EV: Electric vehicle, including BEV, PHEV, FCEV & HEV
BEV: Battery electric vehicle
HEV: Hybrid electric vehicle
FCEV: Fuel cell electric vehicle
ICE: Internal combustion engine
NEV: New electric vehicle (BEV & PHEV)
PEV: Plug-in electric vehicle (BEV & PHEV)
PHEV: Plug-in hybrid electric vehicle
The car industry is undergoing a radical transformation, with most carmakers agreeing the next 10 years will bring more change than the two previous decades. The next target date cited by automakers as a tipping point is 2025, when everything from materials and fuel to cost and the companies that build cars are set to look dramatically different. In this report, the J.P. Morgan Research team explores the rise of the electric vehicle and what the industry will look like by 2025.
For both North America and Europe, hybrids and BEVs are set to lead over the next decade as plug-in hybrids are not proving too popular in either region. In Europe, plug-in electric vehicles (BEVs and PHEVs) will rise from roughly a 2% share of total new sales in 2017 to around 9% by 2025, nearly eclipsing 1.5 million vehicles by the middle of the next decade. A dramatic move away from ICE-only vehicles is expected and by 2025 only plug-in electric vehicles and HEVs will likely be sold. Over that time period, J.P. Morgan forecasts sales of plug-in electric vehicles in Japan and Korea will reach 384,000 vehicles, representing a market share of 6%, while HEVs will approach 1.8 million vehicles or 27% of total sales. Meanwhile in the U.S., tougher fuel economy regulation will likely push automakers to expand their EV offerings, but not with the same degree of urgency as in Europe, where there are looming carbon dioxide emissions targets and fines. Nevertheless, overall EV sales – including BEV, PHEV and hybrids – are estimated to account for over 38% of total sales in 2025. 1
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Prices are falling by 15-20% per annum as the scale of production ramps up and battery suppliers increasingly give away their margins. This puts China on track to produce EV and internal combustion engine technology at cost parity (for compact vehicles) by 2020. Revised subsidy schemes for 2018 also mean certain models will reach price parity after discounts this year.
The State Council's 2020 target calls for 4.5 million units of charging posts and 12,000 units of charging stations.
China’s NEV market subsidies came into effect in June 2018. All existing government subsidies will expire from 2021, which could trigger some “pre-buying” activity before 2020.
Retroactive dual-credit policies announced in March are pushing manufacturers to have a larger proportion of NEVs in their production portfolio. This is to meet China’s 2020 fuel consumption target of an average 5 liters of fuel consumption per 100 km.
China's local government policy requires 30% of allnew buses to be NEV.
As the composition of EV batteries change and the industry expands, the demand and price of certain commodities will be impacted. Mainly driven by China EV sales, global demand for lithium is expected to climb 20% by 2025, according to J.P. Morgan Research forecasts. Increased demand for nickel in EV batteries is also expected to push prices higher, with the battery sector on track to become the second-largest consumer of nickel after the stainless steel market by the middle of the next decade. Of the base metals, after nickel, copper follows as a close second in terms of demand growth potential. As well as being used throughout an entire electric vehicle, the metal is also used in charging ports or stations and cables. Aluminum demand will also get a substantial boost as EVs grow in popularity and vehicles get lighter.
| AC Level 1 | AC Level 2 | DC Level 3 |
| Slowest and least expensive. Mainly used for overnight domestic charging. | Capable of charging a small- to medium-sized car (24 kWh battery) in 4 to 6 hours. | Rapid chargers that can typically charge a 24-kWh battery to 80% in roughly 30 minutes. |
At the end of last year, just under 600,000 public charging points were installed globally, with 320,000 of these in China according to Bloomberg New Energy Finance. The majority of these are AC Level 1 and 2, with only around 20% of all public charging points offering “fast” chargers.
"The market is going to be flooded with multiple ways to own electric powered vehicles. Interestingly, among the premium makers, BMW is first selling smaller EVs before venturing to sell a large SUV electric range. This is in clear contrast to Audi and Mercedes.”
JOSE ASUMENDI,
HEAD OF EUROPEAN AUTOMOTIVES, J.P. MORGAN
J.P. Morgan regional auto equity analysis
