SINGAPORE (ICIS)–The global uptake of electric
vehicles (EVs) accelerated last year as sales
rose more than 30%, with the pace of adoption
to be determined by how quickly the main
constraints that affect consumer demand will be
eliminated.
The sales of passenger vehicles with internal
combustion engines (ICEs), meanwhile, declined
by around 21% in 2020, Fitch Ratings said in a
research note on Friday.
The growth in EV sales was supported by
generous purchase subsidies, stricter emissions
controls and rising consumer interest.
Singapore-based research firm Canalys said that
global sales of electric vehicles (EVs)
increased by 39% year on year to 3.1m
units last year.
“Electric vehicles represented almost 5% of all
new car sales in 2020. EVs are forecast to
reach over 7% of new car sales worldwide in
2021, a further 66% growth, to exceed 5m units
sold,” it said in a note.
The coronavirus pandemic has accelerated EV
adoption as stimulus plans include increased EV
subsidies, Fitch Ratings said.
The trend is further supported by the US’s
renewed focus on climate objectives and
Europe’s tightening emissions regulations, it
said.
Consistent policy measures remain prerequisites
for the EV segment’s transformation into a mass
consumer market, according to Fitch Ratings.
“Fundamental demand factors will gradually
become key for EV growth. The pace of adoption
will be determined by how quickly the main
constraints that affect consumer demand will be
eliminated,” Fitch Ratings said.
This will require cheaper and longer-range
batteries to aid affordability as well as the
development of widespread charging
infrastructure, it said.
EV sales are still mostly unprofitable for
automakers as high battery costs make electric
powertrains more expensive than ICEs, while
manufacturers also bear research and
development costs and capital expenditure
(capex) dedicated to electrification, Fitch
Ratings said.
However, a greater share of EV sales is
essential to avoid fines and comply with
emission targets that cannot be met by improved
ICE fuel efficiency alone, it said.
In the long term, automakers should gradually
improve EV profitability due to economies of
scale and lower production costs as battery
prices decline, the ratings firm said.
“We expect electrification to be a key rating
driver for several manufacturers, particularly
in Europe, in the next 12 to 18 months,” Fitch
Ratings said.
EV sales will continue to grow throughout the
decade, with Canalys forecasting that EVs will
represent 48% of all new cars sold in 2030.
“The automotive industry is currently facing
crippling semiconductor shortages, so managing
future supply chains and production systems to
cope with the growth will be make or break for
any electric vehicle strategies,” it said.
The automotive industry is a major global
consumer of petrochemicals which contributes
more than a third of the raw material costs of
an average vehicle, and production disruptions
could severely weigh on demand.
Focus article by Nurluqman
Suratman
Click here to view the Automotive –
impact on chemicals topic page.
