Global electric car market is estimated to be valued at US$ 343.27 Bn in 2024 and is expected to reach US$ 1,576.08 Bn by 2031, exhibiting a compound annual growth rate (CAGR) of 24.3% from 2024 to 2031.
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Global electric car market is expected to witness strong growth over the forecast period driven by factors such as government regulations and subsidies toward adoption of electric vehicles, improving electric vehicle charging infrastructure, and rising environmental concerns. Additionally, declining battery prices and ongoing battery innovation are also contributing toward increasing electric car sales over conventional vehicles. OEMs are heavily investing in developing electric vehicles with advanced technologies and longer driving range to appeal customers. Moreover, growing consumer preference for technologically advanced and low maintenance vehicles is further supporting the market growth. However, high vehicle cost as compared to gasoline cars and range anxiety continue to remain major challenges for widespread adoption of electric cars. Nevertheless, advancements in battery technologies are expected to make electric cars more affordable in the coming years.
Market Driver - Increasing government incentives for electric vehicle adoption
Many governments such as China, India, U.S., etc. around the world are strongly encouraging consumers to shift from conventional internal combustion engine vehicles to electric vehicles. They realize that the widespread adoption of EVs is crucial to reducing pollution levels and curbing climate change. Various incentive schemes have been launched to make EVs more affordable for buyers and bring down their upfront costs. Major countries like the U.S., China, France and Germany offer tax credits or rebates upon purchase of an eligible electric vehicle. Some nations also provide benefits such as exemption from road tax or toll fees for EVs. Since vehicle running costs are significantly lower for EVs, total cost of ownership is lower than gasoline or diesel cars over time. This financial encouragement from governments is definitely nudging more customers to opt for electric vehicles.
For instance, In April 2024, BYD, a leading manufacturer of new energy vehicles, officially launched its latest pure electric vehicle model, the BYD SEAGULL, in Colombia. First unveiled at the Colombian Auto Show the previous year, this compact electric hatchback is expected to appeal greatly to Colombian youth, who will appreciate its modern design, innovative electric features, and affordability. The launch event attracted over 600 media representatives and clients, earning recognition from local media as the best new product launch event of the year in Colombia.
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Growing consumer awareness of environmental sustainability
People globally are increasingly worried about deteriorating air quality and the alarming pace of global warming. There is a strong sentiment that urgent action needs to be taken to reduce emissions from the transportation sector which accounts for a sizable share of overall pollution. Electric vehicles, with their zero tailpipe emissions, are seen as an important part of the solution. Younger generations especially demonstrate a strong enthusiasm to adopt greener solutions and lifestyles. Automakers too have upped their promotional efforts highlighting the eco-friendly nature of their EVs. With much discussion around sustainability and climate change on various media platforms, environmental consciousness has risen manifold in recent years. This has positively impacted the perception around electric vehicles and more individuals now see them as a way to shrink their carbon footprint. Charging infrastructure build-out in major cities and standardization of technology have also made EVs a more viable option than before.
Key Takeaways from Analyst:
Global electric car market is set to grow significantly driven by stringent emission norms which are forcing automakers to shift towards electric vehicles. Governments across regions are also providing substantial subsidies and tax rebates to promote electric vehicle adoption. Additionally, increasing consumer awareness about environmental protection is driving more consumers to opt for electric cars over conventional gasoline vehicles.
However, high purchase prices of electric vehicles continue to restrain widespread growth in many markets. Lack of charging infrastructure is another major challenge, especially in developing countries, which is preventing rapid adoption. Affordability issues may hinder the electric car market in price sensitive regions.
Nevertheless, continuous fall in battery prices and further improvements in battery technology are likely to address the cost barrier in the long run. Automakers are also exploring cost effective electric vehicle designs and platforms. Collaboration between automakers, battery makers and charging point providers will be crucial to build out necessary charging networks worldwide.
Among regions, North America is expected to dominate the global electric car market thanks to strong government support schemes and consumer incentives. The Asia Pacific market is also growing rapidly due to tough emission norms and bans on combustion engine vehicles planned in certain countries.
