Watch out Elon. Hybrids and plug-in electric hybrids seem to be where the consumer is at vs. battery electric vehicles. At least for the moment.
Mr. Musk, who seems to have some insight into the industry, says there will be 10 surviving manufacturers, 9 of them Chinese.*
From Rystad Energy via OilPrice, February 21:
- China dominates the global EV sector, with aggressive growth projections and a strategic focus on expanding domestic production.
- The US and EU face challenges in EV adoption, with regulatory uncertainties and economic factors impacting consumer decisions.
- PHEVs show resilience alongside BEVs, reflecting evolving consumer preferences and the role of transitional technologies in decarbonization efforts.
The electric vehicle (EV) market is on track for a watershed year in 2024 as emissions reduction targets clash with falling consumer spending amid enduring economic uncertainty. Rystad Energy research forecasts 17.5 million EV sales this year, an 18.5% annual increase. As a result, the share of new car sales that are either battery electric (BEV) or plug-in hybrid electric vehicles (PHEV) will increase from 19.2% in 2023 to around 21.8% at the end of 2024.
China will play a significant role in the market's continued expansion thanks to sizeable growth in its domestic production. We expect about 11.5 million new EVs will be sold in the country this year, a 44% share of all new car sales.
China is dominant in the global EV sector, accounting for 69% of all new EV sales in December, and continued growth is on the cards. Last year saw a 37% annual growth in sales, with approximately 9 million new EVs sold and a market share of 34%. The country has also advanced its EV penetration targets, aiming for a 45% market share by 2027, an increase from the originally planned 40% by 2030. With local players continuing consolidation, this strategic move opens a critical window for non-Chinese automakers struggling to gain a foothold in its booming EV market.
Closing 2023 with 26.5 million passenger cars sold, China saw a 10.8% increase from 2022. December marked another milestone, with EVs achieving a record-breaking month of sales at 1.13 million units—a 16% surge from November and a 50% annual increase. BEVs accounted for 27.6% of car sales for the month and 40% of all sales.
Outside of China, the EV landscape looks notably different. In Europe, market penetration is expected to grow, albeit slower than observed in prior years, at 3.3 million units this year. The US EV market suffered a lackluster 2023, with uncertainty surrounding tax credits and interest rates complicating consumer decisions to switch to an electric vehicle.
Riding last year's momentum, Chinese automakers are aggressively expanding into emerging markets, overshadowing established players. This eastward shift is particularly evident in Europe, where a stagnant EV market finds hope in the arrival of budget-friendly Chinese brands. However, this influx also presents challenges: local automakers face mounting pressure to adapt, struggling with plant conversions and production delays. China's pivotal role in this dynamic becomes even more pronounced as a global supply chain leader. Meanwhile, in the West, the US presents a complex landscape. The Inflation Reduction Act's subsidies offer a potential boon, but strict rules on foreign entities ultimately dampen automotive spending, particularly in the EV segment.
Abhishek Murali, Senior Energy Systems Analyst
Learn more with Rystad Energy’s Energy Transition Solution.
PHEVs show promise, but long-term viability in question
The number of passenger cars, or light vehicles, sold in 2023 increased by 10% from 2022. Growing economies and typically slower markets, such as Australia, India and Malaysia, drove this unexpected surge. This overall growth fueled an uptick in EV deliveries in 2023, with about 14.3 million EV sales globally, a 35% increase compared to 2022.
The recent sales figures for BEVs versus PHEVs are an interesting look at the market dynamics – BEV sales are growing consistently, but PHEVs remain resilient. This is especially evident in the US in the second of 2023, where consumer preference has shifted to PHEVs....
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So far in 2024:"GM Reverses All-In EV Strategy to Bring Back Plug-In Hybrids"*Here's December 8's "Western Legacy Automakers Probably Won't Be Long-Term Survivors":
"Electric cars will never dominate market, says Toyota"
"The world’s top carmaker got mocked for rejecting EV hype—not anymore. ‘I want to congratulate Toyota’"
ICYMI: "Toyota raises profit forecast as hybrid sales soar"
"China could be on track to dominate the world’s EV market, even if not in the U.S."
