Taking stock of the global electric vehicle race
The electric vehicle market is poised for both rapid growth and fundamental reshaping as a tsunami of new models start reaching drivers.
The big picture: Global EV sales — battery-electric and plug-in hybrid combined — more than doubled last year to around 6.6 million vehicles. They accounted for 8.6% of the global light-duty vehicle market, compared to about 2.5% in 2019, per a new International Energy Agency commentary.
- Analysts see another growth surge this year, with the research firm BloombergNEF projecting over 10.5 million in sales.
Our thought bubbles: Here are a few takeaways from the latest sales data and analyses...
EVs are not yet a truly global trend. According to IEA, China, Europe and the U.S. together account for about two-thirds of the global car market but 90% of EV sales. The chart above shows the top 5 global EV companies in 2021. EVs were below 1% of sales in Brazil, India, Indonesia and Japan last year, per IEA.
Policy is still really important — think EU carbon rules and subsidies there and in China — but there are more forces spurring EV purchases now.
- "Government policies remain the key driving force for global electric car markets, but their dynamism in 2021 also reflects a very active year on the part of the automotive industry," IEA notes.
- Big automakers like GM are ramping up investment plans and setting aggressive sales growth targets.
Lots of new models are about to reach consumers. Per the consultancy IHS Markit, there will be 146 EV models available in the U.S. in 2025, compared to just 24 in 2020.
The supply chain crunch is real. Last year saw significant price increases for steel, lithium, nickel and other metals, and chip shortages."
- For the first time, supply side bottlenecks are becoming a real challenge to the electrification of road transport and are adding to traditional demand side challenges," IEA said.
Tesla's on top but its dominance could erode. The company led the world in global sales with 936,000 units last year, IEA notes, and another growth surge is projected in 2022.
- But overall the market is growing fast and lots of new entrants are arriving. Analysts see the ongoing loss of Tesla's U.S. market share even as its sales grow.
- A recent Bank of America note sees Tesla's share of U.S. EV sales falling from 78% in 2018 to around 20% in 2024. IHS Markit sees Tesla with less than 15% of U.S. sales by 2027.
- But that says more about EV growth than any weakness from Tesla, and investors seem to agree, with the company boasting a market cap close to $1 trillion despite growing competition.
Electric vehicles remain a small slice of U.S. sales, but the battle among big U.S. automakers for the market of the future is intensifying.
Driving the news: General Motors, when reporting earnings yesterday, talked up the acceleration of its EV output and launches and signaled it may expand its existing plans to invest $35 billion in electric and autonomous tech in the 2020-2025 period.
- "To deliver this acceleration, we are pulling ahead significant investment into the 2022 to 2025 time frame, and we will share more details as we further refine our plans," CEO Mary Barra said on an earnings call, touting investments in the needed battery supply chain.
The intrigue: Bloomberg, citing anonymous sources, reported Tuesday that Ford may add significantly to current plans to invest $30 billion into electrification through 2025.
- The company is "planning a major reorganization to prepare for the electric future," it reports. Ford did not respond to an inquiry.