Global electric vehicle (EV) sales closed at 2.2 million in 2019. This number is expected to drop 43% to 1.3 million by the end of 2020, according to new research from Wood Mackenzie.
The coronavirus outbreak, potential delays to fleet purchasing due to lower oil price and a wait-and-see approach to buying new models have all contributed to this decrease in projected sales.
Wood Mackenzie’s analysis notes that China will catch up to 2019 demand by November 2020, while Europe will do so by December. Year-over-year demand in the US is projected to lag 2019 demand by 30% by the close of 2020.
“At the end of January, sales of all cars in China were down by 21% compared to 2019. By February, they had plunged by 80%. EV sales were hit harder, with January numbers down 54% and February projected to be down more than 90%. EVs have constituted approximately 5% of all vehicles sales in China for the past two years.
“Most new EV buyers are still first-time owners of the technology. The uncertainty and fear created by the outbreak has made consumers less inclined to adopt a new technology. Once the epidemic is contained in China, we suspect consumers will flock back to car dealers and reaffirm their confidence in EVs.
“In stark contrast, EV sales in Europe saw a 121% increase in January – despite a 7% reduction in the overall market. The trend of increasing EV adoption persisted into February, albeit lower than the previous month.
“However, the first case of coronavirus was not reported in the region until late January. The infection rate is expected to peak in Europe and North America towards the end of H1 2020, approximately two months after China. The January and February numbers therefore do not yet reflect the impact of coronavirus in the two regions.
“The first lockdown in the US did not start until 20th March but the effects have already begun to show in EV sales. General Motors is offering a discount of US$10,000 for its Chevrolet Bolt. Further such rebates are sure to follow to move inventory as demand drops further,” said Ram Chandrasekaran, Wood Mackenzie Principal Analyst.
In an unorthodox move, traditional automakers entering the EV market have announced upcoming models that will be launched over the next several years rather than over the next 12 months.
“Ford introduced its Mustang Mach E in November 2019 but it won’t be widely available until H1 2021. Volkswagen has been promoting the ID.3 for several years but isn’t expected to starting selling the model until later this year. General Motors celebrated an ‘EV Day’ on 4th March to tout its readiness for the transition to electric vehicles, however none of its new products are going to be available until late 2021.
“The automakers’ response to the pandemic – suspending car manufacturing to focus on making medical equipment – is only going to delay model launches further.
“From a consumer’s perspective, however, it makes perfect sense to wait longer for these models. After all, a car purchase is a large financial investment that lasts several years. Unfortunately, for EV adoption, this is likely to lead to a plateauing of sales in the near term. While the pent-up demand from the pandemic will help a bounce back in sales later in the year, new demand growth will lack until 2021.
“Despite the potential delays in EV adoption, several automakers have expressed a desire to be carbon neutral due to government policies and a change in investor attitude. The shift towards sustainability is the driving force behind the electrification of transport. Uncertainty caused by the oil price war and global catastrophes will only serve to strengthen that resolve, not deter it,” added Chandrasekaran.