Fears of fading global EV demand are unfounded
Investors are worried that global electric vehicle (EV) demand is fading, due to fears of recession, rate hikes, and Chinese lockdowns. However, data from leading EV manufacturers such as BYD, Tesla, NIO, along with that of other incumbent manufacturers tapping into the EV segment, proves that these fears are unfounded – with strong 2022 sales as proof.
The International Energy Agency (IEA) puts the situation into perspective in the Executive Summary of its Global EV Outlook 2022, which was released in May of 2022. As of that point in time, the IEA’s research revealed that:
• EV sales doubled between 2020 and 2021 to a record of 6.6 million
• In 2021, almost 10% of global car sales were EVs
• Global EV market share quadrupled from 2019 to 2021
• Sales of EVs in 1Q22 were 2 million units, up 75% from the same period in 2021
"A recent forecast from BloombergNEF predicts that 10.2 million pure EVs (13.2 million if you include PHEVs) will be delivered in 2023."
The EV industry is more resilient and healthier than ever
Bringing this forward to include all of 2022, the latest data is consistent with this outlook. A recent forecast from BloombergNEF predicts that 10.2 million pure EVs (13.2 million if you include PHEVs) will be delivered in 2023. Here are some highlights of the top volume global EV brands:
Tesla remains the EV market leader, with 1.3 million EV sales in 2022, a 40% increase over 2021. With its global production footprint in China, the US (2 plants) and Germany, the company is poised for additional growth in 2023. If the long-awaited Cybertruck makes it into production, Tesla’s 2023 results could be even better than expected. Tesla lowering prices in China will further drive sales.
BYD finished 2022 with EV production of 911,140, which is over 184% higher than 2021. This makes BYD the number two producer of EVs, right behind Tesla – and gaining fast! BYD’s expansion into Europe, which started in 2022, will continue, enhancing the automaker’s overall sales results.
Other China-based manufacturers posted impressive gains. GAC’s Aion EV division sold 271,000 units for a 126% increase, while CATL’s Hozon delivered 152,073 EVs, up 118%. NIO ended 2022 with a total of 122,486 EVs sold, an increase of 34% over 2021., while Xpeng added 120,757 sales to the total.
Some other global players included Volkswagen with over 330,000 EVs sold in 2022 (a 23% gain), BMW with 215,755 EV units sold (a 107% increase), and Mercedes-Benz with 117,800 sales (a big 124% boost).
Catalysts that are likely to boost EV demand in 2023
As we enter 2023, there are several developments that can improve the likelihood of improved EV sales during the coming year. These include:
The Inflation Reduction Act of 2022 (IRA) in the US: This recent piece of groundbreaking legislation, passed by both houses of the US Congress and signed by President Biden, has created an ongoing government-supported program to facilitate the transition to EVs in this major market. The IRA consists of several elements designed to work together to get more Americans to choose an EV for their next vehicle. The IRA provides for:
• Financial incentives for buyers of new and used EVs
• Credits to help manufacturers retool existing facilities and build new manufacturing in the US
• Grants to deploy zero emission heavy-duty vehicles
• Credits on EV charging equipment
The IRA also contains battery material sourcing and manufacturing/assembly requirements that are necessary to qualify for its generous incentives. This, along with other recently-passed legislation, has spurred a flurry of new US-based materials processing, battery assembly, charging equipment, and EV manufacturing plant announcements. The total that will be invested in these EV-related projects, at this point in time, is closing in on $100 billion dollars.
China is reopening after 1,016 days of its Zero-Covid policy: There is both good news and bad news to be had in the aftermath of China’s decision to abandon its Zero-Covid policy. While the reopening of the society will ultimately be very good for the EV business by mid-2023, thanks to increased production and more shoppers in EV showrooms throughout the country, there is a short-term downside. That is the issue of China’s very own Covid pandemic, delayed by the mass lockdowns and currently spreading like wildfire due to low vaccination rates. Once that the worst of the Covid surge has passed, EV production and sales should resume their former high trajectory.
An expanding and improving global charging infrastructure continues to develop: As global EV sales continue to increase, so will the quality and quantity of charging infrastructure. This is a key factor in encouraging new buyers to take the leap and choose an EV for their next vehicle. Various governments worldwide are encouraging and incentivizing the buildout of charging networks. More EVs are also being equipped with 800V charging systems, which can use DC fast chargers to charge their batteries to 80% in less than 30 minutes, greatly reducing charging times.
There are other ways to charge EVs besides using a charging cable. Battery swapping is an excellent solution for those EV owners who live in apartments or condominiums that do not offer a home charging option. Chinese manufacturer NIO has been building EVs with swappable batteries, which allow a freshly charged battery to be installed in minutes, eliminating the need to wait for a charge. NIO is also building battery-swapping stations in China and Europe.
Wireless charging is another method that can facilitate EV adoption by removing the need for a cable. Built into parking spaces, parking lots, and other relevant locations, this system allows vehicles to charge while parked. Wireless charging could also keep electric taxis and buses charged while they work.
Many new EV models are being launched into the global markets: The steady flow of new EV models entering showrooms around the world will accelerate at an even faster pace throughout 2023. Global manufacturers will have new offerings in every size and price class, from the smallest to the largest, and from entry-level to bespoke luxury.
As consumers in Europe and America see that the number of EV options in showrooms is reaching parity with ICE vehicles, they are more likely to consider an EV for their next vehicle (China already offers a huge and growing EV selection). Here is a list of some of the EVs that will be released for sale during calendar year 2023:
NEW EV models 2023Abarth 500e
Audi A6 E-Tron
Audi Q6 E-Tron
Audi Q8 E-Tron
Chevrolet Blazer EV
Chevrolet Equinox EV
Chevrolet Silverado EV
Citroën ë-C4 X
Genesis Electrified GV60
Genesis Electrified GV70
Genesis Electrified G80
GMC Hummer EV SUV
Hyundai Ioniq 6
Maserati Gran Turismo Folgore
Maserati Grecale Folgore
Mercedes-Benz EQS SUV
Mini Countryman Electric
Ora Next Cat
Skoda Enyaq iV vRS
Vinfast VF 8
Vinfast VF 9
Volkswagen ID Buzz
There are many forces that will continue to support long-term EV growth
As we progress through 2023, the ongoing transition to electric vehicles will be supported by all of these elements:
• Government incentives
• Ever-tighter emissions regulations
• High petroleum prices
• A greater selection of EV models
• More affordable EV prices
• Improved charging infrastructure
Even though fears of a recession and other economic factors may lead to lower global vehicle sales overall, growing consumer interest in EVs will likely lead to significant increases in both EV sales and EV market share. From the mining of minerals to the production of batteries to the manufacturing of EVs, the entire EV supply chain should benefit from the increased demand that will drive the market’s growth in the coming year.