Electric car supply & demand: Which countries dominate the market?

There are well-known geographical trends for international buying habits in the automotive world, yet new technology will soon influence these trends and political pressure will alter them further.

For now they still hold strong. Drivers in the United Kingdom, for example, have long exhibited an insatiable appetite for imperious German cars. And those with a driving licence in the US prop up the Japanese automakers by buying hundreds of thousands of their reliable but ultimately prosaic sedans. The French, on the other hand, have done, currently do, and will always buy French. It’s almost a law.

Electric cars are subtly altering the status quo, however, as their sales are heavily influenced by local politics, prevalent social attitudes, and of course the cost of energy. So who are the emerging power players in the dawning era of electromobility?

Consulting firm McKinsey & Company have kindly supplied ecomento.com with some graphs that provide the answer – or at least part of the picture. The company’s ‘Electric Vehicle Index’ plots import/export data and sales figures from the world’s largest automotive economies and generates a ranking of ‘importance’. As you can see below, no single country is currently regarded as being much more significant than the rest, although it’s not quite that simple.

mckinsey-company-electric-sales-worldwide

These conclusions have been reached by using data for the sales of battery-electric, plug-in hybrid, and range-extended vehicles, discounting the enormous global market for hybrids. The cars used for this study are all capable of driving on electricity alone, in other words.

Unsurprisingly Norway dominates when it comes to market penetration of electric vehicles. Due to some very generous incentives – that will soon run out – the Tesla Model S was, incredibly, the best-selling car during September last year and the Nissan LEAF has also beaten Volkswagen’s Golf. Because of Norway’s non-existent electric vehicle exports, however, the Scandinavian country only ranks sixth on McKinsey & Company’s index.

At the opposite end of scale is Germany, where battery-electric and plug-in hybrid cars have endured the cold shoulder from buyers. Things are picking up after just 6,710 sales during 2013, but for such a prosperous country it speaks volumes that only 30 examples of the Tesla Model S were sold in January this year. Like the the French, however, the Germans are proud of their indigenous automotive expertise and models like the BMW i3 and the superb Volkswagen e-Golf we recently reviewed are expected to do extremely well in the future.

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Electric vehicle demand: No surprises here as Norway and Holland dominate

Despite poor domestic appetite for electric cars, Germany still makes it into the index’s top three, along with Japan and the USA. Japan’s inclusion is easily explained: the Nissan LEAF has sold to the tune of more than 100,000 worldwide, and that number could explode if the Chinese market develops a taste for the zero emissions hatch. The LEAF is also successful in the US, and in addition to sales of home-grown electric cars such as the 23,094 Chevrolet Volts sold last year (and a similar number of Tesla Model S’), it’s no surprise to see the States ranked top.

The chart below reflects this to a certain extent, although you may ask why Germany is so far ahead when the country’s automakers are only just opening their order books? What are the country’s engineers, marketers, and service personnel doing to justify this leap over their American, French, and Japanese counterparts?

The gulf is because the index for supply takes the form of a five-year prognosis, taking into account the depth and expertise in engineering a country’s automakers possess and the number of prototypes in development. With this in mind it’s no surprise that Germany is streets ahead, not least because Volkswagen Group has only just launched a electric vehicle offensive of potentially magnificent proportions. Tesla, on the other hand, is unproven in the long term and General Motors only has one battery-electric car to its name – the Chevrolet Volt.

global-electric-car-supply-side

Supply: Germany’s contribution is hugely disproportionate to domestic demand. This will change

Where the US, Germany and Japan can’t compete is market penetration. Tesla CEO Elon Musk recently said that his company would have to sell 100,000 cars a year just to hold a one percent share of the global car market. According to McKinsey & Company, Norway and Holland are already there, with market penetration rates of 1.9 percent and 1.1 percent respectively. Only when larger economies can say ‘one in every 10 cars here is electric’ will real progress have been made, many experts argue.

However, nearly 30,000 electric vehicles were registered in the US in the last quarter of 2014, so the market is certainly heading in the right direction.

With an increasing awareness of the damage pollution is causing to its population and global image, only China is likely to break into the top three ranked countries in the foreseeable future. When it does, however, don’t be surprised to see it quickly overtake the US. McKinsey & Company has previously estimated that the Chinese vehicle market will reach 22 million by 2020 – more than Europe or North America.