BOSTON — Sales of electrified vehicles — particularly plug-in hybrids and full battery electrics—are growing faster than expected, according to a new study from Boston Consulting Group.
Electrified vehicles — which stand at about 8 percent of global sales—will account for a third of sales by 2025, according to a report released this month, up from the company's previously forecast one-fourth of sales.
Aside from plug-ins and full electric vehicles, the company's definition of electrified includes conventional and mild hybrids. EV sales are expected to surpass internal combustion engine vehicle sales by 2030, taking 51 percent of the market.
This uptick in sales comes as traditional and new auto makers have more than 100 electric vehicle models in the pipeline for the next three years. Auto makers have committed $300 billion to EV development and continue to invest in vehicle charging infrastructure.
Boston Consulting says the uptick also places more pressure on auto makers, suppliers and government leaders to support electric vehicles.
The boost in EV sales largely is the result of a drop in the total cost of EV ownership and the fact that EVs present the lowest-cost solution to meet industry regulatory standards, the company says.
Government incentives, tighter regulations of tailpipe emissions in several markets, growth of the charging infrastructure and falling EV battery prices also are significant factors in the increase, Xavier Mosquet, managing director and senior partner at the consulting company, told Automotive News.
"We're now using our most aggressive assumptions in terms of battery price decline, which means that somewhere between 2022 and 2023, there will be a time where for most consumers, it would be a reasonable choice to buy an EV because it will be cheaper overall," said Mr. Mosquet.
The sales mix of electrified vehicles — mild hybrid, full hybrid, plug-in hybrid and full battery-electric vehicles — will vary by market, depending fuel prices, electricity and charging prices and driving-distance averages, the company says.
Financial and nonfinancial incentives in China have made it the leading EV market. In the U.S., electric vehicle tax breaks are starting to wind down for some auto makers.
The U.S. will be the slowest major market to electrify, Boston Consulting says, largely because of low gasoline prices and brisk demand for SUVs. Still, the U.S. won't be far behind Europe, Mr. Mosquet said, and holds an advantage in terms of charging infrastructure.
Mr. Mosquet said Toyota's and General Motors' backing of the Trump administration's efforts to rescind tougher fuel-efficiency standards — and any reductions in U.S. incentives — will minimally impact sales.
"If for any reason the federal government decided to stop the incentives, we'd be stuck in the middle because, between now and 2022, it will be hard to make a market.
"And so the car manufacturer would, in a way, be left on their own to sort of increase the price of gasoline cars and decrease the price of battery-electric vehicles." Mr. Mosquet said.
"By 2022, 2023, remember, it will be consumer-driven, so we won't need the incentives anymore."
Despite the optimistic forecast, he said, "The next three years are going to be challenging, and so if you're a car manufacturer or automotive supplier and you've invested in EV technology, you need to have a market and the consumer needs some support for the next three years."