EV sales have slowed down on cost concerns, as market also matures
\nDespite short-term challenges, advancing technology will support the market
\nGlobal commitment to net zero will also keep demand for lithium strong
\n\u00a0<\/p>\n
About 15% of greenhouse gas emissions come from road transportation, so switching to cleaner vehicles is absolutely crucial for meeting climate change goals.<\/p>\n
Governments all over the world are pushing hard for it, with some hefty subsidies for electric vehicles.<\/p>\n
But although demand for EVs keeps growing, it\u2019s not skyrocketing like before.<\/p>\n
So, how\u2019s the EV market looking these days?<\/p>\n
Well, globally, sales are still climbing, but the pace is easing up a bit.<\/p>\n
According to BloombergNEF,<\/em> sales of electric vehicles and plug-in hybrids doubled in 2021 and shot up by 62% in 2022.<\/p>\n But in 2023, that growth slowed to 31%, with plug-ins making up 15% of all vehicle sales.<\/p>\n In 2024, the forecast is for a 21% increase.<\/p>\n China\u2019s leading the charge here, making up 59% of the 13.8 million plug-in sales in 2023, while Europe and North America trail behind at 23% and 12%, respectively.<\/p>\n \u00a0<\/p>\n First off, there\u2019s been some chatter about the cost. With used EV prices dropping, people are starting to think more about the resale value of the vehicles.<\/p>\n There\u2019s also a bit of an issue with the availability of rapid-charging stations.<\/p>\n As more people jump on the EV train, the need for having these stations is becoming more apparent. Worries about the availability of charging spots are starting to weigh on potential buyers\u2019 minds.<\/p>\n On top of that, back in the early days we could count on tech geeks to push EV sales; but now the market is more mature so we\u2019re dealing more with budget-conscious buyers \u2013 most of whom are still on the fence about electric cars.<\/p>\n And finally, China is not the reliable growth engine it used to be, and consumer spending there has slowed down tremendously.<\/p>\n \u00a0<\/p>\n On the supply side, China is sitting on a surplus of around 5 million EVs. By 2025, that surplus is expected to be north of 20 million units.<\/p>\n The country is aiming to boost its EV game both at home and abroad, armed with some serious cost advantages and its domination in components like batteries.<\/p>\n Batteries account for 30% to 40% of EV manufacturing costs, and Chinese EV manufacturers can keep costs low due to the concentrated battery procurement networks they\u2019ve established within China.<\/p>\n According to Goldman Sach\u2019s analyst, Kota Yuzawa,<\/em> Chinese EV makers do pose a major threat to Japanese brands, which have maintained high market share in Southeast Asia for many years.<\/p>\n \u201cThe Southeast Asia market has been a major export destination for Chinese EVs since 2023,\u201d said Yuzawa.<\/p>\n However, EV sales in Southeast Asia are minuscule compared to regions like US, Europe, and India.<\/p>\n .\u201dGiven that EV demand outside China is not very large apart from these three regions, we think it\u2019s unlikely that China\u2019s supply surplus will be eliminated easily,\u201d Yuzawa added.<\/p>\n That overcapacity creates a problem, and is sparking concerns in EV-producing countries about potential further price reductions.<\/p>\n On 14 May, the US government announced that it would increase tariffs on Chinese EVs from 25% to 100%.<\/p>\n The US says that with all that excess that China has, Chinese EVs have been sneaking into American markets unfairly at bargain prices.<\/p>\n \u00a0<\/p>\n Meanwhile, sales of hybrid electric vehicles (HEVs)<\/strong> and plug-in hybrid electric vehicles (PHEVs)<\/strong> have been picking up speed, especially with the dip in battery EVs.<\/p>\n Over in the US, sales of hybrids have been outpacing battery EVs for the last few months.<\/p>\n Hybrids have quickly become the preferred choice for many buyers because many see them as offering pretty much the same perks with EVs, without the headaches like range anxiety.<\/p>\n \u201cYour standard hybrid makes the most sense to most people,\u201d Ivan Drury at Edmunds.com told PBS<\/em>. \u201cI think you\u2019ll find that people don\u2019t want to deal with the hassle or the difficulties of charging.\u201d<\/p>\n Hybrids however do emit a bit of tailpipe pollution, but since they use less fuel compared to regular combustion engine cars, their emissions are lower.<\/p>\n They\u2019re also priced pretty similarly to petrol vehicles, and are usually way cheaper than comparable EVs.<\/p>\n \u00a0<\/p>\n There is no masking the uncertainties we might be facing in the short term, but the foundations that have been driving the electric vehicle trend are still holding strong.<\/p>\n The market is still expecting government support, better economics, more charging stations, and the growing acceptance of EVs as the way forward.<\/p>\n According to the International Energy Agency<\/em>, EVs are among the select few technologies that could really help us hit that net zero emissions goal by 2050.<\/p>\n There\u2019s also some exciting tech on the horizon that could address current limitations of EVs and bolster adoption.<\/p>\n Next-generation battery technologies such as solid-state<\/strong> are expected to improve range, charging time, safety, and affordability of EVs.<\/p>\n \u201cWidespread solid-state commercialisation is unlikely to begin until the end of the decade, but early iterations of this technology are already available to consumers,\u201d said a research report from Global X<\/em>, a fund management firm.<\/p>\n The research noted that in July 2023, Chinese electric automaker Nio has shipped the first ES6 SUVs with a 150 kilowatt-hour (kWh) semi solid-state battery pack that can support a range of 578 miles (930 kilometres) on a single charge.<\/p>\n Also, it\u2019s important to understand that while EV sales growth is slowing, it\u2019s not actually moving in reverse.<\/p>\n According to forecast, sales of all types EV vehicles (battery and plug-in hybrid) are expected to make up over 60% of all vehicle sales in Europe and China, and 41% in the US by 2030.<\/p>\n \u00a0<\/p>\n Source: Global X<\/strong><\/em><\/p>\n \u00a0<\/p>\n Lithium prices hit all-time highs in 2022, caused by years of EV sales momentum that suppliers were simply not able to keep up with.<\/p>\n In 2023, lithium prices plunged but have bounced back modestly in 2024.<\/p>\n Over the longer term, experts say the global commitment to net zero by 2050 will see continued strong demand for critical minerals like lithium.<\/p>\n Lithium-ion batteries, which are key to us moving toward cleaner energy, will especially drive the demand for this soft white metal.<\/p>\n BloombergNEF for instance expects global demand for lithium to grow nearly 5x by the end of the decade.<\/p>\n And Global X says that while the EV industry may be moving into its next chapter as part of its maturation, the technology remains in its early stages of adoption.<\/p>\n \u201c In our view, the EV industry and adjacent lithium and battery tech companies have a long runway for growth ahead.\u201d<\/p>\n NOW READ: A Live Cat Bounce: Canaccord\u2019s Reg Spencer is positive on lithium\u2019s revival<\/a><\/strong><\/em><\/p>\n <\/span><\/p>\n The post The Ethical Investor: Despite EV slowdown, the future is still electric and lithium story remains intact<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"Why the uptake of EVs is dropping off<\/h2>\n
How is China impacting the global EV market?<\/h2>\n
What\u2019s going on with hybrid sales?<\/h2>\n
The future is still electric<\/h2>\n
Lithium fundamentals also remain intact<\/h2>\n