Online Exclusive: China, Europe leading global EV growth

Time is a relative thing, and your place in the world determines how you experience any moment. Today, here may be tomorrow—or even yesterday—somewhere else.

The timing of electric vehicle adoption is no different. The sector is growing quickly, but the timing of that growth changes by region, impacted by factors such as governmental regulation, availability of charging infrastructure, overall vehicle demand and consumer acceptance of EV technology.

"The timing might be different, the technology might be different, but all regions are growing extremely fast in the EV (space)," said Tina Wu, DuPont Mobility & Materials' global vice president of advanced solutions and Asia-Pacific regional leader.

All eyes on China
Globally, auto makers and suppliers are turning their eyes to China, a market where automotive demand—regardless of powertrain—is expected to grow.

"Total vehicle, China has got the growth right now," said Fred Jamieson, Henniges Automotive's global vice president of sales, marketing and program management. "It is outgrowing the rest of the emerging markets where you have got a higher level of growth from a smaller base. China is very important in terms of total vehicle, total market growth."

China also has an advantage in its management of the COVID-19 pandemic, having been the first country to experience the challenges of containing the virus. The country got a jump start on game-planning for a post-COVID-19 future, positioning it to make big transitions and push forward with manufacturing as well R&D.

"From my point of view, with its early recovery from COVID and strict governmental policies regarding new energy vehicles, I feel that China has the greatest potential to grow in the next year," said Rainer Kremmeicke, a key account manager within ContiTech's Divergent Mobility Group. "The market is far from being saturated."

IHS Markit, in an analysis published late last year, examined the expected growth for light vehicle sales in China. In 2019, the country saw the sale of nearly 25 million light vehicles. That dipped a bit to about 23 million last year amid the COVID-19 pandemic.

Total light vehicle sales are expected to climb again this year, falling just short of the 25 million-unit mark, but should eclipse that figure in 2022, IHS Markit said. Sales should continue to grow steadily until 2027, when it is expected that country will reach 30 million light vehicles sold.

Couple that overall automotive demand with governmental regulations that are driving the adoption of EV technology, and the country is emerging as one of the global leaders for the auto industry.

IHS Markit in January said global EV sales would rise by 70 percent in 2021, building on the 2.5 million EVs sold in 2020.

Kevin Adler, editor for IHS Markit's climate and sustainability group, authored the analysis. In it, he noted that China (44 percent) and Europe (28 percent) will account for 72 percent of the global EV sales this year. North America and Japan, meanwhile, are expected to account for 16 percent and 11 percent of global EV sales, respectively.

By 2025, global EV sales are expected to reach 12.2 million, which Adler said indicates a CAGR of 52 percent.

In China, BEV production is expected to reach 4.8 million units by 2025, accounting for 17 percent of the overall market, according to Abby Chun Tu, an IHS Markit principal research analyst. Plug-in hybrid electric vehicles are expected to account for 6 percent of China's market share by then, reaching 1.6 million units.

Part of that growth could hinge on the region's acceptance of electric vehicles.

According to data released this year in the Specialty Equipment Market Association's "2021 Vehicle Landscape Report," Asia leads the world in its acceptance of the electrified drivetrain technology.

South Korea and Japan show the most support for alternative drivetrains, with 57 percent and 55 percent of drivers leaning toward EVs for their next vehicle. In China, 45 percent of drivers prefer alternative powertrains.

For perspective on how comfortable drivers in those countries are with EV technology, the SEMA report noted that 74 percent of U.S. auto buyers seek traditional ICE vehicles.

Europe leading the way
If China has the most potential for growth, Europe may have the greatest potential for the here and now.

The European Union has been aggressive in pushing regulations that align climate policy and emissions standards. The region also has been a hotbed of R&D efforts that are driving autonomous and electric vehicle technology.

"Europe continues to lead on a lot of the core technology," Wu said. "Europe is also very sustainability conscious from government regulations to the top OEMs and their commitment to the EV. Europe is really going to be a huge market, too."

Those trends, she said, are going to drive a quick transition to EV adoption.

"You are just going to see a switch from the traditional vehicle to electrification of some sort," Wu said.

That transition already is taking place, and Germany may be proof of that, according to data from the German Federal Motor Transport Authority (KBA).

Last year in Germany, sales of EVs—plug-in hybrids, fuel cell, natural gas and hydrogen vehicles—accounted for 22 percent of the country's overall market share, and the number of registered BEV passenger cars more than tripled year-on-year to 194,163 units, KBA said.

Volkswagen is leading the electrification charge in Germany, accounting for 17.4 percent of the country's overall BEV market share, and Audi followed with 9 percent, KBA data showed. For passenger cars, VW represented 23.8 percent of registrations with Renault and Tesla following at 16.2 and 8.6 percent, respectively.

U.S. sees signs of change
It's no secret that the North American market—particularly the U.S.—is lagging the rest of the world in the adoption of EV technology. Experts, however, say a number of signals are indicating that could change very soon.

First, U.S.-based OEMs are shifting their focus, investing heavily in the design and development of the electric vehicle models.

"When you look at our traditional OEMs, they started making very clear statements—clear investments—shifting their focus to EV platforms. This is a clear sign (of change)," Jamieson said. "… They are putting their money where their mouth has been."

Late last year, General Motors Co. said it would convert its light vehicle lineup to electrified powertrains, aiming to sell only EV models by 2035.

Ford Motor Co., in late May, unveiled the 2022 F-150 Lightning, a much-anticipated electrified pickup that CEO Jim Farley said was "just the beginning of a whole new era at Ford."

The Detroit-based auto maker hasn't set a target date to transition its entire lineup of vehicles to electrified powertrains, but Kumar Galhotra, Ford's president of the Americas and international markets group, told Automotive News that the company is trending in that direction.

"I can easily see a point where we'd say, 'Here's the date where we'd be all-electric,' " he told AN, a Crain Communications-owned sister publication of Rubber & Plastics News. "We're certainly working toward it."

Rumblings about the U.S.'s adoption of EVs isn't just happening at the manufacturing level. Wu sees changes coming at the regulatory level as well.

"The market is getting ready," Wu said. "I saw a lot of changes last year with the new regime coming in and that changes a lot. Washington talks a lot more about sustainability than ever before. I think America is going to catch up pretty quickly."

Kevin Riddell, LMC Automotive senior manager of powertrain forecasting, pointed to the Biden administration's climate and jobs focus as a telltale sign that the country likely is moving forward with regulatory policy that will back the auto maker's planned shift to e-mobility.

Moreover, the U.S. is taking on one of the biggest hurdles to consumer adoption of EVs: range anxiety. The new administration is pushing investments in charging infrastructure, setting a goal of building 500,000 charging stations nationwide.

To put that goal in perspective, Riddell said, that is five times the number of gas stations in the U.S. today.

"That is going to be a huge effort to alleviate some of those other pressures," Riddell said. "… To be fair, that 500,000 charging station goal is going to be by 2030, so we are not going to see the full impact of that for a while."

Bringing infrastructure up to speed may feel like a daunting task, but Wu believes it will happen quickly. After all, she said, this remained a major hurdle in both China and Europe, but both regions were able to address the issue quickly.

When the U.S. begins its investment in charging infrastructure, aligning it with EV offerings, the adoption of the technology will come.

"Three to four years ago, in Europe and China, it was the same thing," Wu said. "It is going to change very quickly once you get on this journey. It is going to come together very rapidly."