Electric car sales boom despite coronavirus-induced slump in global vehicle market

Lockdowns and work-from-home policies across the world have unsurprisingly reduced demand for new cars. However, the electric car market is defying this trend. While total global passenger car sales are expected to drop by 15% this year, EV sales are set to broadly match the 2.1 million sold in 2019, resisting the global recession caused by the pandemic. This will account for a record 3% of global car sales, up from 2.6% in 2019. The number of electric cars on the road is expected to reach almost 10 million by the end of 2020.

Both full battery electric vehicles (BEV) and plug-in-hybrid electric vehicles (PHEV) sales are on the rise, and this is not only in terms of their market share, but also in absolute terms in some countries.

A gleaming Tesla, the most luxurious of the EV brands

China accounts for around half of all EV sales, but Europe is following close behind and is leading the way in the recent boom in the market. In Sweden, where the overall new passenger car registrations in May decreased by 50%, plug-in car sales increased by about 20% since last year to 3,424. This has translated into an astonishingly high market share of 22%. Meanwhile, in Germany, EV sales from January to June increased from 47,584 in 2019 to 93,848 in 2020.

How do we explain this trend?

Firstly, economic factors might help to explain why the electric car market has managed to defy gravity. Global electric car sales grew by at least 30 percent every year over the past decade (except for 2019, when growth slowed down to 6% as the regulatory environment changed in China), and the variety of models available has continued to increase to match the diversity in consumers’ needs. This means the EV market has a pre-existing advantage over the general automobile market.

It is also possible that the typical electric car consumers, who tend to be wealthier, have been less affected by the global economic crisis. The fact that sales of luxury cars in general have declined less than those of cheaper brands supports this theory.

But psychological factors – a change in people’s mindsets – may also play a role. It is likely that the COVID-19 experience has increased our concern for the environment, and encouraged people to think more about the consequences of their actions on the community – whether that be local, national or global – rather than just on their own narrow world. Moreover, research suggests that environmental awareness increases the likelihood that a buyer will switch to an electric car.

The pandemic has brought the issue of climate change even more to the fore

There are no hard studies yet of how the pandemic has shifted attitudes in this sense, but it seems that the concept of making personal sacrifices for the benefit of the wider community (masks, social-distancing etc) very much reflects the sentiment behind the struggle against climate change.