The News
Despite an ongoing slump in global sales of electric vehicles, more than one in five cars sold worldwide this year will be electric, according to a new International Energy Agency (IEA) report released Tuesday.
European battery EV sales dropped 11.3% year-on-year in March, the Financial Times reported, but the IEA said that EV sales are likely to remain robust in 2024, reaching around 17 million by the end of the year.
The agency forecasted that almost one in five cars on US and European roads will be electric by 2030, and in China — which will be the most significant contributor to global EV sales growth — one in three will be electric.
Still, non-Chinese EV firms are battling headwinds that could complicate the transition. Tesla on Tuesday is expected to report a significant drop in operating profit as it faces fierce competition from Chinese EV makers.
SIGNALS
German automakers’ approach to competing with China is ‘fiction’
German automakers are some of the loudest voices against raising EU tariffs on EVs and EV parts, arguing that cutting them instead would push Germany to become more competitive. Executives at Volkswagen and BMW believe that they need Chinese EV battery parts to keep their costs low until they can make their own, but the idea that German automakers can regain competitiveness in China is “fiction,” argued Foreign Policy’s James Crabtree. Beijing has “no interest in allowing German car companies to thrive in its market,” he wrote, noting that German automakers are losing out on building stronger ties with Japan and India by prioritizing recovery in China.
EV resale prices in US are hampering popularity
Plummeting EV resale values in the US have become a major “roadblock” in the expansion of EV market share across the country, USA Today reported. Over the past year, average prices for used EVs dropped by 32% compared to 3.6% for gas-powered vehicles. Coupled with higher price tags compared to Europe and Asia and inadequate charging infrastructure, the resale prices are yet another factor that “aggravate buyers’ worries that an EV isn’t worth the price or the potential headaches,” USA Today wrote. The resale value slump was largely triggered by Tesla slashing prices in an effort to remain more competitive. “Musk cutting prices made people feel like they owe $50,000 on their Tesla and now, it’s only worth $40,000,” one analyst said.
Chinese consumers are ‘numb’ to Tesla price cuts
China’s rapid rollout of cheap EVs is largely driving the IEA’s optimistic forecast, but Tesla’s market share is expected to drop in the country despite some of the most significant price cuts compared to its competitors, according to New Geek, a Chinese tech consumer blog. Between 2019 and 2023, Tesla’s average price in China dropped by 22%, leading to a 392% increase in sales, but Chinese EV giant BYD slashed its prices by 7% with a 1,217% sales increase during the same time period. “It is clear that consumers are becoming increasingly numb to Tesla’s price cuts,” New Geek wrote. While Tesla’s vehicles still have a better range compared to BYD’s, the blog suggested that nationalist pride is behind the fervor for BYD cars in China.
