Wood Mackenzie says the COVID-19 outbreak, uncertain economy as well as plummeting oil prices will have a significant impact on EV sales this year.
Last year, global electric vehicle sales hit 2.2 million, however, new research from the energy consultancy firm forecasts that 2020 EV sales will fall by 43 per cent by the end of the year.
The COVID-19 outbreak first hit in China at the end of 2019. By the end of January, sales of all cars in China were down by 21 per cent compared to 2019. By February, car sales in China had plunged by 80 per cent.
EV sales in China were hit even harder, with January numbers down 54 per cent and February projected to be down more than 90 per cent. EV sales have made up 5 per cent of all vehicles purchases in China for the past two years.
“Most new EV buyers are still first-time owners of the technology,” said Ram Chandrasekaran, Wood Mackenzie Principal Analyst. Chandrasekaran says 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,” said Chandrasekaran.
Wood Mackenzie’s analysis notes that China is expected to catch up to 2019 demand by November 2020.
Meanwhile in Europe, EV sales jumped by 121 per cent in January, despite a 7 per cent drop in the overall market. The trend continued into February, however, sales were lower than the previous month.
However, Wood Mac notes 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 the first half of 2020, approximately two months after China, and as such, the January and February numbers do not yet reflect the impact of coronavirus in the two regions.
EV sales are expected to recover to 2019 levels by December.
In the United States, the first lockdown did not begin until March 20, but the effects of COVID-19 had already begun to impact EV sales. GM is currently offering a $10,000 discount for its Chevy Bolt and further such rebates are expected in an effort to help move inventory.
According to Wood Mac, year-over-year demand for EVs in the United States is forecast to drop by 30 per cent by the end of 2020.
The global pandemic has also slowed the rollout for new EV models. Traditional automakers entering the EV market were expected to launch their upcoming models this year, but they will be introducing new EVs over the next several years.
Ford introduced its Mustang Mach E in November 2019 but it won’t be widely available until the first half of 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,” said Chandrasekaran.
According to Chandrasekaran, 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.”
Chandrasekaran expects the pent-up demand from the pandemic will help a bounce back in sales later in the year, new demand growth in EV sales 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,” said Chandrasekaran.
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.