VW targets of 3 million electric cars by 2025
When you look across the electric vehicle market, there are some very ambitious figures and some very conservative forecasts. Just this week Volkswagen group announced the launch of a "family" of electric cars starting in 2019. While we await more details, the company expects to sell up to 3,000,000 battery electric vehicles by 2025 which is ambitious, to say the least. So, what can we expect from the electric vehicle market over the next decade? Is Volkswagen right to target 3 million electric cars by 2025?
At this moment in time, it is pure guesswork as to how many electric vehicles will be sold by 2025 and what share of the global marketplace they will hold. BNP Paribas believes electric vehicles will have a 16% share of the global market by 2025 while IHS Markit is looking for just 3.4%. When you bear in mind the millions of vehicles sold each year this is a massive difference both concerning market share and actual vehicles sold. However, it does highlight the difficulty in forecasting with any confidence how the electric vehicle market will develop in the short and medium term.
Battery costs are vital to the future
There is a suspicion that the likes of Volkswagen are looking for unachievable forecasts so that they can talk down the price of battery packs. The idea is that if you target a specific figure, let's say 1 million units, you will get a significant discount compared to a long-term order of for example 500,000 units. As the battery companies also jockey for position and market share they will be very keen to do deals with those who seem on the crest of a decent market share. So, over the next couple of years we will no doubt see some tough negotiations and pie in the sky figures, but ultimately there is every confidence that electric vehicle sales will increase dramatically over the next decade.
The EV sector has a history of poor guidance
Whether you are looking at the likes of Renault-Nissan, Tesla, General Motors or Volkswagen, the well-known EV manufacturers do not have a good track record of forecasting future sales. Time and time again they have missed targets to the frustration of analysts and investors. It is only the fact that sales continue to move ahead at an acceptable pace which has allowed the likes of Tesla to revisit the marketplace time and time again raising much-needed finance.
Soon, the industry will need to deliver on promises, reduce unit prices via increased sales and make electric vehicles more accessible to the masses. It would be wrong to suggest no progress has been made in this particular area, but it is slow and unpredictable. Even though governments around the world have invested significant funds into the electric vehicle market more needs to be done. Many believe that the adoption of electric vehicles as a standard for government/public sector transport would be an excellent boost in the short, medium and longer term. After all, if governments around the world believe in electric vehicles (as they are suggesting), then early adoption would save significant funds from the public purse?