Electric vehicles are facing the leap into the mass market

DETROIT, Dec. 15 (Reuters) – The past year has been a sobering one for investors pouring money into Tesla Inc (TSLA.O) and rival electric vehicle startups hoping to emulate the success of Tesla CEO Elon Musk.

As interest rates rose and financial markets turned, the shares of many EV startups fell. Rivian Automotive Inc (RIVN.O), which had a higher market value than Ford Motor Co (FN) shortly after going public in 2021, lost more than 70% of its value in the past year.

Other EV startups fared worse. Electric van maker Arrival warned it could run out of money within a year. Lucid Group Inc (LCID.O), backed by Saudi Arabia’s sovereign wealth fund, struggled to build its sleek luxury electric vehicles. Shares of Chinese Tesla challenger Xpeng Inc (9868.HK) lost more than 80% of their value.

Now comes the hard part: convincing more mainstream consumers to come along.


The auto industry is pouring more than $1 trillion into a revolutionary shift from internal combustion engines to electric vehicles, led by software. 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 ending sales of new combustion passenger cars.

The rise of Tesla Inc (TSLA.O) to become the world’s most valuable automaker – a $1 trillion valuation last year – humiliated established automakers such as Toyota Motor Corp (7203.T) and Volkswagen AG (VOWG_p.DE) who were ever hesitant to go electric.

Starting next year, a wave of new electric vehicles, from pickups to mid-size SUVs and sedans, will reach the world’s major markets.

Business leaders and forecasters disagree on how quickly electric vehicles could take over half of the global auto market, let alone all of it.

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

Among the barriers to electric car adoption, industry executives and analysts said, were a lack of public fast-charging infrastructure and the rising cost of electric electric cars, driven by shortages of key materials and uncertainty about government subsidies that could drive the purchase of electric vehicles in stimulated major markets. including the United States, China and Europe.

The all-electric Ford F-150 Lightning pickup is unveiled at the company’s global headquarters in Dearborn, Michigan, U.S., May 19, 2021. REUTERS/Rebecca Cook/File Photo

According to consulting firm AutoForecast Solutions, electric vehicles could account for a third of the North American market and about 26% of vehicles produced globally by 2029.

Electric vehicle sales are unlikely to increase in a smooth, ever-rising curve, said AFS President Joe McCabe. If there is a recession next year, as many economists predict, it will slow EV adoption.

Wards Intelligence predicts that combustion vehicles will account for just under 80% of North American sales by 2027. Based on automakers’ product plans, Wards analyst Haig Stoddard said at a recent conference that manufacturers are “expecting strong ICE (internal) volume over the next decade.”


Throughout 2022, established automakers such as Mercedes, Ford and General Motors Co (GM.N) unveiled dozens of new electric vehicles to challenge Tesla and the new entrants.

Mass production of most of these vehicles will begin in 2023 and 2024.

By 2025, 74 different models of electric vehicles could be offered in North America, McCabe said. But he predicts that less than 20% of those models will likely be sold in volumes in excess of 50,000 vehicles per year. Automakers could be left with too many niche models and too much capacity.

Slowing economies are also threatening overall vehicle demand in Europe and China.

During the early years of the 20th century, new car companies sprang up, backed by investors eager to catch the wave of mass mobility that Henry Ford and other automotive pioneers started. By the 1950s, the global auto industry had consolidated and once heralded brands such as Duesenberg had disappeared.

The coming years will determine whether the crop of electric car brands will follow a similar path in the 21st century.

Check out the Reuters roundup of news stories that dominated the year, and the outlook for 2023.

Reporting by Joe White Edited by Bernadette Baum

Our Standards: The Thomson Reuters Principles of Trust.

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