Will 2021 Finally be the Year of the EV?

Next year is shaping up to be a pivotal one for electric vehicles. A host of new models are on their way, costs are coming down, driving ranges are improving, the supporting infrastructure is expanding and buyers are getting more accustomed to the technology.

The combination promises to provide the critical mass needed to push EVs beyond the low single-digit market share threshold the segment has been stuck on in the U.S. It also could pave the way for a more rapid adoption rate in coming years.

The product rollout features several high-profile models, including the GMC Hummer, Tesla Cybertruck, Rivian R1T/R1S trucks and Lucid Air luxury sedan. The latter, which is squarely aimed at the Tesla Model S, boasts several industry firsts and/or best-in-class features—including driving range (517 miles), battery charging (20 miles per minute) and aerodynamics (0.21 Cd). But it comes at a hefty price. The base Air will start at about $80,000, while the appropriately named Dream Edition will sticker for more than twice that amount.

Such models will help create awareness and electrify excitement. Of course, that’s already the case for almost anything Tesla does. The California carmaker saw its global sales rocket from 35,000 EVs in 2014 to about 368,000 units last year thanks to higher volume models such as the Model 3 midsize sedan and Model Y compact crossover.

Mainstream Momentum

But it’s not just Tesla and the growing number of niche startups that hope to duplicate its success. The key to the future is volume, which only can come from a broad range of mass-market models.

That soon won’t be a problem. Virtually every major carmaker is readying new EVs. Lots of them. Up and down their lineups. This includes Ford’s Mustang Mach-E crossover that bows late this year.

Among the models on tap for 2021 are the Audi Q4 e-tron, Mercedes EQA, Nissan Ariya, Volkswagen I.D. 4 and an unnamed Kia model, all of which are part of the ongoing transition from traditional cars to SUV/crossovers. Another thing they have in common: They will be built on dedicated electric platforms rather modified versions of an existing ICE vehicle. Specialized architectures enable increased efficiency (i.e., longer driving ranges), improved packaging (roomier interiors) and lower costs (higher profits).   

Tesla already has the latter figured out. Despite the overall industry slowdown triggered by the coronavirus, the company is on pace to deliver 400,000 EVs this year and Elon Musk’s goal to break the half-a-million threshold is in reach for 2021. The company’s success (real and perceived) has propelled it to a string of quarterly profits and pushed it to the top of the industry in terms of market valuation, zooming past both Volkswagen and Toyota earlier this year.

But Tesla’s current dominance could be short-lived as competition intensifies. Volkswagen aims to surpass Tesla in annual EV production within three years. In addition to the I.D.4, the company’s MEB chassis can carry virtually any body style produced by the carmaker’s various brands.

GM also has big plans. It aims to launch 20 all-electric models by 2023—three times the number Tesla is expected to offer by then. Hyundai Motor Group, meanwhile, is creating a new EV sub-brand that will expand the company’s Ioniq nameplate, mirroring several other carmakers (BMW i, Mercedes EQ and Volkswagen ID). GM is considering a similar strategy.

Growing Support

For the first time ever, there’s more charging capacity than there are EVs. In 2019, the number of stations worldwide soared 60% while combined sales for EVs and plug-in hybrids increased by 40% to create a surplus of 100,000 outlets.

Global EV sales are expected to increase by about one-third this year to 2.1 million units. To date the bulk of the volume has come from China and Europe, with the U.S. being a relatively slow follower.

But with a steady stream of new models coming, carmakers will increasingly look for a global return on their investments. By 2025, the number of nameplates offering electrified powertrains (including hybrids) is projected to balloon to about 130, according to industry forecasts. This compares with just 18 in 2018.

That’s what’s called critical mass.