Market Challenge - Limited charging infrastructure in many regions
One of the key challenges currently facing the global electric car market is the limited availability of charging infrastructure in many regions. While countries like China, the US and some European nations have been progressively building out public charging stations over the past decade, most parts of Asia, Africa and South America still lag far behind in developing the necessary charging networks. This acts as a major deterrent for consumers who are worried about being stranded without a place to charge their electric vehicles during long journeys. Auto manufacturers and governments need to partner together and make massive investments towards installing charging points at regular intervals along highways, near residential areas, commercial districts and other busy locations. Standardization of charging ports and compatibility with different vehicle systems is another area that demands cross-industry cooperation. Without a convenient and extensive charging infrastructure, it will be difficult to convince mainstream buyers to switch to electric cars and help accelerate the global transition to sustainable mobility.
Market Opportunity - High initial purchase cost compared to conventional vehicles
While the high initial purchase price of electric vehicles continues to be a barrier compared to conventional internal combustion engine vehicles, it also presents a significant opportunity for growth and adoption in the global market. The upfront cost tends to be higher for electric vehicles due to the cost of the battery pack. However, total lifetime ownership costs are lower for electric vehicles due to lower fuel and maintenance expenses. As battery technology continues to advance, prices are expected to decline substantially in the coming years which will help close the purchase price gap. Some countries and regions are already implementing purchase incentives like taxes exemptions to defray the higher upfront costs and make electric vehicles more affordable for consumers. For example, the UK government recently increased grant funding for electric vehicles to help more customers overcome the battery cost hurdle.
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Insights By Vehicle Type - Favorable government regulations drive adoption of Battery Electric Vehicles
In terms of vehicle type, battery electric vehicles (BEVs) segment is estimated to contribute the highest market share of 68.3% in 2024 owing to favorable government regulations and incentives. Various governments around the world are offering subsidies and tax benefits to promote sales of electric vehicles. For instance, the U.S. government offers a federal tax credit of up to US$7,500 for the purchase of new BEVs. Similarly, the U.K. government offers grants of up to US$3,500 for the purchase of eligible electric vehicles. Such initiatives significantly lower the upfront cost of BEVs for customers and make them more affordable compared to other vehicle types like PHEVs or HEVs.
Governments are also implementing various non-financial incentives like access to HOV/carpool lanes and free/subsidized charging to boost the adoption of electric mobility. Some countries have even proposed plans to ban the sales of new combustion engine cars from certain target years. This strong policy push encourages more automakers to expand their BEV lineups and reassures potential buyers about long term usage of these vehicles. The support from regulators gives BEVs an edge over other electric vehicle types in gaining higher market share currently.
Insights By Battery Type - Lithium-ion segment dominance driven by performance advantages
In terms of battery type, the lithium-ion segment is estimated to contribute the highest market share of 74.9% in 2024 owing to its performance advantages over other battery technologies. Lithium-ion batteries offer higher energy density which allows for increased driving range on a single charge compared to older technologies like NiMH. The battery is also lighter in weight which boosts the vehicle's fuel efficiency. Moreover, Lithium-ion batteries have faster charging capabilities and a longer operating life over multiple charge-discharge cycles.
Automakers prefer Lithium-ion as it meets the demanding power and performance requirements of modern electric vehicles. The battery helps deliver responsive acceleration and torque similar to gasoline engines. Its high energy density also permits automakers to install battery packs with sufficient capacity without compromising interior space or cargo volume within the vehicle. These advantages have made Lithium-ion the leading technology adopted across most premium electric cars. Although solid-state batteries promise better safety and lifespan, their high production costs relative to Lithium-ion prolong the dominance of the latter in the market currently.
