'Bleak': Global EV sales to drop 43 per cent in 2020, forecast suggests

The global economic downturn spurred by the coronavirus outbreak is set to hit the burgeoning electric vehicle market heavily in 2020, with latest forecasts pointing to plummeting sales in the wake of oil price falls, supply chain delays, and consumers putting off purchases.

While global EV sales have surged exponentially in recent years to reach a record 2.2 million in 2019 alone as more battery car models came onto the market than ever before, the figure is likely to be almost half that in 2020, according to Wood Mackenzie.

The consultancy giant yesterday released new analysis forecasting a 43 per cent drop in global EV sales this year, down to 1.1 million overall, with Covid-19 wreaking havoc across battery supply chains, as well as uncertainty in oil markets and among the many consumers stuck indoors.

It is just the latest economic analysis painting a bumpy road ahead for the battery car sector in the wake of the Covid-19 crisis, with BloombergNEF also last month downgrading forecasts for a host of green industries including electric vehicles, batteries, wind and solar.

At present Wood Mackenzie expects China - the world's largest market for EVs - to catch up to 2019 demand levels by only November at the earliest, with Europe likely to reach that point a month later. In the US, meanwhile, year-on-year demand is projected to lag 2019 demand by almost a third by the time 2020 draws to a close.

The analysis takes its signal from China where the coronavirus first broke out and EVs make up around five per cent of all car sales. In January immediately after the outbreak, EV sales in China were down 54 per cent, and by February had plunged more than 90 per cent as the virus spread, according to Wood Mackenzie.

"Most new EV buyers are still first-time owners of the technology," explained Ram Chandrasekaran, principal analyst at Wood Mackenzie. "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."

Pandemic took hold a little later in Europe, however, which saw a 121 per cent increase in year-on-year EV sales in January despite a seven per cent reduction in the wider car market, and sales growth also continued into February.

But the US and most major economies in Europe, including the UK, France and Germany, did not impose strict lockdown measures to stem the spread of the virus until March, and the infection rate in North America and Europe is not expected to peak until towards the end of the first half of 2020, around two months later than China.

"The January and February numbers therefore do not yet reflect the impact of coronavirus in the two regions," said Chandrasekaran.

Nevertheless, with China the world's largest EV market and a major manufacturing hub for battery technologies, and travel and consumer buying power having been severely limited in the US and Europe in recent weeks, the global rollout of electric vehicles it set to be heavily hit by the pandemic.

With a global recession now looming to boot, Wood Mackenzie described the outlook for EV market in 2020 as "bleak".

"The full impact of the pandemic remains to be seen," its analysis states. "When the lockdown measures are removed we will see a bounceback in demand, but the timing and scale are unclear. The picture is further complicated by premature model launches - traditional automakers entering the EV market, such as Ford and General Motors, have announced models that won't be widely available this year. Consumers interested in EV adoption may hold off until test drives are available."

Many carmarkers which had planned to launch new EV models this year - including Volkswagen and GM - have now announced plans to push back these launches over the next several years rather than the next 12 months, explained Chandrasekaran.

"The automakers' response to the pandemic - suspending car manufacturing to focus on making medical equipment - is only going to delay model launches further," he said. "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."

There are causes for optimism within the EV sector, however, particularly in the UK where industry hopes are high that company car tax changes which came into force this week can help spread the wider adoption of battery cars, while the government's recently-announced Budget contained a host of support for EV charging.

Chandrasekaran stressed that despite the slowdown in growth in 2020, the longer term outlook for the rollout of EVs remained positive.

"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."

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• Automotive
• wood mackenzie
• Electric Vehicles
• Batteries
• Coronavirus