All cars were once a man’s dream (“All cars were once a dream in someone’s mind”) (Peter Gabriel).
That is right. No innovation sees the light of day without a pioneer with a vision for the future. The automotive industry has legends like Henry Ford and Karl Benz to thank for changing the world with new technologies and leaving brands that still exist.
But the lyrics of Peter Gabriel’s song can be put in a different perspective. Cars are objects that consumers dream about. Many people have a very different attachment to the vehicle they drive or want to drive than to any other item they own. We would also like to point out that after nearly thirteen decades, the car is now at a turning point like never before. Consumers are forced to make unusual decisions. After all, the relatively arbitrary choice between a diesel and gasoline engine has nothing to do with the decision to prefer an electric car.
It seems that the megatrend of electrification has reached a higher level. Let’s take a look at some of the latest developments in electric car sales and forecasts.
Figure 1 shows that the Asia-Pacific region has had the highest growth rate of electric vehicle sales in recent times. This region is dominated by China, where consumer preferences are rapidly changing and local brands are making a name for themselves.
- Source: Bloomberg New Energy Finance, data as of November 23, 2022. APAC = Asia Pacific; EMEA = Europe, Middle East and Africa. Past performance is not indicative of future performance and the value of any investment can go up as well as down.
The Chinese company BYD, which has been a shareholder of Warren Buffett since 2008, has overtaken Tesla as the world leader in electric car sales in 2022. BYD’s best-selling models in China include the Song, a mid-size SUV, and two sedans, the Qin and Han. . This not only refutes the idea that BYD offers a different category of cars than Tesla, but also points to BYD as a potential competitor to Tesla and other companies as the group strengthens its presence in Europe and elsewhere.
And in the UK, Tesla dominated in 2022 thanks to the Model Y, the best-selling battery electric car in a year in which sales of electric cars surpassed those of diesel cars for the first time. . In Norway, where diesel and gasoline cars face the most ambitious bans to come into effect in 2025, electric cars accounted for 79% of all new passenger cars in 2022. .
The adoption of electric vehicles currently depends on several factors. These include the proliferation of new models in different price brackets that give consumers more choice, improvements in battery technology, less worry about failures, expansion of public charging infrastructure and government subsidies, and changing consumer choices for environmental and technological reasons.
- Source: Bloomberg New Energy Finance, data as of December 21, 2022. Historical performance is not indicative of future performance and may lose any investment value.
What do the skeptics think?
However, not everyone is completely convinced by the concept of electric cars. Japanese automakers are significantly outpacing their European rivals in the field of battery electric vehicles. Toyota CEO Akio Toyoda recently made waves by stating that electric cars are not the only option for the future, although the group has been a pioneer in plug-in hybrid technology. However, we’re not rushing to conclude that Toyota is taking the route previously taken by disruptive tech skeptics like Kodak and Nokia. According to Toyota, the passenger cars will be equipped with several categories of traction systems, including electric battery, hybrid systems and fuel cells. The panorama of the sector, where various car manufacturers are innovating with alternative technologies, is indeed key to achieving the world’s climate change goals.
Bans on the sale of new cars with internal combustion engines will take effect at various dates over the next two decades. Many countries also promote the history of these bans. It will be 2030 in Sweden and the UK, and in the 2030s in other European countries. However, bans must be accompanied by comprehensive policy measures to make this new electric vehicle revolution sustainable. The International Energy Agency provides the following recommendations:
1. Maintain and adapt support for electric vehicles (with transitional mechanisms such as subsidies).
2. Launch the market for heavy vehicles, ie trucks and buses
3. To promote the adoption of electric vehicles in emerging and developing economies
4. Develop charging infrastructure for electric vehicles and smart grids
5. Ensure their supply chains are secure, robust and sustainable
A lot has changed in the electric car ecosystem in the last 5 years. But in the next 5 years, the changes will be even more. Fasten your seat belts!