IHS Markit perspective
Implications | The |
Outlook |
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The number of electric vehicles (EVs) on offer to US consumers
is set to explode in the coming years, with EV investments and the
impact of those investments on automakers' financial results
subjects of intense scrutiny in recent months. IHS Markit has
recently released its latest sales-based powertrain forecast, and
this article looks at the outlook for the US market. With several
factors driving automakers to increasingly invest in a
zero-emissions future, IHS Markit forecasts explosive growth in the
number of electrified powertrain offerings in the US between 2018
and 2026.
By 2023, IHS Markit forecasts 43 brands will offer at least one
EV option - this will include nearly all existing brands as well as
new brands entering the market - compared to 14 brands offering EVs
in 2018. In 2018, 18 nameplates offered electric propulsion systems
in the US. In 2020, the number is forecast to increase to about 38.
By 2026, IHS Markit forecasts about 133 nameplates will offer an
electric powertrain in the US, whether standard or optional. Some
of these nameplates will be existing entries which expand to offer
an EV option, while others will be new to the market, like the
Mercedes-Benz EQC or Volkswagen I.D. 3. As today with Hyundai's
Kona and Ioniq and Kia's Soul and Niro, some brands in future will
offer EV, hybrid, and ICE solutions under one nameplate. As a
result, the net gain in nameplates on offer will be somewhat less
dramatic than initially might be thought, increasing from 361 in
2018 to 400 in 2022, but then slipping to 390 in 2024. This
forecast reflects, in a few cases, placeholder projects which could
ultimately come to market using the marketing power of an existing
nameplate. In any case, the level of choice in 2026 is likely to
prove daunting for consumers to navigate.
EV sales forecast
IHS Markit forecasts that sales of vehicles with an electric
propulsion system will reach 1.28 million units in the US in 2026,
compared with just less than 200,000 units in 2018. In 2018,
vehicles with electric powertrains accounted for 1.2% of the US
market, about double the share in 2017, an increase almost solely
due to the arrival of the Tesla Model 3. With this significant
volume growth, sales of vehicles with an electric powertrain are
forecast to account for 7.6% of total US vehicle sales in 2026.
These sales will be spread across multiple segments and brands,
favouring utility vehicles, as currently does the standard market,
and across at least 43 different vehicle brands. IHS Markit
forecasts that the top 10 brands will claim nearly 890,000 units of
the 1.28 million EV sales in 2026, leaving about 33 brands with a
combined 392,000 units. The competition growth can be illustrated
in a few ways. Average annual sales per model, excluding segment
leader Tesla, will be about 25,000 units. Excluding the top 10
brands offering EV models, the other 33 brands will have average
annual sales of 11,900 units in 2026. The sales volumes will vary
between models according to pricing, vehicle type, and brand
exclusivity. In the overall US light-vehicle market, the forecast
is for about 48 brands with a total sales volume of 16.84 million
units in 2026, an average of about 350,000 units per brand. In the
near term, EV competition will be extremely high. Increased choice
and availability will drive sales growth, but the number of vehicle
introductions is initially outpacing demand for the electric
propulsion option.
Segment outlook
The future of EV options is for a change from early entries in
the segment of compliance cars and small city cars to relatively
long-range vehicles and vehicles for specific uses, a shift which
is necessary for more widespread adoption of the vehicle type.
While in 2018, only 700 compact utility vehicles (UVs) were sold
with electric powertrains in the US, in 2026, this segment is
forecast to be the top EV segment, with a volume of nearly 400,000
units. In 2018, the top-selling EV segment was the compact car
segment, which includes the Tesla Model 3, with 130,581 units sold.
In 2026, the compact car segment is forecast to be the
third-highest selling EV segment, growing only to about 225,000
units. In 2018, there were EV options in only eight segments. The
result of the flurry of OEM activity between now and 2025 will be
EV options in 18 US segments. Overall, the mix is expected to be
similar to that for traditional powertrain vehicles, something
necessary to grow EV sales. To make EVs attractive to more buyers,
they must come in packages which fit with customers' expectations.
This means that, in 2026, we are expecting SUV EV sales to grow to
about 757,000 units in the US, nearly 60% of total EV sales. In
early 2019, there has been talk of introductions of full-size and
mid-size EV pick-ups, as Rivian has made a splash with a promising
option and GM and Ford have both committed to expanding the number
of EVs across their respective ranges; however, IHS Markit's latest
forecast sees only about 32,000 units of EV pick-ups sold in the US
in 2026. By comparison, full-size UVs, which have less extreme duty
cycles than full-size pick-ups, are forecast to sell about 69,000
units in the US in 2026.
Outlook and implications
Automakers across the globe are making massive bets on the
future of EVs, with Volkswagen (VW) perhaps making the most
aggressive moves in this segment. The investment will support what
is expected to be a fundamental shift in propulsion systems offered
in the decades to come, with the billions in investment earmarked
so far only the beginning of the change. IHS Markit forecasts that
EV sales in the US market will grow to about 1.28 million units in
2026. In this near-term period, we can expect a highly competitive
segment, with the new options on offer growing faster than
demand.
Global factors will also affect the growth of the EV market in
the US. Several automakers have announced ambitious investments in
EV markets, as well as aggressive sales targets. However, much of
the initial investment will support sales in Europe and China, and
several automakers may prioritise those markets. The next round of
European emissions regulations will introduce substantially tougher
rules and the penalties for missing them will be much higher. In
China, government policies encourage production in the country,
although there has been a somewhat inconsistent approach to
incentivising consumer behaviour. The sheer size of the Chinese
market, however, makes the opportunity for economies of scale
greater there. In the US, there is the prospect of emissions
targets advancing less aggressively than once planned, and less
aggressively than in Europe or China. However, the US remains the
second-largest market and success in it remains important to
automakers.
