The design of government policy has been fundamental in providing a foundation for the global EV market, but it is unlikely that government incentives will remain high in the most developed markets. In these markets, it is likely the EVs will become more available in luxury class segments, where the plug-in electric vehicle (PEV) premium is less pronounced relative to comparable vehicles due to higher overall vehicle prices.

Furthermore, the market for vehicles that reduce fuel consumption is becoming more competitive due to other fuel efficient and alternative fuel technologies. Of note are fuel efficiency advances made to conventional internal combustion engines (ICEs) through stop-start technologies, the use of lightweight materials for body panels and chassis, engine downsizing, and growing interest in diesel. These advances to the conventional vehicle platform threaten HEV market share in economy class segments and are widely applicable to body types outside of the standard hatchback profile typical of EVs. Growth in HEV, PHEV, and BEV platforms will be contingent upon expanding EV availability outside of the small hatchback segment into larger vehicle formats such as sport utility vehicles (SUVs) and trucks.

—“Electric Vehicle Market Forecasts”

Navigant has enhanced its EV forecasts model to provide vehicle segmentation forecasts broken out in three scenarios: conservative, base, and aggressive. The model consists of of two major elements: automaker EV roadmaps and the EV return on investment (ROI).

• Navigant Research developed the automaker EV roadmaps on a brand-by-brand basis determined by existing brand portfolios; presence by country; stated EV drivetrain preference (HEV, PHEV, and BEV); and government policy regarding EV development.

• The EV ROI element is an assessment of how competitive each EV is against its conventional ICE counterpart by class, body type, brand, and drivetrain. Variations across these segmentations determine the business case of any given EV platform on an EV-by-EV basis and provide an understanding of how many sales may be expected from an EV introduction.

Variables influencing each scenario include forecasts on retail fuel prices, electricity rates, conventional ICE fuel economy, HEV fuel economy, improvements in lithium ion (Li-ion) energy density, cost reductions to Li-ion batteries, government incentives to drive market growth, and government policies to drive EV development.

Light-duty EV sales by scenario, world markets: 2014-2023. Conventional hybrids (HEVs) and plug-ins (plug-in hybrids and battery-electric vehicles). Source: Navigant. Click to enlarge.

Navigant forecasts the global light duty EV market—including conventional hybrids—will surpass 2.7 million vehicle sales in 2014, with plug-in EVs accounting for roughly 12% of that. Navigant forecasts the global EV market (including conventional hybrids) will grow to reach nearly 5.8 million vehicles in the conservative scenario and nearly 7.0 million in the aggressive scenario.

Although PEVs only account for 12% of the EV market in 2014, Navigant expects PEV sales to expected to increase to more than 2.5 million units in 2023, capturing 39% of the segment. HEV sales are expected to surpass 2.4 million in 2014, but will not grow as quickly as PEVs, reaching nearly 3.9 million units by 2023.