Global electric vehicle (EV) sales closed at 2.2 million in 2019 and is expected to drop 43% to 1.3 million by the end of 2020, according to research from Wood Mackenzie on April 8. 

Analysts with the global consulting firm cited the coronavirus outbreak, potential delays to fleet purchasing due to lower oil price and a wait-and-see approach to buying new models as having contributed to the projected decrease in sales.

WoodMac chart

Wood Mackenzie’s analysis notes that China will catch up to 2019 demand by November 2020, while Europe will do so by December. Year-over-year demand in the U.S. is projected to lag 2019 demand by 30% by the close of 2020.

In China, sales of all cars at the end of January were down by 21% compared to 2019. By February, they had plunged by 80%.

Ram Chandrasekaran, Wood Mackenzie principal analyst, said EV sales were hit harder, with January numbers down 54% and February projected to be down more than 90%. EVs have constituted about 5% of all vehicles sales in China for the past two years.

“Most new EV buyers are still first-time owners of the technology,” Chandrasekaran said. “The uncertainty and fear created by the outbreak has made consumers less inclined to adopt a new technology. Once the epidemic is contained in China, we suspect consumers will flock back to car dealers and reaffirm their confidence in EVs.”

Chandrasekaran noted that, in stark contrast, EV sales in Europe saw a 121% increase in January—despite a 7% reduction in the overall market. The trend of increasing EV adoption persisted into February, albeit lower than the previous month.

“However, the first case of coronavirus was not reported in the region until late January,” he said. “The infection rate is expected to peak in Europe and North America towards the end of first-half 2020, approximately two months after China.”

As a result, he said the January and February numbers do not yet reflect the impact of coronavirus in the two regions.

In the U.S., the first lockdown did not start until March 20 but Chandrasekaran said the effects have already begun to show in EV sales.

“General Motors is offering a discount of $10,000 for its Chevrolet Bolt,” he said. “Further such rebates are sure to follow to move inventory as demand drops further.”

In an unorthodox move, traditional automakers entering the EV market have announced upcoming models that will be launched over the next several years rather than over the next 12 months, according to the WoodMac report.

Examples of this include Ford’s introduction of its Mustang Mach E in November 2019 that now won’t be widely available until first-half 2021. Volkswagen also had been promoting the ID.3 for several years but the company isn’t expected to starting selling the model until later this year. Lastly, General Motors celebrated an ‘EV Day’ on March 4 to tout its readiness for the transition to electric vehicles. However, none of its new products are going to be available until late 2021.

“The automakers’ response to the pandemic—suspending car manufacturing to focus on making medical equipment—is only going to delay model launches further,” Chandrasekaran said.

From a consumer’s perspective, however, he said it makes “perfect sense” to wait longer for these models.

“After all, a car purchase is a large financial investment that lasts several years,” he said. “Unfortunately, for EV adoption, this is likely to lead to a plateauing of sales in the near term. While the pent-up demand from the pandemic will help a bounce back in sales later in the year, new demand growth will lack until 2021.”

Despite the potential delays in EV adoption, Chandrasekaran also noted how several automakers have expressed a desire to be carbon neutral due to government policies and a change in investor attitude. The shift towards sustainability is the driving force behind the electrification of transport.

“Uncertainty caused by the oil price war and global catastrophes will only serve to strengthen that resolve, not deter it,” he added.