Electric vehicles (EVs), until recently considered toys for the rich, will be front and center in the auto market within a few years. New research shows that 16% of new cars sold in 2025 will be EVs.
According to work by UBS researchers:
Our second UBS Evidence Lab consumer survey of ~10k consumers in the six largest car markets underscores a positive trend in consumer interest in electric cars (particularly in the fleet segment) whereas the popularity of diesel cars has dropped sharply. We raise our global EV sales forecasts to 16.5m (from 14.2m) in 2025, on (1) higher demand in China supported by survey data and regulation; (2) higher 2017 ytd sales in several key markets. Our new forecasts imply 16% EV sales penetration in 2025, or almost every sixth car sold globally. We expect every third car sold in Europe to be electric by then.
Among the most important reasons for the surge is a forecast that EV prices will fall enough to make them available to the general public.
The research is flawed in that it does not take into account a number of issues. Among them is the number of charging stations available to buyers. Perhaps just as important is the length of time it takes to charge an EV today. It can be up to 30 minutes at a charging station. To fill a car’s gas tank takes less than five minutes.
There is also the issue of whether people will lose their taste for gasoline-powered cars. Many people do not particularly care about the effects of fossil fuel engines on the environment. Gas prices have been low, based on historic norms, and if oil prices remain at or below $50, that could continue. Additionally, hybrids and clear diesel cars continue to compete almost directly with EVs, at least based on fuel mileage.
UBS has tried to look well ahead, with very modest evidence, to make a major prediction. The forecast lacks considerations that may be just as important as prices and availability.