Annual PEV Sales in Major Markets to Grow to 1.8 M. Units: Navigant Research

Faster or slower, expanding sales of electric vehicles (EVs) is an irreversible trend already, as environment protection, decreasing oil reserve, and sustainability of our earth can only be increasingly important.

While plug-in electric vehicles (PEVs) are available in all U.S. states, most Canadian provinces and territories, and in every Western European country, they are not readily accessible in the Asia Pacific. That will change over the next several years as Asia Pacific becomes the largest market for PEV sales. According to a recent report from Navigant Research, sales of PEVs in North America, Western Europe, and Asia Pacific will grow from 352,000 annually in 2014 to 1.8 million by 2023.

“PEVs are becoming more available and more price-competitive, both geographically and in vehicle segments outside of small and luxury car classes,” says Scott Shepard, research analyst with Navigant Research. “That is expanding the universe of potential PEV buyers beyond the narrow demographics of early adopters to a wider market that is similar to that for hybrid electric vehicles.”

PEVs are better suited to and marketed toward urban areas, as vehicle range requirements are typically shorter in these communities. As such, the concentration of PEVs is anticipated to be higher in geographic areas with higher populations and more households. The largest urban markets during the forecast period, according to Navigant Research will be Tokyo, Los Angeles, and Paris, with PEV sales in 2023 of 49,000, 39,000, and 25,000 vehicles, respectively.

U.S. the Most Important PEV Market

The largest regional market for PEVs is North America, with 2013 sales of slightly less than 100,000. Navigant Research expects that figure to grow rapidly over the next 10 years, as more models become available, the price premium for PEVs compared to conventional vehicles narrows, and charging infrastructure is deployed widely.

Navigant Research points out that the number of PEVs on roads in the U.S. will grow from nearly 296,000 in 2014 to more than 2.7 million by 2023.

“The U.S. market for plug-in electric vehicles is reaching a new level of maturity and expansion,” says Scott Shepard, research analyst with Navigant Research.  “The introduction of PEV options in the truck, van, and sport utility vehicle segments – which make up half the North American automotive market – will help drive strong growth in the PEV market going forward.”

The major regional PEV markets, North America, Western Europe, and Asia Pacific, will grow at a compound annual growth rate (CAGR) of 23.7% through 2023, Navigant Research says.

Alternative Revenues for Automakers

Another structural change is forecast to happen in the automotive industry, in advanced nations first, with automakers  seeking other revenue sources for business growth.

In the coming years, Navigant Research says, automakers are likely to see revenue from sales of conventional vehicles flatten or even decline in mature markets as vehicle sales continue to slow in developed countries. As a result, automakers are actively exploring new revenue streams, such as car-sharing services, sales of EV charging equipment through dealers, home energy management, residential solar photovoltaic sales, and grid services.

The research firm says that cumulative worldwide automaker revenue from alternative revenue streams will total US$22.1 billion from 2014 to 2023.

“The onset of the PEV market means that carmakers now have thousands of customers connecting to their home electricity network, as well as potentially connecting at  workplaces and other commercial locations that offer vehicle charging,” says Lisa Jerram, senior research analyst with Navigant Research. “That provides opportunities for vehicle-to-grid and home energy management services that automakers are only beginning to understand and tap into.”

In addition to businesses enabled by the unique characteristics of PEVs, automakers are also exploring other avenues, including car-sharing, which is already a major revenue generator. Automakers' revenue from car-sharing services will reach more than US$418 million in 2014, according to Navigant Research, increasing to US$5.2 billion by 2023.