2015 Global electric vehicle trends: Which markets are up (the most)

Posted Wednesday, 18 May 2016, 20:06
Judging from what we see of automakers' product planning, they are continuing to emphasize electrification even though oil prices seem unlikely to recover anytime soon. Late in 2015, Volkswagen chose to speed up the development of electric vehicles after the Dieselgate scandal. Ford committed $4.5 billion for electrified vehicles and plans to deliver 13 new EVs by 2020. Hyundai-Kia plans to roll out 8 EVs by 2020. These stories remind us how hybrid vehicles thrive on competition, as the rivalry among the major automakers remains a key driver for technology improvement.
What exactly was the state of the EV market in 2015? As it turns out, Volkswagen's decision makes a lot of sense in the context of the wave of global electrification that we observed throughout the course of 2015.
The global EV population hit a milestone in the second half of 2015 when the one-millionth modern plug-in electric vehicle was sold. Even more interesting, though, is the share of new-vehicle sales captured by electric vehicles in select markets. Looking at annual sales in 2015 (see figure below), countries with relatively high EV sales, as a percentage of new vehicle sales, remained high while others with lower EV sales were still catching up. Norway and the Netherlands are still leading, while Sweden and Denmark exceeded the U.S. in terms of their EV market share. China saw a big jump in total EV sales and surpassed several markets. Note that the U.S. and California’s shares are a percentage of passenger cars, excluding light trucks (like 4×4 sport utility vehicles and pickups).

Share of new plug-in electric vehicles, 2012-2015

Norway is by far the leader in total EV sales, with an impressive market share of 22%. In April 2015, Norway reevaluated its EV policies after reaching 50,000 plug-in vehicles registered. This triggered the Norwegian government to reaffirm its commitment to an EV incentive program until 2017, to maintain the momentum. The Netherlands has recovered after EV sales there dipped slightly in 2014, because of changes to the tax system, and remains second overall, with an especially high share of PHEV sales. 
Interestingly, 2015 also saw significant PHEV uptake in both Norway and the Netherlands. While sales of the Mitsubishi Outlander PHEV remain as strong as they were in in 2014, additional sales growth came from the newly-introduced VW Golf GTE, which accounted for over 20% of PHEV sales, as well as from other new high-end, large or luxury PHEV models. In Norway, even though there is no direct tax exemption for PHEVs (as there is for BEVs), the low CO2 emissions of PHEVs generate abundant tax savings thanks to the registration taxes, which are partially based on CO2 emissions. Similarly, the Netherlands’ CO2-based tax system has historically benefitted PHEVs, by giving them lower tax rate compared to their conventional vehicle counterpart with higher CO2 emissions.
As we see new EV models being are introduced to the market, we expect EV sales to increase, because a larger number of models are being promoted and are readily available. The figure below illustrates the number of plug-in electric vehicle models sold in each market since 2012. The number of EV models continues to rise around the world. Although the numbers represented in the chart are estimates, and may not include models with low sales, they clearly show a trend of greater EV availability across regions. However, as a caveat, at the local level we have observed that the availability of EV models can vary quite drastically.
When looking at annual growth of EV sales as a percentage of total sales, China, the Netherlands, and Denmark stand out (see the figure below). For two consecutive years, EV sales in Denmark and China have doubled or tripled the previous year's totals.
Even though the market share of EVs in China is only 1%, more EVs were sold in China in 2015 than in any other country; total annual EV sales there now exceed total EV sales in the U.S. Thanks to heavy government incentives, China has a large market for commercial electric vehicles, including buses and vocational vehicles. Commercial EVs account for as much as 40% of total electric vehicle sales in China. (For consistency, figures in this blog do not include commercial electric vehicles).
Growth of EV sales in some of these markets is impressive, but that growth should not obscure some challenges, both new and old. For example, in China, the number of EVs registered by owners is less than reported EV sales. Fortunately, China has already started to investigate the issue, which will hopefully prevent this type of cheating in the future.
Over the long term, fiscal incentives for EVs become a financial burden, and many governments are starting to talk about phasing out incentives as costs of battery technologies come down. For example, Denmark has announced that it will phase out tax breaks for electric vehicles by 2020. While there is uncertainty around future policies, these incentives will be gone sooner or later. The key policy question is how to optimize the policy portfolio in order to keep EVs in the market. Of course, as we’ve noted elsewhere, promoting electric vehicles is about many other factors as well, such as charging infrastructure, local outreach, and nonfiscal policies
Clearly there are plenty of reasons to be optimistic about this impressive early development in the EV market. However, more research to fill the various information gaps, more technical and policy exchange, and more collaboration among governments is needed. The International Zero-Emission Vehicle Alliance provides a platform for such collaboration, and we look forward to seeing the influence it has in 2016.