UBS Report: 1 Out of 6 Cars on the Road Will Be Electrified by 2025

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【Summary】UBS analysts highlighted influence to come from local governments, which can already be seen in India, Norway, China and Japan. Increased availability of EV charging infrastructure is also helping boost EV adoption worldwide.

  Michael Cheng  ·  Dec 06, 2017 4:29 PM PT
author: Michael Cheng   

UBS Group AG, a Zurich-based international company that specializes in financial and banking services, is very bullish about the EV sector. In a recently published report (conducted by UBS Evidence Lab), the firm increased its forecast for EV sales and adoption rates. 

By 2025, UBS researchers predict roughly 16 percent of EV sales penetration on a global scale, which equates to one out of six cars sold by that period. Europe is expected to lead EV adoption in the coming years, with over 33.3 percent (or one out of three) of vehicular units sold to be electrified.

Mass EV Adoption

A key takeaway from the EV survey stems from the rapid transition of gas-powered corporate fleets to EVs. According to the authors of the report, this segment is very interested in purchasing EVs. UBS analysts highlighted influence to come from local governments, which can already be seen in India, Norway and Japan.  

"The high purchase price (#1 reason for not buying an EV) should...become less relevant as EV powertrain costs come down faster than expected," said the authors of the report. "Our higher EV sales forecast is supported by a wave of investments in new charging infrastructure."

Interestingly, the report cites aggressive policies as a major catalyst for EV adoption in the next decade. China's dual-credit policy, for example, targets both EV production and sales. In the UBS survey, over 58 percent of China-based respondents expressed interest in buying an EV. On other hand, only 14 percent of Germany-based respondents were likely to purchase an EV.

The UBS report does not paint a clear picture of Germany's growing EV industry. According to Clean Technica, EV adoption is up in the country by 137 percent, which is close to two percent of the global market share. So far, the Audi A3 e-tron, Renault Zoe and the BMW i3 are the most popular EVs in Germany, based on sales.

EV Infrastructure and Competition

Increased availability of EV charging infrastructure is also helping boost EV adoption worldwide. Previously, lack of accessible charging hubs hindered EV sales. Now, with automotive companies doing their part in building and supporting new EV infrastructure, such drawbacks are no longer an issue.

"In 2013-14, China had only 20k public charging plots, which expanded to 50k by end- 2015 and 141k by end-2016. As per government forecast, this number would further expand to 300k by end-2017," highlighted the UBS report.

When it comes to rising competition in the EV space, Tesla is the automaker to beat. UBS analysts are of the view that BMW is in a position to dethrone Tesla from its top spot as leading EV manufacturer. This point in the report was made, based on increased demand for BMW's 3-series and the Tesla Model 3.

From a long-term perspective, Tesla's disconnection form local dealer networks may hinder its ability to dominate the nascent sector. UBS believes when other well-established car brands, such as Mercedes-Benz, expand their electrified lineups, Tesla could experience a shift in demand for its EVs. 

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