What is the Potential Demand for Electric Vehicle Component?

In recent years, the sales of electric vehicles have grown massively and with the increasing concerns being raised over the escalating air pollution levels and surging greenhouse gas (GHG) emissions, this trend will continue in the coming years. According to the International Energy Agency (IEA), electric car sales surpassed 2.1 million units in 2019. This augmented the stock of electric cars to 7.2 million units. Furthermore, the organization reported that 3 million new electric cars were registered across the world in 2020, recording a growth of 41% from the number reported in 2019. 

Moreover, the governments of several countries are providing various financial incentives such as tax exemptions and purchase rebates for augmenting the deployment of electric vehicles. For example, the federal government in the U.S. is providing an Internal Revenue Service (IRS) tax credit between $2,500 and $7,500, depending on the capacity of the electric vehicles and the size of the batteries used in them. With the provision of these kinds of incentives by several governments, the sales of electric vehicles are mushrooming, which is, in turn, propelling the demand for electric vehicle components across the world.  

Because of the aforementioned factors, the global electric vehicle component market revenue is expected to rise from $22.2 billion in 2018 to $157.4 billion by 2025, while the market will progress at a CAGR of 29.4% from 2019 to 2025. Depending on component, the market is classified into battery pack, electric vehicle supply equipment (EVSE), motor, controller, DC-DC converter, high-voltage cable, power distribution module (PDM), thermal management system, and vehicle interface control module (VCIM). 

Geographically, Asia-Pacific is currently dominating the electric vehicle component market and the situation will remain the same in the coming years as well, as per the forecast of the market research company, P&S Intelligence. This will be because of the implementation of various initiatives and policies by the governments of the regional countries for propelling the deployment of electric vehicles. For example, the Chinese government is providing subsidies for encouraging the adoption of electric vehicles in the country. Owing to these subsidies, the deployment of electric vehicles increased by more than 60% in the country from 2017 to 2018.

Similarly, the Indian government announced in 2017 that it is targeting to create an electric vehicle fleet in the country by 2030. Furthermore, the government launched the National Electric Mobility Mission Plan 2020 in 2013 for promoting the deployment of hybrid and electric vehicles in the country. The large-scale deployment of these vehicles will push up the demand for electric vehicle components, thereby causing the expansion of the electric vehicle component market in the coming years.

Thus, it is safe to say that the sales of electric vehicle components will skyrocket across the world in the forthcoming years, primarily because of the growing adoption of electric vehicles, on account of the increasing environmental concerns, surging implementation of favorable government policies, and the provision of financial incentives by the governments of several countries.