Electric vehicles confront the leap to the mass market

DETROIT, Dec 15 (Reuters) – The past year has been frustrating for investors pouring money into Tesla Inc ( TSLA.O ) and rival electric vehicle startups that hoped to emulate the success of Tesla CEO Elon Musk.

As interest rates rose and financial markets boomed, shares in many EV startups collapsed. Rivian Automotive Inc.

Other EV launches have been worse. Electric van maker Arrival has warned it could run out of cash in less than a year. Lucid Group Inc ( LCID.O ), which is backed by Saudi Arabia’s sovereign wealth fund, has been struggling to make its luxury Air EVs. Shares of Chinese Tesla rival Xpeng Inc ( 9868.HK ​​) lost more than 80% of their value.

Now comes the hard part: Encouraging more mainstream customers to come along for the ride.

WHY IS IT A LOT?

The auto industry is pouring more than $1 trillion into a revolutionary transition from combustion engines to electric vehicles controlled by software. From Detroit to Shanghai, bus and government policymakers have embraced the promise of electric vehicles to provide cleaner, safer transportation. European countries and California have set 2035 as the deadline for ending the sale of new passenger vehicles.

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Tesla Inc ( TSLA.O ) to become the world’s most valuable automaker – valued at $1 trillion last year – has overtaken established automakers such as Toyota Motor Corp ( 7203.T ) and Volkswagen AG ( VOWG_p.DE ) They didn’t want to before. the electricity goes off.

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 of the global electric vehicle market, let alone nearly all.

In China, the world’s largest single automotive market, battery electric vehicles have a 21 percent market share. In Europe, EVs account for about 12% of total passenger vehicle sales. But in the United States, the EV market share is only about 6%.

Among the obstacles to EV adoption, industry executives and analysts said, is 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 to buy EVs. will flourish in the big markets. It includes the United States of America, China and Europe.

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

According to AutoForecast Solutions, a consultancy, by 2029, electric vehicles could make up a third of the North American market, and 26 percent of vehicles produced worldwide.

AFS president Joe McCabe said sales of electric vehicles will not be in a smooth, ever-increasing curve. If there is a recession next year, as many economists predict, it will slow EV adoption.

Wards Intelligence predicts that combustion vehicles will make up less than 80% of North American sales by 2027. Based on the plans for the production of automobiles, Wards analyst Haig Stoddard said in a recent conference that manufacturers “expect strong volume of ICE (internal combustion engine) for the next decade.”

WHAT DO THEY WANT FOR 2023?

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

Mass production of most of these vehicles will begin in 2023 and 2024.

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By 2025, 74 different models of electric vehicles could be offered in North America, McCabe said. But he predicts that less than 20% of those models may sell in volumes above 50,000 vehicles a year. Automakers can get stuck with too many niche models and too much capacity.

Slowing economies in Europe and China are also threatening public vehicle demand.

In the early years of the 20th Century, new auto companies emerged, driven by investors who wanted to ride the wave of mass movement that Henry Ford and other automotive pioneers had started. In the 1950s, the global motorcycle industry consolidated and brands such as Duesenberg that were once prominent disappeared.

The next few years will determine whether the products of the 21st century electric vehicle brands will follow a similar path.

Take a look at the Reuters news stories that dominated the year, and the outlook for 2023.

Reporting by Joe White Editing by Bernadette Baum

Our Standards: The Thomson Reuters Trust Principles.

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