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Electric cars have been the stars of the Detroit Auto Show this year and they have attracted a lot of attention from the media, as more and more urgent discussions about climate change and about the way the world fails in its struggle. Every self-respecting car manufacturer has at least one EV in the reserve. The biggest ones have several. And all these new electric vehicles are expected to hit the market in the next few years. Overcrowding can happen.
The pileup could be "of epic proportions", as AlixPartners had warned in a study cited in a recent badysis of the topic of EV conducted by Paul Eisenstein of CNBC. According to Eisenstein, badysts expect nearly a dozen new electric vehicles at the end of this year alone in the US showrooms. Some of them will be direct competitors of Tesla, which currently holds 83% of the US battery-powered electric car market.
The "threat to Tesla" in electric vehicle reporting is popular and 83% market share is actually not sustainable in any sector. But with loyalty to the Tesla brand, concerns about the company's future sales may be premature. What is not premature is the concern about this pileup that AlixPartners warned about.
The world's largest automakers are investing billions in electric vehicles motivated by government incentives and strategies to phase out ICE vehicles in some markets. From a pro-EV point of view, it's a good time to launch as many electric cars as you can design and build. All major manufacturers have developed electric vehicle manufacturing platforms and are preparing to use them wisely. Millions of electric vehicles arrive on the market. There is only one problem with this: the actual sales statistics. Related: Oil rallies as Saudis cut exports to the United States
China, for example, is the world's largest market for electric vehicles. The total number of electric cars on China's roads reached 2.61 million, an increase of 70 percent or more than a million cars from the previous year. And yet, these 2.61 million electric vehicles, according to Eisenstein, represent only 4% of the total car market in China. Beijing has ordered local automakers to increase their electric vehicle sales by 10% of their total sales this year and 12% by 2020, which means increased competition for their international competitors.
The United States, where electric car sales jumped 81% last year, had only 1 million electric vehicles on their roads. Last year, sales of electric vehicles amounted to approximately 360,000. This compares however to the total sales of more than 17.2 million cars for the year. The contextualization of the new sales of electric vehicles gives a different perspective on the electric vehicle sector. The latter becomes all the more clear as you take into account the federal tax incentives granted to electric vehicle manufacturers, which are between $ 2,500 and $ 7,500 per vehicle, manufacturer reaches the sales of 200,000 electric vehicles.
Related: The major risk that oil markets underestimate
Thus, despite the enthusiasm generated by electric cars, they still represent only a tiny fraction of total car sales in the world's largest car market. Can this enthusiasm somehow lead to increased adoption of EVs? Not alone. In a Forbes article on US electric vehicle trends this year, Amanda Myers, an energy innovation policy badyst, pointed out that many people did not want to switch to EVs because their price was prohibitive. Yet with the drop in battery costs, which has been dropping steadily and dramatically over the last decade, electric cars will become more affordable, boosting buying. Longer ranges – another major concern for buyers – will also help stimulate adoption.
The question for all those manufacturers who spend billions on R & D and EV production is whether this acceleration of adoption will be large enough to justify their investments.
The AlixPartners study estimated that "by 2023, $ 255 billion in R & D investment and capital expenditures will be spent on electric vehicles, and that some 207 electric models should be commercialized. by 2022 ". many of them are doomed to be unprofitable due to currently high system costs, low volumes and intense competition. "One could only hope that automakers took these risks into account in their EV strategies.
By Irina Slav for Oilprice.com
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