The sale of electric vehicles (EVs) accelerated globally last year, exceeding market expectations, American credit rating agency Fitch Ratings said in a statement on Thursday.
EV sales grew by more than 30% in 2020, while sales of passenger vehicles with internal combustion engines (ICEs) declined by an estimated 21%.
The agency highlighted that global EV growth was supported by generous purchase subsidies, stricter emissions controls and rising consumer interest.
According to Fitch, consistent policy measures remain prerequisites for the EV segment's transformation into a mass consumer market.
The Covid-19 pandemic has also accelerated EV adoption as stimulus plans include increased EV subsidies.
However, the agency underlined that the expected long-term evolution of support measures means that the transition will increasingly rely on fundamental demand drivers.
- Demand factors
The agency said fundamental demand factors will gradually become key for EV growth, among which is electrification for several manufacturers, particularly in Europe, in the next 12 to 18 months.
"The pace of adoption will be determined by how quickly the main constraints that affect consumer demand will be eliminated. This will require cheaper and longer-range batteries to aid affordability, the development of wide-spread charging infrastructure, and more robust and predictable residual values," the agency explained.
It added that automakers would improve EV profitability through economies of scale and lower production costs as battery prices decline.
By Gulsen Cagatay