What Will the Electric Vehicle Economy Look Like in 10 Years?

Cyrus Nikou
4 min readApr 4, 2023

Ten years from now, most of the world’s new passenger vehicles will be electric.

If you live in San Francisco or Seattle or Shanghai, this is easy to believe. You encounter more battery-electric and plug-in hybrid vehicles than you can count in a typical day, even if you don’t (yet) own one yourself.

Elsewhere — especially in lower- and middle-income countries — vehicle electrification still seems like a distant prospect. But it’s coming.

How quickly batteries replace internal combustion as the dominant passenger vehicle powertrain depends on three interrelated issues: national and regional policy choices, manufacturing and supply chain constraints, and the all-important cost curve.

The EV Landscape Today: Clear Momentum, Massive Upside

The EV industry has considerable momentum as we move through 2023.

According to BloombergNEF’s EVO Report 2022, EVs accounted for 9% of global passenger car sales and 44% of global bus sales in 2021. The total global EV passenger car fleet was about 17 million strong at the end of 2021. These figures are significantly higher today and will continue to rise quickly in the short term.

The distribution of EV sales to date is broadly bullish. China accounted for nearly half of new global EV car sales in 2021, with more than 3 million. Europe was a close second and the United States a distant third.

All three markets are huge and not yet close to saturated, though at current growth rates, EVs will likely account for more than half of China’s new car sales by 2028 (if not sooner). In the United States, the Inflation Reduction Act’s tax credits significantly reduce the net cost of EV purchases and related home upgrades while subsidizing new charging infrastructure, both vital to broad-based adoption. Europe’s EV subsidies are already so successful that some policymakers believe they’re no longer necessary.

Reimagining and Retooling the Automotive Supply Chain

The automotive supply chain is also bullish on EVs.

Though internal combustion engines (ICE) account for as much as 85% of existing passenger vehicle powertrains, all passenger powertrains currently in development are electric. By the early 2030s, electric powertrain sales should claim 50% or more of the global market.

Elsewhere in the supply chain, major automakers have inked tens of billions in partnerships with battery manufacturers and other OEMs, particularly in North America, Europe, and Asia. And those OEMs are working on both incremental and potentially transformative improvements to key technologies, from batteries and chips to suspensions and electric motor cooling systems. Progress here is critical for EV manufacturing to scale over the next decade.

Automaker and OEM efforts to retool the automotive supply chain and improve EV tech is all the more important amid ongoing resource pressures at the supply chain’s base. Lithium and other key battery elements are expensive and scarce, and adequate mining capacity remains years off due to cumbersome permitting and development processes. Improvements in battery performance and lifespan, alongside an efficient and comprehensive battery recycling supply chain, can relieve these pressures.

Building Out Reliable Charging Infrastructure (And Driving Down EV Costs)

The demand side of the EV equation appears less complicated than the supply side, but it’s still heavily dependent on supply chain and policy pressures.

The charging infrastructure is a potential bottleneck. As of late 2021, most of the world’s EV chargers were in China, with Europe and the U.S. lagging far behind on both a per-capita and per-EV basis. Especially in North America, where long-distance driving is more common, dense interurban charging networks and even rural access are vital for broad-based EV adoption. Considerable policy support is needed during the initial build-out phase.

Finally, while consumer and manufacturer subsidies are key in the short term, full passenger vehicle electrification depends in the long run on unsubsidized EVs achieving true cost parity with ICE vehicles. This, in turn, depends on how quickly the EV supply chain scales and how quickly manufacturing costs fall.

Take Nothing for Granted

At a glance, the electric vehicle transition seems assured.

EV sales have soared since 2019, with tens of millions of battery-electric and plug-in hybrid vehicles now on the road.

EV selection will soon mirror ICE selection, from three-wheeled microcars to three-ton pickup trucks.

And perhaps most importantly, major automakers are betting big on an electric future. There are no new mainstream ICE powertrains in development. Given the immense capital costs associated with such projects and major shift in automotive engineering resources to support the future of vehicle electrification, we may never see a new mainstream ICE powertrain again.

But a closer look reveals a more fragile state of play. A great deal must go right for EVs to dominate the passenger vehicle market by 2035. Recent gains — IRA subsidies, rapid scaling in EV-critical resource mining, billions in investment up and down the EV supply chain — could stall growth or even reverse due to poor policy choices, geopolitical instability, lack of sufficient infrastructure, or shifts in consumer demand.

In other words, nothing about the EV transition and mass adoption is guaranteed. For all of us with a stake in a cleaner transportation future, much remains to be done.



Cyrus Nikou

Entrepreneur and philanthropist Cyrus Nikou puts his 15+ years of experience in private equity to work as Atar Capital’s founder and managing partner.