Electric Vehicles Will Boom In These 4 Key Markets Amid 'Great Automotive Paradox'
Automakers like Tesla (TSLA), General Motors (GM) and Toyota Motor (TM) could benefit as electric vehicles rack up nearly a third of sales in four key global markets in the coming decades, while the ride-sharing explosion will dampen overall car sales.
XAutoplay: On | OffThat is according to a new report from research and analytics firm IHS Markit, which sees a “great automotive paradox” looming as new mobility services disrupt the automotive landscape in the United States, Europe, China and India. Fewer cars will be owned by individuals even as more people travel via car than ever before, said Daniel Yergin, IHS Markit vice chairman.
“The pace and degree of this dynamic shift will have significant implications for industry, for public transportation systems and for how people get to work and live their lives — and spend their money on transport,” he added.
Mobility-as-a-service providers such as Uber and Lyft are expected to buy more than 10 million cars in the world’s leading auto markets by 2040, up from a mere 300,000 this year, the study found. And they are expected to spearhead the adoption of electric and driverless cars, even as they shift from hiring drivers to owning fleets.
Electric vehicles (EVs) will account for more than 30% of new cars sold by 2040 in those four major markets vs. just 1% last year. The cheaper cost of electricity vs. gasoline, easier maintenance from fewer moving parts, and the expansion of charging stations and fleet networks will drive greater use of electric and autonomous vehicles by ride-sharing companies.
But the tipping point will be the cost of battery packs. That’s expected to hit a price point by the 2030s that makes EVs competitive with traditional gas- or diesel-powered vehicles, the study said.
Tesla’s Model S and Model S, GM’s Chevy Bolt and Volt, Toyota’s Prius Prime and the Nissan Leaf top EV sales in the U.S. in 2017, according to Inside EVs.
Meanwhile, sales of the mass-market Tesla Model 3 have been slow amid production bottlenecks, while investors await the debut of the Tesla semi-truck Thursday.
While the IHS study expects growth of new light-vehicle sales to slow “substantially” in the four key markets through 2040, traditional cars won’t go away.
Cars primarily powered by gasoline and diesel will still account for 62% of new cars in 2040 — though that would be down from 98% last year, according to the report. Sales of these vehicles will be buoyed by demand for hybrids, which still primarily run on internal combustion engines. However, cars fueled by gasoline or diesel alone will account for less than half of new cars sales by 2031.
Against that backdrop, oil’s dominance in transportation will diminish.
“But it will remain a major player,” said Jim Burkhard, an IHS Markit vice president. “Many of its advantages as a fuel, such as its high energy density, will persist.”