Because their current business is being mandated and legislated out of existence the Western marques, barring some serious breakthroughs in small-scale hydrogen or methanol, will have to pivot to EV's.
And they won't be able to compete.
It almost appears that the gifting of the electric vehicle and solar industries to the Chinese was deliberate.First up, from Electrical Engineering Times, December 6:
China’s domestic sales of EVs so far in 2023, at about 8 million units, are nearly double the 4.5 million sold in the rest of the world, according to Sandy Munro, an automotive engineer who founded industry consultancy Munro & Associates. BYD (Build Your Dreams), a publicly listed Chinese manufacturer, this year became the world’s largest EV maker, overtaking Tesla, he said.
BYD will eventually be “the biggest car company in the world,” Munro said. “Bigger than Volkswagen, bigger than General Motors, bigger than Toyota.”
While Western nations accuse China of EV dumping, about 40 of the surviving startups in the world’s largest car market are ramping up production to meet an expected surge in demand. China has led the rest of the world with an estimated $14 billion in EV subsidies since 2009.
Munro predicted that, by 2028, about half of the cars sold worldwide will be EVs. Sweden and Norway have become trendsetters by phasing out internal combustion engines (ICE) cars, he noted.
Chinese automakers will capture more of the global market, particularly in key countries like India that are unlikely to build EV industries in the near term, said Paul Triolo, who advises tech companies at Albright Stonebridge Group.
Developing nations will welcome lower-priced EVs from Chinese manufacturers as they try to meet climate targets, he added.
In China, EV prices are far lower than in the rest of the world. BYD’s Seagull EV, introduced in April, sells for about $11,000. That’s less than half the $26,838 “Model 2” EV that Tesla plans to make at a factory in Germany. The typical price for an EV in the U.S. today is about $50,000, Munro said.
BYD has expanded sales into Norway, Denmark and the UK, as well as Thailand and Australia. The company hasn’t entered the U.S. Tense relations between the U.S. and China and President Joe Biden’s push to build EVs in the U.S. have delayed BYD’s entry to the second-largest automobile market after China, according to a Reuters report.
For now, the EV price war is confined primarily to China, where BYD and Tesla are the top EV competitors.
“Tesla’s been talking about a $25,000 EV someday,” said Bill Russo, the CEO of Shanghai-based consultant Automobility. “Volkswagen’s saying ‘Let’s set a target for eventually making €25,000 [$ 27,000] EVs.’ Well, they haven’t done that yet. I can get an EV here for less than half the price.”
BYD and Tesla didn’t respond to EE Times’ requests for comment on this article.
Arrested development...
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And at Fortune, November 30:
In 2011, Elon Musk ridiculed the quality of electric vehicles made by China’s BYD. Then he admitted this May that “their cars are highly competitive these days.” Now, the Tesla CEO is amping up his praise of Chinese EV makers.
“The Chinese car companies are extremely competitive,” Musk said at this week’s New York Times Dealbook conference. “China is super good at manufacturing, and the work ethic is incredible.”
He even went so far as to suggest that the top 10 automakers of the future might be mostly Chinese ones—although he still envisions Tesla sitting atop them all.
“There’s a lot of people out there who think that the top 10 car companies are going to be Tesla followed by nine Chinese car companies,” he said at the conference. “I think they might not be wrong.”
In the case of BYD, its manufacturing prowess had long impressed Berkshire Hathaway vice chairman Charlie Munger, who passed away this week. While Berkshire generally steers clear of the auto industry—it declined to invest in Tesla—Munger led an enormously successful investment in BYD. He called the carmaker’s founder and CEO Wang Chuanfu a “natural engineer,” adding that “the guy at BYD is better at actually making things than Elon is.”
‘Demolish the old legends’....
