Europe's electric vehicles fleet to reach 40 million by 2030

25 February 2021 3 min. read

More than 40 million passenger electric vehicles will drive European roads by 2030, spelling riches for the segment’s stakeholder ecosystem. A new Arthur D. Little report highlights the positive enablers of the industry. 

At the consumer level, electric vehicles (EVs) are more in demand than ever. Progress in the segment is eroding traditional barriers to EV adoption ­– high costs, concerns around range, and poor charging infrastructure. A healthy market has emerged, spurred on by eagerness for a more sustainable lifestyle.

The pandemic has only served to intensify the EV revolution. Covid-19 has been devastating for the automotive sector, with tight consumer spend taking sales down by 20% over the course of last year. EVs bucked this trend by more than doubling pre-Covid sales for some months.

EV sales in Europe, 2020

The segment now occupies 12% of Europe’s automotive market – twice the market share from January 2020. “EVs have evolved from a niche technology into a serious alternative to combustion engines,” noted Alexander Krug, partner at Arthur D. Little in its Munich office. 

And the growth story is set to continue – at a much faster rate than before the pandemic. Much of the segment’s progress so far is down to government policies and tax incentives – with major markets across Europe aiming to do away with internal combustion engines by 2040 at the latest.

Now, EV growth is powered by other factors ­– a favourable consumer market, and a boom on the supply side as well. The Paris Climate accord and related regulations have put most industries on strict carbon emission targets. The automotive sector is no different, and EVs present an effective solution to make quick and significant emission cuts.

Leading automotive manufacturers are responding. “Volkswagen just unveiled the ID.3 compact EV, while SUV models like Volkswagen’s ID.4 and Tesla’s Model Y will start selling in 2021,” noted Krug. Riding this momentum, EV growth will likely go into overdrive as of this year.

Covid-19 impact on the EV market

Initial estimates for 2030 put the EV fleet at 33 million passenger vehicles. With the pandemic-induced momentum to work with, this figure has now touched 40 million. Indeed, by the end of this decade, one in two new vehicles sold in Europe will be electric. 

A disruptive force for automotive manufacturers, the EV boom is a blessing for all industries that enable electrification. Take charging for instance. 40 million EVs on the roads will need frequent and reliable charging points. According to Arthur D. Little, revenues from EV charging alone could touch $36 billion on the back of this rising demand.

“This is a sevenfold increase from 2021 and implies a massive growth rate of ~25% per year. Given that our analysis focuses on passenger vehicles, total market value will be even bigger. EV charging opens up enormous opportunities for business models,” noted Arthur D. Little principal Florian Saeftel. 

New revenue models could emerge from charging hardware; asset ownership of charging infrastructure; technical operation of public charging infrastructure; energy management around charging points; and sale of electricity to charging points. A number of startups have already emerged in the charging landscape – backed by investors from the oil & gas industry looking to diversify into new mobility markets.