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25 March, 2021, New York, USA – The automotive relay market is expected to reach $24.3 billion by 2028, rising at 6.1% CAGR, thanks to growing demand for electric vehicles. According to the International Energy Agency (IEA), the sales of electric vehicles witnessed a record growth in 2019, surpassing an already record year in 2018. The IEA reports that the electric vehicles accounted for 7.2% of global vehicles in 2020, rising from 2.6% in 2019. The increase in electric vehicle sales jumped by 40% y-o-y growth between 2019-2020. According to the IEA report, the significant expansion of EVs into new arenas like two-wheelers, trucks, and buses promises to remain a major driver for growth during the 2020-2030 period. Moreover, the IEA also predicts more stability in the global EV market, as governments around the world have moved from subsidies to rely more regulatory, and other structural measures. The IEA reports that this will likely result in clear, long-term goal setting for manufacturing of EV vehicles.
According to the IEA estimates, in 2019, 7.2 million EVs were spotted on the road. This represented a major increase from 2010, wherein only 17,000 EVs took to the roads. Furthermore, the growth of EV remains dominated by manufacturing in China, but many countries are taking strong initiative to introduce EVs to consumers. For example, IEA reported that over 9 countries had more than 100,000 EVs on the road in 2019, while at least 20 countries had reached EV market penetration above 1%.
Cost Reductions and Growing Popularity to Remain Key Trends
According to the IEA, there are three key trends that are key to understanding the growth dynamics of the EV market. In 2019, global passenger vehicle markets witness a significant decline. The global economy for passenger vehicles went into recession in many countries. Furthermore, major car markets like India, and China witnessed fewer sales in 2019, as opposed in 2018. Despite this looming bleak forecast, the EVs managed to capture a 2.6% of total market share, and posted a record number growth in the same year. In Europe, the EVs managed to capture 3.5% market share in 2019, while in China, EVs managed to penetrate 4.9% of total car sales. Furthermore, these trends took place despite the cutbacks on subsidies from the various governments. For example, China reduced its subsidies for electric manufacturers by half in 2019. The US tax credit program ran out of steam for key EV automaker like Tesla, and GM in the same year. Despite the setback which resulted in decline in sales in China in the second half of 2019, and United States, the EV market continued to shine in Europe with 50% increase in sales in the same year. The decline in sales in the second half only slowed down the growth of EVs.
The IEA estimates that growing performance driven features, declining component costs and increased product offerings in the market has already made way for mass adoption. For example, every key global manufacturer is planning to launch an electric vehicle in the market by 2025. Moreover, today EV embed batteries which provide energy density 20-100% higher than the models offered in 2012. Similarly, the battery costs have reduced by more than 85% since 2010. Additionally, models like Tesla 3 have resulted in significant spikes in consumer interest in the global EV industry. The IEA estimates that during 2020-2025, the global vehicle manufacturers will launch over 200 EV models in the market. Moreover, these new generation of vehicle will also cater to niche segments like popular sport vehicles, which will likely up the popularity of EV vehicles further. The IEA also attributes recent slowdown in EV purchases to growing consumer mind-set about waiting for the ‘latest and best’ model on offer.
Electric Scooters and Buses to Remain Key Niche for Players in the Automotive Relay Market
According to the IEA, there were half a million electric buses in operation in 2019. Furthermore, 2019 also witnessed over The phased out subsidies in key countries like China affected the sales of these buses. However, with improvements in rapid charging, these numbers will likely rise once again. For example, in China, most cities today operate a fully operational fleets of partially or fully electric buses. Furthermore, countries like Russia have announced decision to fully abandon the purchases of diesel public buses. It is estimates that the country will purchase 600-800 electric buses annually to replace its existing fleet. Furthermore, some municipalities on their own have taken positive initiatives to support growth of pollution-free cities. For example, the city of Santiago in Chile has become home to the largest bus fleet outside of China. Some notable cities around the world which have deployed electric buses include Kolkata, Shenzhen, Helsinki, Santiago De Chile, and each are unique in their adoption, furthering opportunities for players in the global automotive relay market.
The demand for electric two-wheelers also keeps presenting myriad of opportunities for players in the automotive relay market. Two-wheelers due to their economic promise remain a promising niche for players in the automotive relay market. Two-wheelers require many electric switches similar to three-wheelers. Moreover, due to their low-costs, these are unlikely to switch to automated switches, making way for cost-effective conventional automotive relay products. The IEA estimates that currently the stock for electric two-wheelers stands at around 350 million. Countries like China have introduced bans on internal combustion engines for two-wheelers. Moreover, today, 600 cities around the world in over 50 countries exhibit strong demand for electric two-wheelers. The growing promise of trends like shared mobility, mass demand for two-wheelers in emerging countries, and promising regulatory support for sustainability goals will drive tremendous growth for players in the automotive relay market.
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