According to Researcher and Research LLC, the global electric vehicle (EV) market reached 6.389M units in 2021, with an annual growth rate of 96.9%, the biggest growth in years, as shown in figure1.

Figure 1 Worldwide EV sales

Figure 1  Worldwide EV sales

 

This is the result of a long history of policies used by many countries to push automakers to sell EV (e.g., the European CO2 emissions legal target), give subsidies to EV buyers (e.g., subsidies and local incentives in China), or encourage buyers with tax or related incentives (e.g., Federal Tax Incentives and State, Local and Utility Incentives in the US), the demand for EV has shown an obvious growth trend.

However, the supply chain is the biggest obstacle to market growth in 2022, with key components such as chips and batteries still in short supply. Therefore, the EV market will face an unprecedented price rise this year, which will definitely impact market demand. As a result, we recommend a conservative view of this year’s growth. We currently expect the global EV market to reach 10.702 million units in 2022, representing an annual growth rate of 67.5%.

The supply chain will affect the sales of global EV OEMs, but the impact of the supply chain is not uniform across EV OEMs. For example, significant automakers have developed partnerships with battery suppliers and started to establish their own battery supply chains. However most major raw materials control is still in the hands of relevant Chinese manufacturers.

Therefore, China, with its control of scarce resources, will have a strong influence on the EV industry and will further increase its share of the global EV market. In this regard, we will see that more and more non-Chinese EV OEMs or those about to move into self-driving EVs will have to attract relevant Chinese manufacturers to cooperate with them through the market or technology, in exchange for a secure supply chain.

Under this premise, it is reasonable to assume that only a small number of EV OEMs will be relatively unaffected, launch models in accordance with their stated goals, and meet market demand. For example, Chinese automakers have a better chance of securing supply chain support under the umbrella of China’s strategy of automobile power. Or EV OEMs that already have well-functioning battery plants have relatively more resources to sell more EVs (e.g., Tesla and BYD). Also, Tesla, which has tacit knowledge (knowledge hidden within the company that cannot be easily transferred by employees or copied by other companies) of EV and economies of scale, is supported by the supply chain because of its market position.

As far as the ranking of global EV sales countries is concerned, China has remained the world’s largest sales country since replacing Norway and the US in 2015, with its share growing from 40.9% in 2020 to 50.6% in 2021, and it is estimated that it will continue to increase to 54.2% in 2022. Next, Germany and the US ranked second and third. We estimate that the US market will overtake Germany as the second largest sales country in 2022. The combined market share of the top three markets grew from 63.6% in 2020 to 71.1% in 2021, and that of the top 10 rose from 88.3% in 2020 to 89.2% in 2021, indicating that the top three EV sales countries drove the growth of the EV market in 2021.

Although China will reduce subsidies for passenger EVs by 30% in 2022, more EV models in the Chinese market will increase their prices in response to policy changes, and more and more models’ price hikes have begun to reflect the rise of raw materials, China will remain the number one EV sales country in 2022. In addition to China, the US and Europe remain the main markets for EV sales, while in Asia, it is worth noting the performance of South Korea, Japan, and India in the second half of this year.

In terms of the changes in the proportion of battery electric vehicle (BEV) and plug-in hybrid electric vehicle (PHEV), there is little difference between 2021 and 2020, with 69.5%and 30.5%, respectively. This year, due to the rising cost of batteries, the sales price of EV will rise, which will affect the sales strength of BEV. In addition, in response to the European CO2 emissions legal target and the sales price of PHEV models in China is closer to that of internal combustion engine (ICE) passenger cars in the same market segment, PHEV will have stronger growth momentum this year. As a result, we expect a slightly higher proportion of PHEV sales in 2022, with BEV and PHEV accounting for 67.2% and 32.8%, respectively.

Another significant trend in 2021 was EV equipped with lithium-iron-phosphate (LiFePO4 cathode; LFP) battery, which continued to reach a new high in the global EV market, as shown in figure 2. The proportion in 2021 was 14.3% (in terms of MWh) , a significant increase from 5.2% in 2020. Under the pressure of price hikes this year, we expect more and more EV OEMs to launch models with LFP batteries, so the share will continue to grow to 20.6% in 2022.

Figure 2 Share of LFP battery in global EV market

Figure 2  Share of LFP battery in global EV market

 

 

Note:

Researcher and Research here defines EV as battery electric vehicle (BEV) and plug-in hybrid electric vehicle (PHEV), with passenger car as the primary purpose.