projection for EVs in 2025? ›Electric-vehicle sales should top $50 billion in 2025, GM said. The Detroit-based company plans to build 400,000 EVs in North America from 2022 through the first half of 2024. Production capacity will reach 1 million units annually in North America in 2025.
What are the pros and cons of electric vehicles? ›Electric cars are efficient, quiet, and torque-rich. They can also be expensive, tend to be heavy, and are plagued by a limited public charging infrastructure—something we expect will get better in the coming years.
What will happen to cars in 2025? ›By 2025, 25% of cars sold will have electric engines, up from 5% today. But most of those will be hybrids, and 95% of cars will still rely on fossil fuels for at least part of their power. That means automakers will need to make internal combustion engines more efficient to comply with new standards.
Will electric vehicles be the future? ›By 2025, the move from conventional to electric autos is expected to have had a profound impact on the automotive industry, according to experts. It is expected that electric vehicles' proportion of the worldwide market will rise from 3 percent in 2015 to 23 percent in 2025.
What are the benefits of electric cars? ›- No fuel required so you save money on gas. Paying $0.10 per kW is the equivalent of driving on gasoline that costs less than $1 per gallon. ...
- Environmental friendly as they do not emit pollutants. ...
- Lower maintenance due to an efficient electric motor. ...
- Better Performance.
In California, 35 percent of all model year 2026 new cars will need to be zero emission models (battery electric, plug-in hybrid, or fuel cell electric), increasing to 100 percent by 2035.
Why are electric vehicles the future? ›Electric vehicles produce less life cycle emissions than traditional cars. Electricity emissions are lower because creating electricity requires burning less gasoline or diesel. Another reason that electric vehicles are our future is because they are more energy efficient than internal combustion engine cars.
How long will it be before all cars are electric? ›The Advanced Clean Cars II proposal applies a roadmap to California Governor Gavin Newson's 2020 executive order that all new vehicles sold in California must be zero-emissions by 2035.
What is the prediction for electric cars? ›
Revenue in the Electric Vehicles market is projected to reach US$457.60bn in 2023. Revenue is expected to show an annual growth rate (CAGR 2023-2027) of 17.02%, resulting in a projected market volume of US$858.00bn by 2027.
How many EVs are in the US in 2025? ›...
Share this article.
Cars last around 15 years, so it will take us to 2050 before we get rid of most of the gasoline-powered cars.
How cold is too cold for electric cars? ›Edgar Barron with Long Lewis of Alabaster said batteries in electric vehicles don't last as long when outside temperatures drop below 45 degrees. Some EVs can lose up to 35% of their range in freezing conditions.
What states will ban gas cars? ›Among them, Washington, Massachusetts, New York, Oregon and Vermont are expected to adopt California's ban on new gasoline-fueled vehicles.
What will cars be able to do in the future? ›When it comes to future car design, technology is the biggest driver behind new car models. Major trends show that cars of the future will be electric, autonomous, connected and sleek.
Is it worth buying an electric vehicle now? ›There are definitely benefits to buying an EV nowadays, but you might want to wait. There's no question about it: electric vehicles are hot right now. Electric vehicle (EV) registrations were up by 60% during the first three months of 2022, even as overall car registrations were down by 18%.
Are electric cars better for the economy? ›An electric car can save on average $1,000 in fuel each year.2 The cost to fully charge a 60-kilowatt-hour (kWh) EV with more than 230 miles of range at home is less than $8. Plus, energy prices are not as volatile as oil, which makes budgeting for an EV more consistent each year.
Who benefits the most from electric cars? ›- Battery Providers.
- Transport.
- Utility Providers.
- Ecommerce.
- Delivery.
- EV Manufacturers.
Manufacturers design these vehicles with insulated high-voltage lines and safety features that deactivate the electrical system when they detect a collision or short circuit. All-electric vehicles tend to have a lower center of gravity than conventional vehicles, making them more stable and less likely to roll over.
What would happen if everyone drove electric cars? ›
If every American switched over to an electric passenger vehicle, analysts have estimated, the United States could end up using roughly 25 percent more electricity than it does today. To handle that, utilities will likely need to build a lot of new power plants and upgrade their transmission networks.
