Combustion engines peak as the “inevitable” EV future arrives

The demand for internal combustion engine (ICE) vehicles has experienced its peak, making way for the growing electric vehicle (EV) market, which looks set to grow in line with the developing battery market. However, the industry will be constrained by the limited availability of charging stations and slow installation processes.

The shift away from ICEs is already firmly underway, with the EV market experiencing massive international growth. Confused.com car insurance compared the annual change in EV sales since 2017 globally, noting the top ten countries have all seen growth rates of over 100%. Brazil topped the list with a 285.5% annual growth in EV sales, while Israel and India followed with 281.8% and 183.4%, respectively.

The EV "tipping point"

David Leah, Senior Analyst at GlobalData’s Powertrain team, considered this market shift towards EVs: “It’s not going to happen overnight and there remain a number of risks that could slow the transition down. That said, considering external and industry trends, the shift to zero-emission vehicles seems inevitable.”

This “inevitable” shift is being driven by automakers’ increasing commitment to electrification, incentivised by government policies. In Europe, these include the EU’s CO2 emissions regulation for cars and vans, whilst in China, the New Energy Vehicles (NEV) mandate assigns credits to vehicles depending on electric range, energy efficiency, and rated power of fuel cell systems.

China’s model followed California’s Zero-Emission Vehicle (ZEV) program, which requires large-volume and intermediate-volume vehicle manufacturers to ensure that a certain proportion of their sales are plug-in hybrid EVs or zero-emission vehicles.

With 10 million electric vehicles on the road globally in 2020, this change in approach by manufacturers has already translated into a shift in consumer purchasing habits, as companies are seeing sales reflect the move away from ICEs. BMW’s Chief Financial Officer Walter Mertl’s stated this week that: “The tipping point for combustion engines was last year … Future volume growth will primarily come from battery electric vehicles.”