Electric vehicle production set to surge in 2023
The last twelve months have been a reality check for investors who backed electric vehicle (EV) startups in the hope that they would replicate Tesla CEO Elon Musk’s success.
As interest rates increased and financial markets became more volatile, the shares of many EV startups fell sharply. Rivian Automotive Inc, which had a higher market value than Ford Motor Co shortly after it went public in 2021, has lost more than 70% of its value over the past year.
Other EV startups have not been doing as well lately. Electric van maker Arrival has warned that it could run out of cash in less than a year. Lucid Group Inc, backed by Saudi Arabia’s sovereign wealth fund, is having difficulty building its sleek Air luxury EVs. Chinese Tesla challenger Xpeng Inc’s shares have lost more than 80 per cent of their value.
Now the real challenge begins: convincing more mainstream consumers to switch to EVs. This won’t be easy, but it’s important work if we want to save the planet.
The automobile industry is making a trillion-dollar shift from gasoline-powered vehicles to electric vehicles. This shift is being guided by software, and it’s getting a lot of support from automakers and government policymakers. They see electric vehicles as a way to provide cleaner, safer transportation. Some European countries and the state of California have set 2035 as the deadline for ending sales of new combustion passenger vehicles.
Tesla’s recent success in becoming the world’s most valuable automaker – achieving a $1 trillion valuation last year – has humbled established automakers such as Toyota Motor Corp and Volkswagen AG, who were once reluctant to go electric.
Starting next year, a wave of new electric vehicles ranging from pickup trucks to middle market SUVs and sedans will hit the world’s major markets.
Industry executives and forecasters do not agree on how rapidly electric vehicles could take over half the global vehicle market, let alone all of it.
In China, the world’s largest automotive market, battery electric vehicles have about 21% of the market share. In Europe, EVs make up for around 12% of all passenger vehicle sales. However, in the United States, EVs only have a market share of around 6%.
A lack of public fast-charging infrastructure and the increasing cost of electric vehicle (EV) batteries are two major barriers impeding greater adoption of EVs, according to industry executives and analysts.
AutoForecast Solutions, a consultancy, predicts that by 2029 electric vehicles could make up a third of the North American market, and about 26 per cent of vehicles produced worldwide.
AFS President Joe McCabe stated that electric vehicle sales are not going to continually and smoothly rise. If there is an economic recession in the coming year, as many economists are predicting, EV adoption will decelerate.
Wards Intelligence has forecasted that in 2027, only 80 percent of North American sales will be combustion vehicles. At a recent conference, Wards analyst Haig Stoddard said that based on manufacturers’ product plans, “manufacturers expect strong ICE (internal combustion engine) volume heading into the next decade.”
By 2023 and 2024, most established automakers will have mass-produced dozens of new electric vehicles to compete with Tesla and other upstarts. These include Mercedes, Ford and General Motors Co.
According to McCabe, by 2025 there could be 74 different electric vehicle models offered in North America; however, he predicts that fewer than 20% of these models are likely to sell at volumes above 50,000 vehicles per year. This means that automakers could be stuck with too many niche models and too much capacity. Slowing economies also threaten overall vehicle demand in Europe and China.
The next few years will determine whether the 21st Century’s electric vehicle brands will consolidate or disappear as new companies spring up, backed by investors eager to invest in what is seen as the future of transportation.
As we explore the Reuters round-up of news stories and the outlook for 2023, it’s clear that the next few years will be crucial for the electric vehicle industry.
