In Seven Years, Seven Percent of Cars Sold Worldwide Will Be Electric

The electric vehicle market is quietly exploding. It's a small market, so apart from a few marquee successes—Mr. Musk and his Tesla come to mind—the growth doesn't seem so impressive. But according to a new report from Navigant Research, by 2020, a full seven percent of light-duty cars sold worldwide will boast a battery under the hood.

There are currently three main types of widely available electric cars: hybrid electrics, like the Toyota Prius; plug-in hybrid electrics, like the Chevy Volt; and battery electrics, like the Tesla Model S and Nissan Leaf.

Sales in all three categories are slated to surge. The hybrid electric is currently the best established. Priuses are as common on the roads as all but the most ubiquitous makes, and most major competitors have an entry in the field. But plug-ins are catching up; from 2011 to 2012, electric car sales jumped 228 percent. Navigant expects that growth will continue, with plug-ins growing from 0.2 percent of the light-duty market in 2012 to 3 percent in 2020.

Here's what Navigant's projections look like: "[Hybrids] are now considered to be widely available in North America, Eastern and Western Europe, and Asia Pacific, while the numbers available in other regions remain relatively small," the authors write. "[Plug-ins and battery electric] models are increasing in number and will be less limited by the end of 2014 or mid-2015 in most regions."

According to the research, within two to three years, "Vehicles will be available from almost every mainstream manufacturer."

Just because models are available doesn't mean they'll be selling, obviously. But Navigant thinks they will, for a number of reasons:

• Rising gas prices. The report finds projects that "global gasoline and diesel prices are anticipated to increase at 7.2% and 8.3% … between 2013 and 2020."
• Decline in battery costs. Hybrids and plug-ins "are anticipated to see a 10% and 26% decline in pack costs by 2020, respectively." Battery electrics, meanwhile, won't drop in cost, but will see their range increase dramatically.
• Steady government incentives. The study "anticipates that current incentives offered worldwide will remain in place throughout the forecast period, but are unlikely to be increased."

Seven percent of one of the biggest markets on earth is a pretty substantial chunk. For a point of reference, thus far, some 50 million cars have been produced this year—and more than that will change hands. By 2020, Navigant thinks that nearly seven million electric cars will be sold annually. And that's looking pretty close to a tipping point.