Insights By Range - 150-300 miles segment drives consumer acceptance
In terms of range, the 150-300 miles segment is estimated to contribute the highest market share of 57.2% in 2024 as it offers an optimal balance between driving distance and battery costs. This range adequately meets the daily commute needs of most customers without range anxiety. It also alleviates concerns around running out of charge midway to the destination. At the same time, batteries with capacity enough to deliver this range have higher energy density versus below 150 miles variants, without the high battery costs associated with above 300 miles vehicles.
Automakers are therefore aggressively focusing on introducing new electric car models with approximately 250 miles range, promoting them as versatile EVs that can take owners beyond the city while still being affordable. The sweet spot has gained strong customer acceptance globally. Early adopters who could not afford long range premium vehicles have upgraded to mid-range options. Even customers who already own cars in the below 150 miles range are trading up to 150-300 miles models for their next electric vehicle purchase. This has propelled the mid-range segment to the leading position by volume currently. It is attracting both first-time electric vehicle customers as well as existing EV drivers looking to upgrade.
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North America has dominated the global electric car market. The region is expected to hold 41.5% of the market share in 2024. The U.S. is home to Tesla, one of the pioneering companies in the electric vehicle space. Tesla has led the mass adoption of electric cars in the region with its affordable Model 3 sedan and higher-end Model S and Model X vehicles. This has inspired other major automakers like Ford, GM, and Volkswagen to introduce their own electric car lineups in the U.S. electric car market. The presence of companies like Tesla and new offerings from traditional manufacturers have driven electric car sales quite significantly in the U.S. and Canada. North America also has a well-established charging infrastructure network owing to the early focus on EVs, making it easier for consumers to own electric vehicles.
For instance, In May 2023, Volkswagen Group, one of the world's largest automakers, announced a partnership with Electrify America, a subsidiary of Volkswagen dedicated to building electric vehicle charging infrastructure in the U.S. This collaboration aims to enhance the charging experience for Volkswagen EV owners by expanding the Electrify America network and integrating advanced technologies like Plug&Charge into Volkswagen's ID.4 electric SUV starting in early 2024.
At the same time, the Asia Pacific region, especially China, is emerging as the fastest growing market for electric cars globally. The Chinese government has implemented strong regulations and policies to promote eco-friendly vehicles. Substantial subsidies are provided to buyers of electric cars, while production of such vehicles is encouraged through tax incentives for manufacturers. This supportive regulatory environment has led to massive investments by global automakers in China's EV industry. Companies have also localized their electric vehicle production in China to cater to the strong and increasing domestic demand. Furthermore, China dominating the battery manufacturing industry globally has made it a lucrative hub for electric car production. Hence, with its large automobile industry and policy push, China holds tremendous potential for further growth in the electric car segment.
Electric Car Market Report Coverage
Report Coverage | Details | ||
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Base Year: | 2023 | Market Size in 2024: | US$ 343.27 Bn |
Historical Data for: | 2019 To 2023 | Forecast Period: | 2024 To 2031 |
Forecast Period 2024 to 2031 CAGR: | 24.3% | 2031 Value Projection: | US$ 1,576.08 Bn |
Geographies covered: |
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Companies covered: |
Tesla, Inc., Nissan Motor Corporation, BMW AG, Ford Motor Company, General Motors Company, Volkswagen AG, Hyundai Motor Company, Kia Corporation, Audi AG, Mercedes-Benz AG, BYD Company Limited, Rivian Automotive, Inc., Lucid Motors, Inc., Polestar Automotive Holding AB, and Volvo Cars |
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Growth Drivers: |
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Restraints & Challenges: |
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*Definition: Global electric car market refers to the worldwide industry for electric vehicles that are powered solely or partially by electricity. It includes fully electric vehicles that are powered only by batteries and plug-in hybrid electric vehicles that can run on both electricity and gasoline. The market involves the research, development, manufacturing, and sales of electric cars across all major regions and countries worldwide.
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About Author
Gautam Mahajan
Gautam Mahajan is a Research Consultant with 5+ years of experience in market research and consulting. He excels in analyzing market engineering, market trends, competitive landscapes, and technological developments. He specializes in both primary and secondary research, as well as strategic consulting across diverse sectors.
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