The march towards electric cars will continue to accelerate. By 2025, 1 of every 6 cars sold will be electric, according to a new study by Swiss global financial services company UBS.
The report, which surveyed approximately 10,000 consumers, noted buyers’ strong positive interest in the idea of electric cars, coupled with a declining popularity in diesel engines (a bigger deal in Europe). In addition, the two major road blocks to buying electric cars—pricing and the lack of a charging station infrastructure—are slowly becoming smaller hurdles.
“The high purchase price (#1 reason for not buying an EV) should…become less relevant as EV powertrain costs come down faster than expected,” the report, written by several UBS analysts, says. “Our higher EV sales forecast is supported by a wave of investments in new charging infrastructure.”
Driving the increase is massive Chinese interest in electric cars. UBS’s survey of China showed that 58 percent of potential customers there were interested in buying electric cars. Their decisions are no doubt influenced by the Chinese government’s aggressive push towards electric cars, including the recent announcement that at some point in the coming years the country will ban the sale of diesel engine cars.
China’s focus on infrastructure is another big reason that consumers there feel more excited about the chance to buy an elecritc car, the report notes. “In 2013-14, China had only 20k public charging plots, which expanded to 50k by end- 2015 and 141k by end-2016. As per government forecast, this number would further expand to 300k by end-2017.”
One area where electric cars might break in earlier than expected is through corporations. “A key highlight of this year’s survey is that EVs [electric vehicles] are way more popular amongst people eligible for a corporate car. This result strongly supports our thesis that the corporate car segment will switch to electric fairly quickly,” UBS says.
A financial company, UBS tries to predict potential bull and bear markets for electric cars and finds a few big unknowns. The first challenge to the rise of electric cars are governments across the globe, which could easily place punitive taxes on their sales if they were inclined to promote certain industries over others. Batteries are also a concern. Although 70 percent of current electric car owners are “satisfied with the life of their battery,” UBS says, and they can cover 87 percent of all driving needs, there’s a strong perception that they’re not enough. Future battery improvements should be able to correct this, but one can never guarantee future technologies will be invented.
On the flip side, a best-case scenario for electric cars would see incentives for buying EVs, battery tech development, and additional charging station infrastructure. UBS says that in “this scenario, every fourth car sold in 2025 would be electric (23.7%).”
As for who is selling those cars, UBS predicts a changing marketplace. It names Tesla as the current leader in electric vehicles, with cars like the Model 3 cutting into BMW’s dominance as a status symbol. Not everything is sunny for Elon Musk, though. Looking “at future EV launches, existing premium brands are still preferred over Tesla and the lack of a dense dealer network could put Tesla at disadvantage, our survey shows.”
Telsa has emerged as an early contender for the standard car of the future, the next Honda Civic. But the next few years, if UBS is to be trusted, will be wide open to the competition.