We are delighted to present a Q&A session with Gaurav Batra, the Associate Director and Automotive Insights Lead at EY. With a wealth of experience spanning consulting, research, analysis, business development, and project management across various industries, Gaurav has established himself as a domain expert in the mobility sector. He is responsible for delivering high-impact analysis and insights, particularly in the areas of electric vehicles (EVs), the future of mobility, and automotive retail and innovation. Gaurav has represented EY in numerous industry conferences, anchoring presentations and panel discussions, and his insights have been featured in leading industry publications.

In this Q&A session, we delve into the evolution of the global EV market, the forecast for key regions such as the US, China, and Europe, the necessary adaptations in the manufacturing landscape, the role of hybrid and plug-in hybrid vehicles in the transition to fully electric vehicles, and the key insights to be shared at the GEMTECH Forum.

#GEMTECH: How do you see the evolution of the electric vehicle (EV) market globally over the next decade?

#Gaurav Batra: Electric vehicles (EVs) have been gaining significant market share, capturing approximately 11% of total light vehicle sales in 2023, a substantial increase from around 1.5% in 2018. In terms of unit sales, EVs surged to approximately 10 million by the end of 2023, which is nearly seven times the sales figures of 2018.

Despite years of robust growth for electric vehicles, recent months have seen a moderation in this trend, with a noticeable pivot towards Hybrid Electric and Plug-In Hybrid Vehicles, which have outperformed pure EVs.

This potential short-term slowdown in EV sales can be attributed to several factors, including macroeconomic variables such as uncertain economic conditions and ongoing geopolitical tensions, as well as concerns about affordability. More specific to EVs, issues such as inadequate charging infrastructure leading to range anxiety, delays in regional EV adoption targets, reductions in EV incentives, and shifting buyer preferences due to uncertainties around after sales costs and resale values of EVs have also played a role.

The market is also transitioning from early adopters to mainstream consumers, who have different expectations and motivations. We have carried out specific research on this topic, known as EY Mobility Consumer Index, involving analysing responses from 14,500 participants across 20 countries to gauge consumer attitudes towards EVs. The study identified five unique consumer personas, each differentiated by their perspectives on EVs and sustainability, cost sensitivity, and mobility preferences. As other market elements align, these insights could be instrumental in deepening the understanding of the consumer. For more information, visit our report at https://go.ey.com/4bBUyw1

In reaction to these market dynamics, EV manufacturers are scaling back on Battery Electric Vehicle (BEV) investments, introducing more affordable and SUV BEV models, and shifting their focus to hybrids and Plug-In Hybrid Electric Vehicles (PHEVs). However, we view these adjustments as transitional in the broader shift towards EVs.

#GEMTECH: Can you share some insights from EY's forecast on the EV market for the US, China, and Europe?

#Gaurav Batra: Our light vehicle forecast is derived from the proprietary EY Mobility Lens Forecaster tool, an AI-enabled model that utilizes neural network capabilities to offer EY's perspective on the transition towards electrification in key global markets (Europe, US, and China) through to 2050.

Our recent insights for the combined markets of the US, China, and Europe reveal:

Despite some short-to-near-term scepticism, global sales of Battery Electric Vehicles (BEVs) remain robust, albeit with a slower growth rate. Sales are expected to increase from 8 million units in 2022 to an estimated 12 million in 2024, with projections reaching approximately 30 million by 2030.

• By 2031, global BEV sales (combining light vehicle sales from the US, China, and Europe) are forecasted to surpass 50% of total vehicle sales, with the potential to dominate over 90% of the market share by 2038.
• It is anticipated that the sales share of pure EVs (BEVs) will overtake that of Internal Combustion Engine (ICE) vehicles by 2028, with China maintaining its position as the leader in global BEV sales throughout the forecast period up to 2050.
• Regulatory initiatives aimed at banning new ICE vehicle sales are expected to diminish their market share to below 1% in the US, China, and Europe by 2038.
• Driven by a rise in demand for hybrids, Europe is predicted to lead global hybrid sales volumes until 2026, after which China is expected to assume the lead from 2027 onwards.
• While China is projected to continue leading in BEV sales volumes over the long term, its dominance in EV sales is forecasted to decrease from around a 70% share in 2023 to 50% by 2036, as Europe and the US are expected to increase their shares of EV sales in the short and medium term.

