China Set to Embrace Electric Vehicle Revolution

China's adoption of electric vehicles is primed to take off, reaching 25% of sales by 2028, Morningstar analysts forecast  

Preston Caldwell 6 November, 2018 | 7:38AM Stephen Ellis

Chinese Electric Cars at the Shanghai Motor ShowMorningstar analysts believe China's adoption of electric vehicles (EVs) is primed to take off, reaching 25% of sales by 2028.

China's head start on EV adoption will be driven by its very aggressive regulatory approach. Furthermore, we think China will rapidly build out a high-density fast-charging network before 2028, alleviating range anxiety for potential EV owners. 

Morningstar's long-term EV sales forecast is based on the whole product model framework along with the technology adoption curve. The whole product framework suggests that any new technology must become functionally comparable to the old technology before it can reach mass market adoption. For EVs, this means the total cost of ownership, driving range, charging time, and related infrastructure must rival internal combustion vehicles.

We assume that EVs and hybrids reach cost parity with petrol and diesel vehicles over the next decade largely due to advancements in batteries, which account for over 30% of total costs. Battery costs will fall because of new battery chemistries with cheaper raw materials and because of manufacturing efficiencies at so-called gigafactories worldwide. Solid-state batteries should reach commercialisation by the end of our 10-year forecast period. 

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About Author

Preston Caldwell  is equity analyst at Morningstar.

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