The Challange
Passenger Car Market
In 2020, the passenger car market was heavily influenced by the COVID-19 crisis. However, battery electric vehicles gained further market shares, especially in Europe. We expect a fast recovery of the sales volume to pre-COVID-19 scenarios, with an annual growth rate of 1.9%. This growth is dominated by the Chinese and Rest-of-World (RoW) markets while US and European market are assumed with constant volume.
The market growth is dominated by electric powertrain types, such as battery electric and fuel cell powertrains. The sales volume of vehicles with an ICE should decrease by 16% by 2040 compared to 2019. These remaining powertrains with an internal combustion engine (ICE) become electrified as well. We expect mild and full hybrids to be widespread.
The shift of powertrain types is driven by the CO2 emission reduction targets in the key market regions. In Europe, the ambition is set the highest of all the markets. By 2050, the transport sector (vehicles on the road) should decrease CO2 emissions by 90% compared to 1990 level. This means that no new vehicle should have any CO2 tailpipe emissions by 2040 at the latest, which can only be achieved by battery electric or hydrogen fueled vehicles. Additionally, fuels from renewables (e.g. e-fuels) could also be CO2 neutral, however their role in the regulations is currently under negotiation.
In the USA the CO2 targets were relaxed under Trump. The Biden administration already announced that it will revoke the relaxation and set more ambitious targets again. California and some supporting states are pushing for even more radical regulations, for example a ban of combustion engines.
In China the strategy appears more balanced and the target of becoming CO2 neutral was shifted to 2060. The draft of the so-called Roadmap 2.0 gives a push to the new energy vehicles (NEV) and low fuel consumption vehicles. In essence, the strategy supports the market introduction of battery electric, fuel cell and hybrid powertrain vehicles.