Over the next decade, several factors are likely to stimulate global EV penetration, including:

• Falling battery prices and advancements in battery chemistry (cathode active material), leading to price parity with ICE vehicles.
• Stringent emission targets, monetary and non-monetary incentives, and improved economic and geopolitical conditions.
• An accelerated launch cycle for entry-level, affordable, and competitive EVs. Automakers' committed targets to electrify their product ranges, driven by mandates.
• Increased consumer confidence due to enhancements in charging infrastructure. These factors are expected to support sustained BEV growth in the long term.

Overall, the next decade is set to be a transformative period for the electric vehicle market, with growth, innovation, and policy support driving the widespread adoption of electric mobility on a global scale.

You can read more about our analysis here EV sales stall in US and Europe as market uncertainty persists – EY Analysis | EY - Global

#GEMTECH: How does the manufacturing landscape need to adapt to accommodate the shift towards EVs?

#Gaurav Batra: The manufacturing landscape is undergoing significant changes due to the influence of geopolitics, which is shaping the evolution of the electric vehicle (EV) sector through regional dynamics, supply chain complexities, and trade policies.

As the shift to eMobility unfolds, we are witnessing a reshuffling of the global manufacturing hierarchy, with new countries and regions emerging as key players in the industry.

China has taken a lead in securing access to essential raw materials and developing robust supply chains, accounting for a substantial portion of the world's battery manufacturing capacity. Over time, China has become a dominant force in EV production and is now looking to export its excess manufacturing capabilities.

Major markets such as the US, Europe are striving to establish their own manufacturing and supply chain ecosystems. This ambition is evidenced by significant announcements related to battery manufacturing and supply chain development. The US has implemented 100% import duties on imports from China, with the EU also now introducing tariffs to counteract the subsidies provided by the Chinese government.

It is also noteworthy that several other regions are emerging as significant contenders in this global shift. Markets such as Southeast Asia, India, and the Middle East are positioning themselves to play a role in the EV industry, promising an increasingly competitive and exciting times ahead for the industry.

#GEMTECH: What role will hybrid and plug-in hybrid vehicles play in the transition to fully electric vehicles?

#Gaurav Batra: Hybrid and plug-in hybrid vehicles (PHEVs) are set to play a pivotal role in the near to mid-term transition towards electric vehicles (EVs). With EVs as the ultimate goal, hybrids and PHEVs act as critical bridge technologies, providing consumers with an intermediary step towards full electric mobility.

While early adopters have fuelled the initial surge in EV sales, hybrids and PHEVs are now aiding more price-sensitive, mainstream car buyers who have shown reluctance towards EV adoption. These transitional vehicles help mitigate scepticism by offering a taste of electric propulsion. They allow consumers to practically test range anxiety in pure EV mode and, in the case of PHEVs, to become accustomed to the concept of vehicle charging.

The current market trends reflect this, with a noticeable increase in hybrid and PHEV sales globally. According to the EY Mobility Lens Forecaster, the combined sales share of hybrids and PHEVs in key EV markets (Europe, US, and China) is expected to surpass that of BEVs in the short term, reaching an estimated 29% of total powertrain sales by 2026, compared to a projected 27% for BEVs. In 2023, hybrids and PHEVs already account for approximately 19% of sales, compared to BEVs at 17%, indicating their role as a transitional solution towards the adoption of fully electric vehicles.

However, it is important to note that neither hybrids nor PHEVs can deliver the full benefits necessary to achieve carbon neutrality and circularity in the mobility value chain. Therefore, while they are instrumental in the current shift, these technologies are ultimately seen as transitional, paving the way for the eventual dominance of pure electric vehicles.

#GEMTECH: What key insights do you hope to share at the GEMTECH Forum regarding the future of the EV industry?

#Gaurav Batra: I am truly excited about the advancements occurring in this region, which are undoubtedly fuelled by a strong political commitment to position the area as a leader in the field of electric vehicles and mobility. With a roster of distinguished organizations and speakers set to participate, I look forward to an enriching experience and dialog from the forum.