The EV market comprised of about 2.0% of the total passenger vehicle market in 2013. This equates to a market size of
around 1.66 million units. In 2014, the market share of EVs/HEVs grew to just over 3%.
In the relatively short history of electric vehicles, HEVs have dominated the market, led by the Toyota Prius. HEVs
currently make up almost 88% of the EV market.
We expect the EV market to reach close to 6.4% of the total passenger car market by the end of our forecast period.
The BEV segment of this market is expected to grow at a far higher rate than HEVs and PHEVs and by the end of our
forecast period, BEVs will make up almost 50% of the total EV market.
Forecast Rationale
Supporting:
1. GOVERNMENT PROVIDING INCENTIVES FOR ALTERNATIVE FUEL VEHICLES MANUFACTURERS AND BUYERS –
Governments are pushing for mass scale adoption of alternative fuel vehicles worldwide in order to reduce the
dependency of their respective nations on oil and to reduce emissions. In the US, Obama recently proposed new
incentives to support the growth of the industry.
2. LOWER COST OF OWNERSHIP – Buyers of electric vehicles stand to make a number of cost savings on vehicle
registration and other sales taxes because a number of Governments around the world are trying to incentivize
consumers to patronize green technology. Electricity is cheaper as a fuel than gas or oil. Therefore, users of electric
vehicles realize cost savings over the life of their cars compared to owners of vehicles running on Internal Combustion
Engines. Owners of EVs get many privileges such as access to high-occupancy vehicle lanes, free parking, and
separate driving lanes in many countries, making their commutes shorter. These privileges also result in net savings
for EV owners. Additionally, owning an EV eliminates trips to the gas station and results in lower rates of
depreciation and hence lower spend on servicing.
3. R&D IMPROVING VIABILITY OF EVS – EVs have until now faced two major issues, namely limited range and high price
(due to high battery costs). These issues are being resolved through technological improvements. Companies like
Tesla are already offering cars with impressive range (300 miles for its 85 kWh battery pack option), and battery costs
are expected to drop by one-third by 2017, with further price drops expected thereafter.
4. VEHICLE AVAILABILITY – A large number of car manufacturers have entered, or are planning to enter, the EV market,
including reputed names such as BMW, Mercedes Benz, and Audi. The availability of a wide range of options will
provide an incentive for buyers to purchase these vehicles.
Mitigating:
5. LACK OF ADEQUATE CHARGING INFRASTRUCTURE – Although technology has led to faster charging rates for EVs, long
distance commuters may have to charge their vehicles multiple times. This would require a charging infrastructure
across the nation, similar to the widespread access to fuel stations. Governments in the US and China are working
towards developing such an infrastructure, but it is still uncertain whether this will be developed in time to enable the
EV market to grow at the expected rate.
6. CUSTOMER ATTITUDE TOWARDS EVS – Although a large number of customers are open to the idea of purchasing an
EV, there are several factors which might prevent them from doing so, including a) higher prices relative to similar
ICE (internal combustion engine) vehicles, b) fear that the battery may overheat, explode, or malfunction, c) lack of
adequate recharging infrastructure, d) limited range - especially for long distance commuters.
Sources for historical data and explanations can be found on the Trefis.com website (link)
— MODEL S MARKET SHARE —

This represents the market share of Model S as a percentage of the total EV market.

TREFIS ANALYSIS for TESLA MOTORS

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