What is the biggest problem with electric cars? ›You can't drive as far in an electric car
The best electric cars now have ranges of well over 300 miles between charges. But many have a range of just 150 miles or less between charges, which means they are much more suited for use in cities and on short, local journeys, rather than for long-distance travel.
Many challenging obstacles are facing the future of EVs. They can be summed up in six key areas: customer acceptance, charging infrastructure, chip shortages, battery shortages, reliance on rare earth materials (lithium, tin, graphite, nickel, etc.), and the ability to have multiple owners.
How electric cars will change the world? ›From cars to buses to trucks, electric vehicles are transforming how we move goods and ourselves, cleaning up our air and climate — and your voice can help advance the electric wave. Urge your city to invest in electric buses, trucks, and charging infrastructure.
Why are people switching to electric cars? ›Switching from conventional vehicles to electric vehicles reduces carbon emissions and smog-forming air pollution. To maximize these reductions, we must accelerate the adoption of EVs and transition to renewable electricity as quickly as possible.
Will gas cars be phased out? ›California, known for leading the United States in climate regulations, dropped a bombshell last month: By 2035, the state will ban sales of new gasoline powered cars and light trucks. Most new car sales are expected to shift to battery-powered electric vehicles (EVs).
Will there be any gas cars in 2050? ›Unfortunately, despite projections of EVs dominating new car sales very soon, gasoline cars are expected to hold onto their lead, even in 2050.
Will electric cars take over gas cars? ›Today, concerns for the earth, gasoline prices, emissions, and other factors are driving buyers to electric vehicles in increasing numbers. Recent studies indicate that EVs will overtake gas-powered vehicles by 2033 in many countries, and worldwide just a couple of years later.
What year will electric vehicles take over? ›“Between 2025 and 2030, we will have enough (electric) cars around us to understand where the market goes,” Tal said. “People will not be like today, where many people don't know if the electric car is for real.” There's also the concern that electric vehicles will remain out of reach for the average consumer.
What Year Will electric cars take over? ›By 2029, electric vehicles could account for a third of the North American market, and about 26% of vehicles produced worldwide, according to AutoForecast Solutions, a consultancy. Electric vehicle sales likely will not increase in a smooth, ever-ascending curve, said AFS President Joe McCabe.
What year will most cars be electric? ›
Green Data Dash. Just over half of passenger cars sold in the US will be electric vehicles by 2030, according to a report from BloombergNEF, thanks in part to consumer incentives included in the $374 billion in new climate spending enacted by President Joe Biden.
Will all cars be electric in 10 years? ›The rule establishes a year-by-year roadmap so that by 2035 100% of new cars and light trucks sold in California will be zero-emission vehicles, including plug-in hybrid electric vehicles. The regulation realizes and codifies the light-duty vehicle goals set out in Governor Newsom's Executive Order N-79-20.
Are electric cars the next big thing in the US? ›The auto industry's future “is electric, and there's no turning back,” according to President Biden. It's expected that EV sales in the U.S. will grow from around 500,000 vehicles in 2021 to over 4 million in 2030.
Is the US moving to electric cars? ›By 2035, about 45% of new car sales could be electric according to industry analysis IHS Markit. At this rate, about half of the cars on the road would be electric by 2050.
Will gas vehicles be illegal? ›In summary
California will ban sales of new gas-powered cars by 2035, but the conversion to battery-powered vehicles poses numerous unresolved issues. California made it official last week — the state will ban sales of gasoline-powered new cars after 2035. Gov.
Helped by government incentives, Norway became the first country to have the majority of new vehicles sold in 2021 be electric. In January 2022, 88 percent of new vehicles sold in the country were electric, and based upon current trends, they would most likely hit the goal of no new fossil fuel cars being sold by 2025.
Will gas still be available after 2035? ›People can continue driving gas-fueled vehicles and purchasing used ones after 2035. The plan also allows for one-fifth of sales after 2035 to be plug-in hybrids that can run on batteries and gas. But it sets a course for ultimately ending the era of filling up at the local gas station.
Can electric cars run in snow? ›Advantages of Electric Vehicles on Snowy Roads
First of all, EVs come with large and heavy batteries so their weight makes them suitable for winter driving conditions. Heavy vehicles have a better chance of traction on snow or ice. Also, electric engines are gearless so getting up slowly on snow or ice is effortless.
