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ISTI: EV Sales Will Maintain High Annual Growth of 20% in 2019 Despite the Fall in Car Sales Worldwide

published: 2019-11-07 0:30

Automotive sales worldwide in 2019 are projected to fall by 4.7% from the previous year, according to a report from the Industry, Science, and Technology International Strategy Center (ISTI). Car sales in the US, Japan, and Germany are estimated to register small annual increases, but car sales in both China and India will drop by around 10% from the previous year. The declines in the latter two countries will be considerable enough to drag down the global sales volume. One bright spot is the electric vehicle (EV) market. ISTI forecasts that global EV sales in 2019 will maintain a high growth rate of more than 20% as in 2018, with the total volume potentially exceeding 5 million vehicle units.

ISTI, which is an arm of Taiwan’s Industrial Technology Research Institute, points out in its report that automotive sales worldwide will come to around 90 million vehicle units in 2019, down 4.7% from 2018. EV sales, which are expected to surpass 5 million units in 2019, will account for roughly 6% of the total vehicle sales for the same year. Furthermore, their share in the overall vehicle sales is forecasted to rise above 10% by 2021.                              

The recent period has been tough for China’s automotive market. The ongoing trade dispute between China and the US has heavily impacted the domestic demand. The growth of the domestic automotive industry has also slowed down due to the Chinese government’s supply-side policies such as compelling firms to reduce excessive production capacity, cut costs, minimize financial risks, etc. Just as the trade dispute has negatively affected new car purchases, the structural reforms have reduced revenue stability for all those involved in the domestic automotive supply chain. All in all, China’s automotive industry is expected to go through a painful adjustment period.

In Japan, the long-delayed hike in the consumption tax had triggered a surge of new car purchases just before the policy came into effect this October. However, Japan’s automotive sales are not expected to grow significantly in 2019 because the expansion of the country’s economy has recently become sluggish with signs of weakness in manufacturing and exports. As for the US, the tax cuts and returning capital from abroad have benefited the domestic demand. Nevertheless, the growth of car sales in the US has also been severely constrained by the uncertainties around the trade dispute with China and many other factors. The cyclical downturn in the domestic car market, together with rising interest rates for auto loans, fewer favorable leasing deals, and a series of negative economic indicators, have dampened Americans’ willingness to buy new vehicles.

While the global automotive market as a whole is struggling, EV sales, which cover hybrid, plug-in, and battery electric models, are rising in face of headwinds. Global EV sales are expected to top the 5 million mark this year and sustain the high annual growth rate of over 20% as in 2018. The demand for hybrid vehicles has been the main driving force behind the expansion of the EV segment. ISTI currently estimates that hybrid models will account for 54.2% of the total EV sales in 2019. China, Japan, and the US remain the top three countries by sales of electric passenger vehicles. Also, ISTI’s projected ranking of automotive groups by EV sales for this year shows that Toyota, the Renault-Nissan alliance, and Honda will take the first, second, and third place respectively. While Toyota is now the leading brand in EVs, its main rivals are catching up in market share as the competition continues to heat up.

In the market segment of battery electric vehicles, brands such as Tesla, Nissan, BYD, and BAIC have performed exceptionally well. Although Toyota commands a dominant market share in hybrid vehicles, its weakness in the competition to develop pure electric models is quite evident. Moreover, governments around the world are also pushing for the phase out of internal combustion engines. Their policies have thus resulted in a steady increase in the sales of battery electric vehicles. Among the top five countries by growth in EV sales, three have already announced a ban on sales of gasoline and diesel vehicles by 2030. These three countries, in the order of their growth rates for EV sales, are Germany, Israel, and the Netherlands. ISTI’s report forecasts that the share of electric models in the overall vehicle sales will gradually expand, eventually comprising at least 10% of the global automotive market by 2021.

Lu-lin Hsieh, research manager at ISTI, said that although continuing growth in the EV demand is expected for the future, vehicles with an internal combustion engine (i.e. conventional gasoline and hybrid models) are still projected to make up as much as 76% of the total annual sales by 2030. Hence, it will take a long time for the automotive and related industries to make the transition to the technologies of battery electric vehicles.

(This article is an English translation of news content provided by EnergyTrend’s media partner TechNews. Photo credit: Pixbay.)

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