In 2019, the globe registered a sale of 2.1 million electric vehicles (EVs). Moreover, by the end of 2019, the global electric car fleet had surpassed 7.2 million units, but the outbreak of COVID-19 caused the sale to decline to around 1.8 million units in 2020. This was due to the economic uncertainties prevailing throughout the world. Preventive measures such as the restrictions on mobility and lockdowns led to a substantial reduction in the sales of EVs due to the reduction in EV production by 14–16% in 2020.
According to the COVID-19 impact analysis on the electric vehicle industry by P&S Intelligence, a significant reduction in crude oil prices also hurt the EV industry. Since the surging prices of oil supplemented the adoption of EVs, their decline acted as a big setback for EV component manufacturers and marketing companies. Original equipment manufacturers(OEMs) contracted their production capacity, as the economies of scale were highly bent against their favor. Due to the low crude prices, people again started to prefer traditional vehicles over EVs.
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This is credited to several factors such as huge cost reductions in electric vehicle manufacturing and the growing popularity of these vehicles across the world. Moreover, due to the mushrooming scale of battery manufacturing and rapid improvements in battery technology, the demand for plug-in hybrid electric vehicles (PHEVs) and battery electric vehicles (BEVs) would surge sharply. This is because these advancements would make the electric vehicles highly competitive, in terms of the total cost of ownership.
Despite these turbulences, EV manufacturers are optimistic that the industry will boom in the coming decade. The market will have significant opportunities for self-reinforcing cost reductions in EV production. Due to the decline in the production cost, plug-in hybrid electric vehicles (PHEVs) and battery electric vehicles (BEVs) will be able to compete with vehicles using an internal combustion engine, in terms of the total ownership cost. Additionally, with EV makers taking precautionary measures, such as increasing the frequency of sanitization in production units and work stations, social distancing within dealerships, and sanitizing the products to be delivered, the industry is projected to rebound.
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Therefore, the optimistic approach by EV manufacturers is expected to help overcome the obstacles emerging due to the COVID-19 outbreak.
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