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Car Industry

Electric cars will double their market share in 2021, forecast says

By the middle of this decade, EVs could make up 10% of new cars sold.

The US is charging forward into EVs.
Brendon Thorne/Stringer/Getty Images

The auto industry had a bad year from a volume perspective in 2020, thanks to the coronavirus pandemic. However, electric cars had a pretty great year, and new data from IHS Markit confirms it. The forecasting firm revealed its data and projections for the EV segment last Friday, which showed a record market share for EVs at 1.8% of new cars sold.

Looking to the final month of the year last December, EVs pushed to 2.8% of new vehicles registered. That's still a puny number compared to traditional vehicles, but the firm dropped this nugget of info along with it: the 2.8% figure is triple the number from just three years ago. In other words, three times as many people bought EVs this past December as they did in Dec. 2017. Part of that is likely the fact there are more options on sale, but the numbers clearly show more people are interested in EVs than ever before.

The real interesting pieces come from IHS Markit's forecast for 2021 and beyond. This year, the firm believes we'll see electric cars take a market share of 3.5%, just about double from 2020's number. Indeed, this also coincides with additional EVs hitting dealership lots from a number of automakers. Fast forward to 2025 and the company forecasts EVs will make up 10% of all new cars sold. That would be a massive shift in buying trends. The firm believes consumer acceptance of EVs will simply continue to grow as more companies continue throwing their weight behind the zero-emissions powertrain movement. We've already seen some aggressive steps from General Motors, for example.

It's good news for automakers selling EVs, too, because they're keeping their buyers in the same place. According to the data, the majority of EV owners buy another one when they're ready to trade their current electric car in. The loyalty factor is just as important since it shows buyers aren't finding remorse in their battery-powered cars and switching back to, say, a hybrid.

Knowing Tesla accounted for a whopping 79% of all EV registrations in the US last year, it gives other automakers a good shot at competing with the darling EV maker. Because right now, Tesla is leaps ahead.

Video: Why Tesla enjoys a huge lead in the electric car market