'Irreversible trend' will spur global EV sales

Smart e-mobility is the irreversible trend of the global automotive industry, with battery electric vehicles (BEV) expected to account for at least 64 percent of total new car sales by 2040, according to a recent Roland Berger report.

In Automotive Outlook 2040, the Germany-based international management consultancy states that in its base-case scenario the ratio could reach as high as 70 percent, although it varies with regions.

The report says Europe is expected to see a 99 percent BEV share by 2040, with e-fuels playing only a very minor role. China, which is the world's largest new energy vehicle market, is forecast to have a BEV share of 70 to 85 percent by the same year.

The figure will stand between 42 and 60 percent in the United States, while in the rest of the world, the BEV share is expected to grow to around 50 percent.

Among major economies, Roland Berger expects China to set the pace for the sales and revenue growth market for global carmakers.

The report states the Western markets, along with Japan and South Korea, have either reached or will soon reach their zenith in terms of new car sales, which will be followed by a phase of slow but persistent decline until 2040 because of slow economic growth, aging populations and declining population sizes.

"By contrast, we expect vehicle sales in China to grow by around six million through 2040 — although here, too, slower economic growth and declining population size will take a toll, with growth dynamics slowing down in the 2030s," the report states.

Roland Berger said markets in the Global South are set to establish themselves as growth markets, predicting Southeast Asia will see an increase of 4.6 percent annually, India 4.2 percent, Latin America 2.4 percent and the Middle East and Africa 2.1 percent.

Much more important for automotive manufacturers are the resulting revenue pools, particularly as there are large differences in sales prices and the vehicle segment split in different regions of the world.

China offers by far the strongest revenue growth, at around 590 billion euros ($622 billion) in total potential new revenue pools in the period to 2040, despite an expected slowdown in sales in the 2030s.

That figure eclipses the combined Western markets of Europe, the US and Canada, which will be an estimated 520 billion euros.

If they want to compete with Chinese carmakers as the sector becomes increasingly smart and electric, Roland Berger said Western companies must make major changes to the way they operate. For example, they should move away from their traditional approach of "integrating software into vehicles" and "integrating batteries into EVs", because those designs lead to more engineering work and a longer time to market.

The report suggests that if Western companies rethink their strategy, they are likely to stabilize their market position at a level comparable to or slightly below 2024, not only in China but in their home markets.