Electric cars are facing mass market takeoff

DETROIT, Dec 15 (Reuters) – The past year has been sobering for investors pouring money into Tesla Inc ( TSLA.O ) and rival electric car startups hoping to emulate the success of Tesla Chief Executive Elon Musk.

As interest rates rise and financial markets gyrate, the shares of many EV startups are falling. Rivian Automotive Inc ( RIVN.O ), which had a higher market cap than Ford Motor Co ( FN ) shortly after going public in 2021, has lost more than 70% of its value over the past year.

Other power startups have fared worse. Electric van maker Arrival has warned it could sell out in less than a year. Lucid Group Inc ( LCID.O ), backed by Saudi Arabia’s sovereign wealth fund, has struggled to build its sleek Air luxury EVs. Shares in Chinese Tesla rival Xpeng Inc ( 9868.HK ​​) lost more than 80% of their value.

Now comes the hard part. convince more mainstream consumers to come along for the ride.


The auto industry is spending more than $1 trillion on the revolutionary transition from combustion engines to electric cars driven by software. From Detroit to Shanghai, automakers and government policymakers have embraced the promise of electric vehicles to provide cleaner and safer transportation. European countries and California have set a deadline of 2035 to end sales of new combustion passenger cars.

Tesla Inc’s ( TSLA.O ) rise to become the world’s most valuable carmaker, acquiring a $1 trillion valuation last year, has humbled established automakers such as Toyota Motor Corp ( 7203.T ) and Volkswagen AG ( VOWG_p.DE ), which didn’t want to do at the time. go electric.

Starting next year, a wave of new electric vehicles, from pickup trucks to mid-market SUVs and sedans, will hit major markets around the world.

Industry executives and forecasters disagree on how quickly electric vehicles can capture half, let alone all, of the global auto market.

In China, the world’s largest auto market, battery electric vehicles have captured about 21% of the market. In Europe, EVs account for about 12% of total passenger car sales. But in the United States, the market share of electricity is only about 6%.

Among the barriers to electric adoption, industry executives and analysts cite a lack of public fast-charging infrastructure and the rising cost of EV batteries due to shortages of key materials and uncertainty over government subsidies that have boosted EV purchases in major markets. including the US, China and Europe.

The all-electric Ford F-150 Lightning pickup truck was unveiled at the company’s global headquarters in Dearborn, Michigan, USA on May 19, 2021. REUTERS/Rebecca Cook/File Photo

By 2029, electric vehicles could account for a third of the North American market and about 26% of vehicles produced worldwide, according to consulting firm AutoForecast Solutions.

Electric vehicle sales are unlikely to grow on a flat, ever-increasing curve, said AFS President Joe McCabe. If there is a recession next year, as many economists predict, that will slow EV adoption.

Wards Intelligence predicts that in 2027, combustion vehicles will account for just 80% of North American sales. Based on automakers’ product plans, Wards analyst Haig Stoddard said at a recent conference call that manufacturers are “expecting strong ICE (internal combustion engine) volume. the next decade.”


Through 2022, established automakers such as Mercedes, Ford and General Motors Co ( GM.N ) have unveiled dozens of new electric vehicles to challenge Tesla and upstarts.

Mass production of most of these cars begins in 2023 and 2024.

By 2025, 74 different electric vehicle models could be offered in North America, McCabe said. But he predicts that less than 20% of those models are likely to sell more than 50,000 vehicles a year. Automakers can be stuck with too many niche models and too much power.

Slowing economies also threaten overall auto demand in Europe and China.

In the early 20th century, new car companies emerged, backed by investors eager to catch the wave of mass mobility started by Henry Ford and other automotive pioneers. By the 1950s, the global auto industry had consolidated and once heralded brands such as Duesenberg had disappeared.

The next few years will determine whether the 21st century’s crop of electric car brands will follow a similar path.

Discover Reuters’ summary of the news that dominated the year and the outlook for 2023.

Reporting by Joe White Editing by Bernadette Baum

Our standards. Thomson Reuters Trust Principles.


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