The bigger your battery, the longer you can run the heater. Most EVs sold now have a battery capacity between 50 and 80 kilowatt hours, Stanyer said. “A 50 kWh battery would run heat at 1 kW for nearly 50 hours, assuming the car is using a bit of power for other things like the infotainment screen,” Stanyer said.
Are electric cars OK in snow? ›Many EVs have front wheel drive, which is fine for most winter driving conditions in the northeast when accompanied by winter tires and modern traction control systems. A few EV models have rear wheel drive (RWD) systems, which may be less predictable in winter road conditions.
Why electric cars will never work? ›
The most common reasons drivers avoid EVs include fear the battery will run out of charge before reaching their destination, also known as “range anxiety,” fear of too few charging stations, long charge times, and initial higher upfront vehicle costs.
How long do electric car batteries last? ›“Today, most EV batteries have a life expectancy of 15 to 20 years within the car – and a second life beyond.” It's also worth noting that EV battery technology is still evolving, so as tech develops we expect batteries' lifespan to increase – as well as becoming cheaper, smaller and even lighter.
How long does an electric car battery last? ›Life Expectancy
Generally, electric vehicle batteries last 10-20 years, but some factors may reduce their lifespan. For instance, batteries may degrade faster in hotter climates as heat does not pair well with EVs.
Prior to passage of the Inflation Reduction Act (IRA) in August, projections for EV sales by 2030 2030 came in at 43% of the US market. With the climate-spending measure in place, that estimate was revised upwards to 52%.
What percentage of cars will be electric in the future? ›The projected ramp-up to this goal is 40 percent of sales by 2030 and 80 percent by 2035.
What percentage of cars will be electric by 2050? ›The market share of electric vehicles is growing rapidly: by 2030, one in four new cars sold will be battery-powered. It is projected that this figure will increase to over 80 percent by 2050. Electric vehicles are tipped to account for almost 70 percent of the global car parc by 2050.
What percentage of car sales will be electric by 2030? ›In parallel, the share of EVs in total sales needs to reach around 60% by 2030 to stay the course and reach net zero CO2 in 2050. At the end of 2021, the number of electric cars on the road exceeded 16.5 million.
How long before electric cars take over? ›By 2029, electric vehicles could account for a third of the North American market, and about 26% of vehicles produced worldwide, according to AutoForecast Solutions, a consultancy. Electric vehicle sales likely will not increase in a smooth, ever-ascending curve, said AFS President Joe McCabe.
How long will it take for all cars to become electric? ›The Advanced Clean Cars II proposal applies a roadmap to California Governor Gavin Newson's 2020 executive order that all new vehicles sold in California must be zero-emissions by 2035.
How long before all vehicles are electric? ›New gasoline-powered cars will be banned in California beginning with 2035 models under a new groundbreaking regulation unanimously approved today to force car owners to switch to zero-emission vehicles.
Will gas cars go away? ›
California will ban sales of new gas-powered cars by 2035, but the conversion to battery-powered vehicles poses numerous unresolved issues. California made it official last week — the state will ban sales of gasoline-powered new cars after 2035.
What are the advantages of electric vehicles? ›- No fuel required so you save money on gas. Paying $0.10 per kW is the equivalent of driving on gasoline that costs less than $1 per gallon. ...
- Environmental friendly as they do not emit pollutants. ...
- Lower maintenance due to an efficient electric motor. ...
- Better Performance.
Electric vehicles are gaining popularity and market share. In Q2 2022, EV sales accounted for 5.6% of the total auto market (up from 2.7% in Q2 of 2021). Clean energy and improved performance are driving people to make the switch to electric. Government incentives continue to buttress the future of all things electric.
Do all vehicles have to be electric by 2030? ›The rule establishes a year-by-year roadmap so that by 2035 100% of new cars and light trucks sold in California will be zero-emission vehicles, including plug-in hybrid electric vehicles. The regulation realizes and codifies the light-duty vehicle goals set out in Governor Newsom's Executive Order N-79-20.
Will electric cars get cheaper in 5 years? ›According to Treehugger.com, experts anticipate that EVs and gas-powered cars will cost about the same by 2025. As even more EVs are manufactured, they will become less expensive to produce, with some experts claiming they will be even cheaper than their gas-powered counterparts in just a few years.