From OilPrice, March 13:
The Real Reason Why Automakers Slashed EV Prices
- The global electric vehicle (EV) market suffered a dramatic collapse in January 2023 sales, with Rystad Energy research showing that only 672,000 units were sold.
- Cuts in subsidies and tax credits across Europe and mainland China have dampened consumer sentiment and caused automakers to scramble for solutions to salvage the market in 2023.
- The US is breathing new life into the EV market thanks to the Inflation Reduction Act, leading to an increase in both EV sales and market share year-on-year.
The global electric vehicle (EV) market is reeling from one of the most dramatic collapses in monthly sales to date, with Rystad Energy research showing that only 672,000 units were sold in January, almost half of December 2022 sales and a mere 3% year-on-year increase over January 2022. The EV market share among all passenger car sales also tumbled to 14% in January, well down on the 23% seen in December.
EV sales have been on a relatively consistent upward trajectory in recent years – aside from periods impacted by Covid-19 pandemic-related supply chain issues – and a significant collapse in sales is worrying news for the industry. Tax credits and government subsidies have propped up the EV market to date as countries identify passenger car fleet electrification as a core tactic for meeting net-zero emissions goals, but the reduction or removal of these subsidies this year has dampened consumer sentiment. Automakers are now scrambling to reverse the downward spiral and salvage the market in 2023.
The automotive market is usually cyclical, with sales taking a hit after new subsidy rules come into effect at the start of each year, followed by a gradual recovery. However, the cuts in January this year hit harder than normal, triggering this dramatic collapse. The ramifications of this will be long-lasting and will impact sales through the first quarter of the year and potentially the rest of 2023.
EV subsidies in many European countries and mainland China were sliced at the start of the year, and a return of any significance is highly unlikely in the immediate future. One ray of hope for the global outlook is the US market, which is just beginning its electrification journey and rolling out tax credits thanks to the Inflation Reduction Act. The US was the only major market that saw an increase in both EV sales and market share year-on-year, although its contribution to the global total is still relatively minimal....
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