EV market surprises

Tesla has had a win in the EV charging market, but new entrants could redefine the landscape

The news in the electric vehicle (EV) market this week was all about Tesla’s record deliveries of 466,140 cars over the second quarter of 2023, 83 per cent more than the same period last year. If plug-in hybrid electric vehicles are included in the count, China’s BYD would be ahead of Tesla, with sales of 700,244 from April to June. BYD is backed by Warren Buffett’s Berkshire Hathaway.

The EV market is still evolving, with a host of new models in the pipeline from companies that have been leading sales of conventional internal combustion engine (ICE) vehicles. A number of automakers are committed to phasing out sales of ICE vehicles altogether. BloombergNEF expects EVs to account for nearly half of all passenger car sales globally by 2030, from about 14 per cent in 2022.

Cumulatively, there will be more than 100 million passenger EVs on the road by 2026, almost four times the 27 million at the beginning of the year.

The recent flurry of activity in the global charging market is derived from the EV market. Major auto companies, such as Ford and General Motors, as well as EV charging companies like ChargePoint Holdings, Electrify America (owned by Volkswagen) and EVgo have decided to align with Tesla’s North American Charging Standard, or NACS. However, it’s not certain that this is the standard that will dominate the future market, said Ryan Fisher, BNEF’s charging infrastructure analyst, as there are other automakers that have not yet made the switch, and are bringing many new models to market.

Tesla and India: Elon Musk shared a teaser about the company’s plans for India after meeting Prime Minister Narendra Modi in the US last month. “I’m confident that Tesla will be in India and we’ll do so as soon as humanly possible. We don’t want to jump the gun on an announcement, but I think it’s quite likely that there will be a significant investment, a relationship with India,” he said. That relationship could have multiple facets and extend beyond the vehicle business.

The electrification of passenger cars lags all other transportation segments in India. Three-wheelers lead the pack, with two-thirds of all sales last year being of the electric variety, according to BNEF. About 5 per cent of buses sold were electric, while the share of electric two-wheelers and passenger cars was below 5 per cent.

The response to the global charging alignments is thus likely to be lukewarm in India. “This is a very price-sensitive market, so the dynamics at play here are very different,” said Shantanu Jaiswal, head of BNEF’s India research. “The current ability of the grid to support a large number of ultra-fast chargers is also limited in India.”

The share of EVs in a market can change rapidly, as has been the case in many countries. The higher cost of gasoline pushes sales of EVs. Incentives such as the tax credit in the US under the Inflation Reduction Act boosts purchases. Mandates for the electrification of mass transport lead to higher uptake. Lower battery costs add to market momentum since that also means lower EV costs.

Prices for lithium-ion batteries increased for the first time in 2022. Nevertheless, BNEF expects battery EVs to reach upfront price parity with ICE vehicles in most segments and geographies by the end of the decade. Further, next-generation batteries are around the corner.

The electrification of mobility is hitting the demand for oil. “Electric vehicles of all types are already displacing 1.5 million barrels per day of oil demand. This rises dramatically in the years ahead,” BNEF said in its recently released Electric Vehicle Outlook 2023.

There are three other recent news items related to the sector that are worthy of note:

* BYD has zeroed in on Brazil to build its first electric car plant outside Asia. It will invest 3 billion reais ($624 million) to set up a construction complex that will be operational by 2024. The company is also working on securing supplies of lithium in the country.

* Ola began construction of its gigafactory in Tamil Nadu last month. It is expected to be commissioned early next year with an initial capacity of 5 gigawatt-hours.

* Rivian Automotive said it is on track to manufacture 50,000 vehicles this year, about double the total in 2022. It has started delivering in Europe the electric vans it makes for Amazon.com — its largest shareholder and biggest customer. It has already deployed 3,000 of Rivian’s vans in the US.

The write is New York-based senior editor – global policy for BloombergNEF, vgombar@bloomberg.net