The Road to Electrification: Navigating the Global Auto Industry’s Transformation in 2023
Driving Forward: A Deep Dive into the Fast-Charging Evolution of 2023
The year 2023 has been a beacon of progress in the journey towards global electrification. During the first five months alone, electric vehicle (EV) sales accelerated to a robust 4 million, marking a considerable 32% growth in the first quarter. Yet, as we drive down the highway of innovation, there still is much more progress to be made.
The construction of the EV infrastructure and supply chains has moved into the fast lane. We've seen a marked increase in electric chargers being built, underlined by persistent government policy support. This shift has lit the path clear for EVs, with negative sentiments hitting the brakes as China extends tax breaks for the next four years, and sales are supercharged by price cuts and new products in the United States.
June's EV sales were particularly revving for Tesla and the Chinese EV industry, providing much-needed reassurance after investors had shown signs of flagging confidence in EV demand. Tesla’s second quarter saw sales accelerating past expectations, leaving a trail of positivity behind for Chinese EV sales. This performance has put the spotlight back on the potential of investing in the EV industry as a powerful diversification tool in global portfolios.
Source: BNEF. Data as of June 2023.
Looking ahead, the Bloomberg New Energy Finance (BNEF) 2023 outlook anticipates the EV market to be a force to reckon with — growing to an estimated $8 trillion by 2030, and a colossal $56 trillion by 2050. The main accelerant behind this surge? Passenger vehicles.
But the EV narrative is not without its potholes. The traditional giants of the auto industry, Ford, General Motors (GM), and Volkswagen, are facing speed bumps in their efforts to design and scale EV operations. This turmoil in the old guard has opened up a clear road for pure EV manufacturers such as Tesla, BYD, and NIO to take the lead — a lead they could maintain for at least the next two to three years.
One can't ignore the icy reception of Internal Combustion Engine (ICE) cars. While EVs surge ahead, ICE cars are skidding, seeing negative growth with BNEF estimating that the peak for ICE car sales was in 2017. By 2030, ICE sales could be as much as 39% below their peak, an uphill climb for traditional automakers whose sales predominantly come from these vehicles.
The real race, however, lies in achieving ICE parity - equal production cost for equivalent EVs and ICE cars without subsidies. Innovation over the past decade has led to a 90% reduction in battery prices. Still, a hurdle appeared in 2022 when battery prices increased for the first time in at least a decade due to high metal prices.
Amidst these evolving dynamics, the EV market in the US is being charged up by strategic moves and regulatory developments. In a turn of events that could bolster consumer confidence, Ford, GM, and Rivian announced a deal with Tesla to access its nationwide fast-charging network, the largest in the country. In tandem, we see states and companies working to convert charging outlets to the North American Charging Standard (NACS) charger used by Tesla, further strengthening the EV infrastructure.