Tesla Inc CEO Elon Musk speaks at an opening ceremony for Tesla China-made Model Y program in Shanghai, China January 7, 2020.
Aly Song | Reuters
This could be Elon Musk’s moment, or at least when his vision of mass use of electric cars finally takes hold.
A new report by Cairn Energy Research Advisors, a research firm focused on the battery and EV industries, predicts a surge in electric vehicle sales in 2021 as countries around the world push new programs to encourage consumers to buy battery powered vehicles. Cairn estimates global sales of EVs in 2021 will jump 36% and top 3 million vehicles for the first time ever.
“There’s pent-up demand for electric vehicles,” said Sam Jaffe, managing director of Cairn Energy Research Advisors. “We will see a combination of factors make 2021 an inflection point for the sale of electric vehicles.”
Jaffe believes the two biggest factors that will spark demand for electric vehicles are the markets in Europe and China. China is already the world’s largest market for electric vehicles, with one million battery powered models built in that country last year according to Sanford C. Bernstein.
Ford Motor Executive Chairman Bill Ford, left, and actor Idris Elba next to Ford’s all-electric Mustang Mach-E GT SUV at Jet Center Los Angeles in Hawthorne, California on Sunday, Nov. 17, 2019. Elba, who previously worked at Ford Motor Co. in the 1980s, helped introduce the vehicle to the public.
Production of electric vehicles is estimated to climb to at least 1.3 million and could reach 1.5 million depending on market conditions this year, according to Bernstein analyst Mark Newman. Wedbush analyst Dan Ives raised his price target for Tesla from $600 to $800 saying, “we continue to believe EV demand in China is starting to accelerate with Tesla competing with a number of domestic and international competitors for this market share.”
Meanwhile, Cairn Energy Research predicts the biggest growth in EV sales next year will happen in Europe, mainly because governments in the EU are committed to lowering carbon dioxide emissions. That commitment is pushing countries like France to roll out new incentives to convince residents to buy electric cars. In announcing a new bonus for people to buy an electric car, France President Emmanuel Macron said he wanted France to become the top producer in Europe of clean vehicles.
Jaffe says there is a wave of electric vehicle production coming from Europe that will spur greater sales. “The European automakers and Tesla are all adding capacity and that will really have an impact starting next year,” said Jaffe. Tesla’s next final assembly plant outside of Berlin is scheduled to begin production of the Model Y by the middle of next year.
As for the U.S., sales of electric vehicles are expected to grow next year as more models roll out. While the Tesla Model 3 and Model Y are likely to get the lions share of mass market sales, there are several new models including the Ford Mustang Mach-E and General Motor’s Hummer EV SUV that will focus more attention on the electric market. In addition, several electric pickup trucks are scheduled to roll out by the end of 2021.
This is not the first time a research firm has predicted a dramatic increase in EV sales and in recent years many of those predictions have been far too optimistic about the public’s willingness to go from a gasoline or diesel powered vehicle to a plug-in model. In October of 2018, J.P. Morgan estimated electric vehicles will account for roughly 4% of all vehicles sold in the world in 2020. Depending on what happens the rest of this year, EV sales will likely make up closer to 3% of total auto sales.
Jaffe also points out slowing economies around the world could short circuit demand for electric cars. “Consumer confidence is the key. If people are not confident about their jobs or economy, they will think twice before buying a new car,’ he said.
CNBC’s Meghan Reeder contributed to this article