The electric future of automation
The surge in adoption of electric vehicles indicates the steady shift towards a greener, more cost-efficient future
The global automotive industry is rapidly moving to electrically powered vehicles.
This transition, fuelled by technological innovation, environmental imperatives and shifting consumer preferences, is reshaping the automotive manufacturing landscape and gradually driving the evolution of transportation infrastructure worldwide.
Increased adoption
GlobalData forecasts a robust growth trajectory for electrified vehicles. It anticipates a compound annual growth rate of 15%, reaching 53.9 million produced units between 2023 and 2028.
Electrified vehicles is a broad term encompassing all vehicles that use electricity to some extent to move the vehicle. The electrified vehicle sector comprises battery electric vehicles (BEVs), hydrogen fuel cell vehicles and hybrid segments.
In 2023, hybrid vehicles made up the largest share of electrified vehicles globally, at 60.1%, according to the GlobalData estimate. Although this figure is expected to decrease to 46.1% by 2028 as BEVs grow their share from 39.8% in 2023 to 53.7% in 2028.
One reason for this increase in EV market share is the falling cost of buying and owning an EV. Electric and hybrid cars have tended to be more costly than traditional internal combustion engine (ICE) vehicles. However, as EVs become more affordable, consumers have a broader range of choices at lower costs, encouraging their take-up.
Preferences are also influenced by falling maintenance costs, improved range and increasing availability of charging infrastructure.
As the EV market grows, attention is turning to China’s battery production dominance.
China is strategically positioned to dominate the EV market, with over 70% of the global battery production supply chain.
Projections indicate that by 2030, Chinese-made EVs could constitute 60% of the world’s EV fleet. This underscores not only China’s manufacturing prowess but also its commitment to shaping the future of transportation on a global scale.
While China continues to dominate production and infrastructure, early-adopter European markets exhibit the highest rates of EV penetration. Norway has the highest EV penetration rate, with 81% of new vehicle registrations, followed by Sweden at 53% and the Netherlands at 35%.
Middle East market
The Middle East has historically been a slow adopter of EVs. The prevalence of cheap fuel and the preference for large SUVs has stymied penetration rates. Where there have been inroads, it has been in the hybrid segment thanks to their mitigation of range anxiety, which is compounded by relatively few public charging points.
For example, there are an estimated 50,000 EVs in the UAE and according to charging locater website Plugshare, there are approximately 800 total charging stations in the nation, which equates to about 62 vehicles per charger. This compares unfavorably to some other markets like the UK which has 1 charger for every 16 vehicles and China with 1 charger for every seven vehicles.
GlobalData estimates that some 107,000 hybrid vehicles were sold in the Middle East and Africa in 2023, a figure that is forecast to more than double to 280,000 units by 2028. But while this is impressive growth, it pales in comparison with other regions and highlights consumers’ continuing reluctance to embrace the technology.
As the market grows, key automakers in the US and China are vying for market share. General Motors is poised to introduce models such as the Cadillac Lyriq, GMC Hummer EV and Chevrolet Bolt EUV. Ford is also preparing to debut its first EV in the region.
Chinese brands such as BYD, Nio and Xpeng Motors have also established a strong foothold in the Middle East market. This growing range of options will put more pressure on current market leaders such as Volkswagen, Nissan, Hyundai, BMW and Tesla.
GCC states are also eager to gain market share with homegrown production. Saudi Arabia’s Public Investment Fund (PIF) is building a factory in Rabigh to assemble 150,000 EVs a year under the Lucid Motors brand, in which it owns a significant stake. The production agreement also commits the PIF to acquire up to 100,000 vehicles from the plant over the next decade.
In parallel, the sovereign wealth fund has started constructing its wholly homegrown Ceer EV production plant. A joint venture with Taiwan’s Foxconn, Ceer is the first Saudi EV automotive brand and the first to be designed and manufactured in the kingdom.
Riyadh has also forged a $5.6bn partnership with Chinese EV startup Human Horizons to develop, manufacture and sell EVs. Not to be outdone, the UAE has taken a 7% stake in Nio, an EV manufacturer based in Shanghai.
Government backing and initiatives
Government strategies and regulations are also expected to drive EV adoption. The UAE is pushing for greater use of EVs as part of its 2050 net-zero target.
The nation aims to decrease energy consumption in the transportation sector by 40% and cut carbon emissions by 10 million tonnes by 2050, which can only be achieved through strong EV adoption.
At an emirate level, Dubai is rolling out its Green Mobility 2030 strategy, which aims to have around 42,000 EVs on its streets by 2030.
In 2022, neighbouring Abu Dhabi published a regulatory policy outlining principles governing EV ownership, installation and management of supply equipment, power supply for charging installations and pricing.
Additionally, to address its charging infrastructure concern the Dubai Electricity and Water Authority (DEWA) is aiming to install 1,000 public charging stations in the emirate by 2025, a substantial increase in comparison to the 620 stations recorded at the end of 2022.
In a statement by Adnoc Distribution, the UAE’s largest fuel and convenience retailer said that an expected 70,000 charging points are required in Abu Dhabi by 2030 to meet growing EV demand with an investment of up to $200 million.
Challenges ahead
Despite the sharp growth in adoption rates worldwide as electrified vehicles become more affordable, the sector still needs to overcome other challenges.
The limited availability of critical components, such as rare earth metals used in batteries, can constrain production and impact affordability.
To ensure sustainable growth, a multifaceted approach involving diversification of supply chains, investing in recycling technologies and encouraging international cooperation will be required.
Perhaps most importantly, if the industry is to succeed, misconceptions about these vehicles, including concerns about their performance, maintenance and environmental impact, will need to be overcome.
By addressing these challenges comprehensively and collaboratively, the automotive industry can pave the way for a sustainable and prosperous future, driving global adoption and contributing to a cleaner, greener transportation ecosystem.
