Main trends that will affect electric vehicles in 2023

How did the electric vehicle market perform in 2022?

By the end of 2021, analysts expected the EV market to experience another stellar year of growth. In 2021, electric vehicle sales doubled from 2020 to a new record of 6.6 million, accounting for nearly 10 percent of global electric car sales.

2022 proved to be interesting for the EV market, Rho Motion’s Iola Hughes told INN at last year’s Benchmark Week. Headwinds for the sector came after Russia’s invasion of Ukraine and China’s lockdowns in the early months of the year.

“As we move through the year, we have seen a much stronger-than-expected recovery, coming largely from the Chinese market, and a significant increase from original equipment manufacturers (OEMs),” he told INN.

Many regions had strong EV sales in the final quarter of 2022, pushing passenger car and light-duty vehicle sales to more than 10 million battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs), according to Rho Motion data.

“A reduction in subsidies/incentives in key countries, such as Germany, Norway and China, resulted in strong pre-buying before incentives were reduced in the new year,” Rho Motion’s Charles Lester explained to INN. “The EV industry had its first month of ‘1 million’ EV sales in September 2022.”

Sales data from EV-volumes.com shows that the global total last year was 10.5 million units between BEVs and PHEVs.

“An impressive growth of 55.4 percent in a difficult vehicle market as a whole. BEV sales increased 59 percent to 7.65 million units, PHEV sales 46 percent to 2.86 million units. the firm affirms. “The global share of electric vehicles in light vehicle sales is 13 percent by 2022.”

In terms of regions and how they grew in 2022, China saw the largest increase. Sales in the Asian country nearly doubled in 2022 compared to 2021, as OEMs increased their production capacity for electric vehicles and battery makers increased their production of lithium-iron-phosphate and nickel-cobalt chemicals. manganese.

“EV sales in Europe grew 16% in 2022 (vs. 2021), which was hampered on the production side by supply chain difficulties throughout the year,” Lester said. “Many OEM lead times in early 2022 were up to a year; however, EV lead times have eased somewhat as supply chain issues have eased.”

In North America, sales rose to 1.108 million BEV and PHEV units, according to data from EV-volumes.com, an increase of 48 percent. “90 percent of sales were in the US with 80 percent BEV in the North American mix,” the outlet states.

The number of models of electric cars increased more than 15 percent year after year in 2021, reaching 450; that’s also more than double the number of models that were available in 2018. In 2022, despite the challenges, automakers continued to launch new models, expanding segment and price point availability for electric vehicles.

“The increase in model availability was expected, will continue, and is critical to increasing EV adoption,” IHS Markit’s Stephanie Brinley told INN in October.

About half of the world’s electric cars are sold in China, making it the leader in adoption. But one interesting trend seen last year was the expansion of Chinese OEMs beyond the domestic market.

“As Chinese OEMs seek greater market share globally, more automakers or battery producers are entering foreign markets,” Lester said. “Compared to North America, OEMs prefer to make the first move in Europe.”

As in 2022, Rho Motion expects the vast majority of EV sales growth (more than two-thirds of units added) to come from China as the Asian nation extends its lead into other regions.

What factors will drive the electric vehicle market in 2023?

Despite some setbacks, the electric vehicle market continued to grow last year, not only in key markets but also in the rest of the world, including Australia, New Zealand and South Korea. “The reasons are better product availability, the introduction of incentives for electric vehicles and the reduction of import tariffs for electric vehicles in some countries,” says EV-volumes.com. “We expect the growth to continue in 2023.”

When asked about sales expectations for 2023, Lester said that for passenger cars and light-duty vehicles, Rho Motion forecasts more than 14 million global BEV and PHEV sales in 2023.

“Supply chain constraints appear to be easing, although it remains to be seen whether the semiconductor capacity coming online will be the appropriate level of technology to solve the problems there,” he said. Global economic factors and possible recessions in Europe and North America have the potential to cloud these markets to some degree.

“We expect Chinese OEMs to continue expanding into Europe, as they started in the second half of 2022, such as BYD (SZSE:002594), Great Wall Motor (OTC Pink:GWLLF,SHA:601633) and NIO (NYSE:NIO,HKEX:9866),” added Lester.

Similarly, BloombergNEF analysts call for increased EV adoption in 2023, but anticipate a slightly slower pace than seen in the past two years. During that period, sales increased from 3.2 million in 2020 to more than 10 million in 2022.

“We expect 13.6 million plug-in passenger car sales in total for this year, with around 75 percent of them fully electric.” they said. “There are now 27 million electric vehicles on the roads around the world, and this should top 40 million by the end of the year.”

There could still be some challenges ahead when it comes to model availability.

“EV delivery times in Europe still vary considerably from OEM to OEM,” Lester said. “For example, Tesla’s (NASDAQ:TSLA) lead time can be less than two months, while other European OEMs can range from three to 12 months.”

Government subsidies and incentives will be key to watch in 2023. In China, subsidies have been phased out in recent years.

“It was reduced by 30 percent on January 1, 2022 and eliminated on January 1, 2023,” Lester said. “Despite this, the EV market is maturing and the EV penetration rate is increasing, so the impact should be limited compared to the reduction in 2019.”

Looking to Europe, Lester explained that many EV subsidies in the region have decreased after incentives were provided during the pandemic. “Seeing how these do in 2023 will be a test of the point at which consumers are ready to transition to a mature market,” he noted.

In the US, the introduction of the Reducing Inflation Act is expected to support the growth of the electric vehicle market in the country.

“The Inflation Reduction Act will spur EV growth by 2023 in the US and EV portfolios are getting stronger with new models in the pickup and full-size SUV segments,” says EV-volumes .com. “Even if some parts of the Reduction of Inflation Act requirements are unclear, we believe growth will be impressive in 2023.”

Looking further ahead, Reuters notes While automakers have plans to build 54 million battery-electric vehicles by 2030, that would be more than 50 percent of total vehicle production. The analysis also suggests that the world’s biggest automakers want to spend about $1.2 trillion through 2030 to develop and produce millions of electric vehicles, as well as batteries and raw materials.