Electric vehicles face the leap to the mass market

Electric vehicles face the leap to the mass market

Electric vehicles face the leap to the mass market

DETROIT, Dec 15 (Reuters) – The past year has been disappointing for investors as they poured money into Tesla Inc (TSLA.O) and rival EV startups hoping to emulate the success of Tesla CEO Elon Musk .

As interest rates soared and financial markets rotated, the shares of many EV startups have deflated. Rivian Automotive Inc (RIVN.O), which had a higher market value than Ford Motor Co (FN) shortly after its 2021 flotation, has lost more than 70% of its value over the past year.

Other EV startups fared worse. Electric van maker Arrival has warned it could run out of money 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 of Chinese challenger Tesla Xpeng Inc (9868.HK) have lost more than 80% of their value.

Now comes the tough part: persuading more mainstream consumers to come for a ride.


The auto industry is investing more than $1 trillion in a revolutionary shift from combustion engines to software-driven electric vehicles. From Detroit to Shanghai, automakers 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 the end of sales of new combustion passenger vehicles.

Tesla Inc’s (TSLA.O) surge to become the world’s most valuable automaker — hitting a $1 trillion valuation last year — has humiliated established automakers like Toyota Motor Corp (7203.T) and Volkswagen AG (7203.T). VOWG_p.DE) who were once reluctant to go electric.

Starting next year, a wave of new EVs, from pickup trucks to SUVs and mid-market sedans, will hit major global markets.

Industry executives and forecasters disagree on how quickly EVs could capture half of the global vehicle market, let alone all of it.

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

Barriers to EV adoption, industry executives and analysts said, include a shortage of public fast-charging infrastructure and the rising cost of EV batteries, driven by shortages of key materials and ‘uncertainty over government subsidies that have supported EV purchases in major markets including the United States, China and Europe.

The all-electric Ford F-150 Lightning pickup truck is showcased at the company’s world headquarters in Dearborn, Michigan, U.S., 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 percent of vehicles produced worldwide, according to AutoForecast Solutions, a consulting firm.

EV sales likely won’t grow in a smooth, ever-upward curve, AFS president Joe McCabe said. If there is a recession next year, as predicted by many economists, it will slow down the adoption of EVs.

Wards Intelligence predicts that combustion vehicles will account for just under 80 percent of North American sales in 2027. Based on automakers’ product plans, Wards analyst Haig Stoddard said at a recent conference that manufacturers “expect a large volume of ICEs (internal combustion engines) arriving over the next decade.’


Throughout 2022, established automakers like Mercedes, Ford, and General Motors Co (GM.N) unveiled dozens of new EVs to challenge Tesla and newcomers.

Series production of most of these vehicles will start from 2023 and 2024.

By 2025, there could be 74 different EV models offered in North America, McCabe said. But he predicts that fewer than 20 percent of these models will likely sell in volumes exceeding 50,000 vehicles a year. Automakers may be stuck with too many niche models and too much capacity.

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

During the early years of the 20th century, new automobile companies arose, backed by investors eager to seize the wave of mass mobility initiated by Henry Ford and other automotive pioneers. By the 1950s, the global auto industry had consolidated and once-heralded brands like Duesenberg had disappeared.

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

Explore Reuters’ roundup of the news that dominated the year and the outlook for 2023.

Reportage by Joe White Editing by Bernadette Baum

Our standards: the Thomson Reuters Trust Principles.

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