The electric vehicle market surged last year with strong growth in China and Europe leading to EVs making up 10% of all new cars sales in 2022.
State of the EV and Traditional Car Market
Global EV sales totaled 7.8 million in 2022, a 68% rise from 2021, as electric vehicles made up 19% and 11% of all car sales in China and Europe respectively. Germany, Europe’s largest auto market, saw EVs account for 25% of new vehicle production with more electric vehicles selling in December than traditional cars (likely due to government incentives that were set to be cut in 2023).
Meanwhile, new-car sales in general fell 1% worldwide to 80.6 million with 4% growth in China significantly boosting those overall results. In fact, Bayerische Motoren Werke (BMW), Ford, and Mercedes-Benz all saw their electric vehicle sales at least double in 2022 while overall sales actually fell. The surge in EV sales from these automotive manufacturers hasn’t necessarily stifled king Tesla's (TSLA) growth yet, but has certainly eaten into its market share.
Where Does Tesla Fit In?
The EV manufacturer run by a social-media CEO has seen tremendous growth over the past few years. Tesla (TSLA) remains the largest electric vehicle manufacturer in the world by sales but has seen competitors catch up to its position with Chinese manufacturers, BYD and SAIC Motor, as well as Volkswagen making significant strides in recent years.
Tesla increased its global deliveries from 936,000 to 1.314 million in 2022 but BYD saw its deliveries surge from 321,000 to 911,000. Additionally, SAIC motor managed to reach 750,000 from 610,000 deliveries the previous year while Volkswagen reached 572,000. Meanwhile, Ford has become the second largest EV manufacturer in the United States which is closely followed by Hyundai and Kia.
Tesla still retains that top spot but has seen many competitors rise at a faster pace, especially outside the U.S., which is only reinforced by its recent price changes. Tesla has cut prices on some of its vehicle models in both the U.S. and China as demand for electric vehicles wanes with economies stalling as they deal with high inflation and tighter monetary policies to go along with foreign affairs and continued supply chain issues.
Where Do EVs Go From Here?
The continued growth of electric vehicles is expected to take a little bit of a break due to economic conditions as well as fiscal policies. Rebates on EVs are falling in many parts of the world as governments look to minimize how much they have to incentivize customers to actually go out and purchase an electric vehicle. Higher electricity prices in Europe and changes in discretionary spending from consumers aren’t helping EV producers either.
Those factors are no small reason for why Tesla decided to cut some of its vehicle prices and competitors gaining share of the market with larger economies of scale is going to push overall prices down as well. A drop in prices is not a bad thing for consumers and increased competition in a market is excellent as well.
In fact, Elon Musk said many years ago that he would consider EVs becoming the future a success even if Tesla wasn’t able to survive. It looks like now EVs are the future and Tesla will survive for an extended period, it just has to deal with the extremely tight margins of the automotive industry now.
