Has the demand for electric cars really started to slow down and are the Chinese threatening Tesla’s leadership? The annual study of the global electric car market, prepared by BloombergNEF analysts just in time for the COP28 climate summit in Dubai, contains some eloquent graphs, facts and figures that deserve attention, especially interesting in the context of the current restructuring of the energy landscape.

There are no signs of a slowdown in demand for electric cars yet

The key thesis of this study is that recent reports (such as these) of slowing growth in electric vehicle sales have been greatly exaggerated. And the authors provide relevant facts and figures that refute the reasoning about the decline in demand for electric cars.

Sales of electric cars (pure battery-powered BEVs + PHEV plug-in hybrids) are expected to reach 14 million this year, a 36% increase over 2022. In the US, which has been the most engaged in demand, the pace is even exceeding forecasts, with a 50% increase expected this year. Sales may not meet the expectations of individual manufacturers (hello Volkswagen, Renault and others), but overall the pace is in line with the BNEF forecast made at the beginning of the year, and for most industries such growth rates are lucky.

Sales of electric cars in the world are reaching a new record

A slowdown is still possible, but the situation looks more like a competitive battle for leadership than a general drop in demand.

Tesla, BYD and Li Auto, which reliably hold the leadership in the segment of pure electric vehicles, and others will bite off 7% of the global market by the end of 2023, compared to 1% in 2020. Toyota, Volkswagen, Renault, Stellantis and other traditional car manufacturers are still significantly behind in the “electric” niche and are generally losing competition to Tesla and Chinese manufacturers. Chinese manufacturers are taking volume, while Tesla still earns more, similar to Apple and Android manufacturers in the smartphone market. At the same time, European manufacturers, considering everything, finally realized the threat and began to move more actively in the segment regarding affordable electric cars. On the other hand, the US is introducing additional incentives for electric cars and batteries, seeing a serious threat in China’s dominance of the market for “green” minerals – here we explained in more detail why this is important.

The USA, Ukraine and others are on the road to electrification of transport

For the first time in history, sales of electric cars in the United States exceeded 1 million in January-November, which is generally an important milestone.

Separately, the BloombergNEF report notes the Inflation Reduction Act in the US in support of the development of “green” energy, which helped attract $100 billion in investment in the production of electric vehicles and batteries.

Another point is that electric cars are moving faster than others in developing countries such as India, Thailand and Indonesia, where low-cost models are the main bangers driving demand.

And Ukraine is no exception. The war and the fuel crisis of 2022, combined with the low cost of electricity and tax benefits (for customs clearance, Ukrainians now pay only an excise tax — €1 per kWh of battery capacity) only fueled demand, motivating Ukrainians to switch to electric cars even more actively.

In 2022, the sale of fully electric cars increased by a third, and in 10 months of 2023, Ukrainians bought 28.7 thousand electric cars – 2.7 times more than in the same period last year. Volkswagen ID.4 has been the leader among new cars for several months now. As you know, the electric crossover is not officially sold in Ukraine, the supply comes from China. While the leadership among electric cars is held by the Nissan Leaf.

“From China with love”. Volkswagen and other new electric cars from China already occupy 70-85% of the market in Ukraine, 80% of sales are “grey”

If we talk about the most popular models, no one doubts that at the end of 2023 the title of the absolute bestseller will go to the Tesla Model Y, which already at the beginning of the year moved from the pedestal of the perennial leader Toyota Corolla. Actually, this success of the Model Y was foretold from the very beginning of the market in 2020.

Tesla is still in the lead, but BYD is catching up

Tesla remains the market leader in “pure” electric cars, but China’s BYD is rapidly catching up, especially in pieces (Tesla is still far ahead in terms of money).

In 9 months of 2023, Tesla shipped 1,324,074 electric cars to customers – based on the results of all of 2023, there are good chances to reach a sales volume of 1.8-1.9 million and, if lucky, to enter the top league. For example, BMW shipped 2.4 million cars in 2022, thereby securing the #9 place in the global ranking of the largest manufacturers. Toyota, Ford and others are rapidly increasing investment in electric cars. In addition to Tesla, Volkswagen, Renault and others are working on affordable electric cars for 20-25 thousand euros. It is already obvious that the fiercest competition will unfold in this segment.

Prospects – is the end of the ICE era coming soon?

As already mentioned above, there are no signs of a slowdown in demand for electric cars in the US, the EU, or Ukraine yet. If we are talking about the EU market, which is closer to us, where a complete ban on the sale of new fossil-fueled cars was previously agreed upon starting in 2035, now every fifth new passenger car sold in the EU is a pure electric vehicle powered by batteries. And if we take Norway, which is still the undisputed leader in the electrification of road transport, then the share of electric cars has long been far above 80%.

The US targets 50% pure electric car sales by 2030, while China targets 40%. Moreover, China can achieve the goal already next year. To date, about 20 automakers of various calibers, which together account for 54% of the world market, have confirmed their intention to achieve carbon neutrality by 2025 or earlier. At the same time, companies that control 32% of the global market have confirmed the complete rejection of cars with internal combustion engines.

And you don’t need to be an analytical genius or a great financial expert to predict the further growth of demand for electric cars, including in Ukraine, due to real realities and a very likely increase in the excise tax on autogas in the future, which was recently announced by the notorious Danylo Hetmantsev. It is expected that after the increase in the excise tax, the price at gas stations will increase by 8% and exceed UAH 40/liter. So let’s fasten our seat belts and make ourselves as comfortable as possible, for electric cars and the automotive industry in general, very interesting and turning-point times have come in a historical sense.