EV surge in the auto industry, Europe to end petrol car sales by 2035.
But challenges remain around their production, affordability, and sufficient infrastructure to convince drivers to switch to EV.
China is at the pole position.
In 2022 European carmakers were hampered by a shortage of semiconductors, the computer chips that are key to many systems on all types of cars.
But sales of electric cars have been quite good.
China is a leader in electrifying cars, with favorable policies and EV sales set to double in 2022.
But experts have warned that sales there could fall in 2023, along with changes in the Chinese economy.
China’s EV (electric vehicle) Growth
“China’s EV (electric vehicle) growth will moderate in 2023, following a meteoric rise of more than 100 percent year-over-year in 2022,” said Al Bedwell, director of global powertrains at LMC Automotive.
“The country’s slowing economy and inevitable retail price hikes will reduce Chinese EV and plug-in hybrid demand, although a lot of volumes will still be added.”
But it predicted that sales in Europe would pick up this year after growing just 21 percent last year due to supply constraints.
“Europe’s slow 2022 EV growth will accelerate to 50 percent in 2023 as the chip crisis eases,” Bedwell said, although he said it would affect vehicle availability by 2023. This will continue to happen.
The U.S. is giving its electric car industry a big boost with the passage of a $370 billion green energy bill that includes tax cuts for American-made electric cars and batteries.
In 2023, an estimated one in every eight new cars sold globally might be electric.
Tesla dominates
Elon Musk’s Tesla is the largest seller of electric cars worldwide. Tesla plans to sell 1.3 million units in 2022, driven by its Model Y SUV. It predicts a 37 percent increase to 1.8 million cars in 2023.
But Chinese firm BYD is in its sights.
The manufacturer plans to nearly triple its sales of electric vehicles to 900,000 cars in 2022 and plans to expand in Europe and North America.
Chinese manufacturers like BYD or rival automaker NIO are “the most competitive in the world, working harder and smarter,” Musk himself said in January.
Traditional auto companies such as Volkswagen and Stellenbosch Group – which owns Peugeot and Jeep – are also accelerating the launch of their electric models.
In the near future, high-end manufacturers like Rolls Royce and Ferrari also want to introduce their first battery-powered versions.
Japanese automaker Toyota continues to defend hybrids, however, presenting them as more accessible and the only solid solution for power transfer.
Price War
Electric cars are on average more expensive than their gasoline equivalents, costing around 35,000 euros ($38,000). This puts them out of reach for many drivers, despite offering hefty subsidies.
But in early January, Tesla and Ford both announced price reductions of up to 20% in Europe and the US.
In Europe, manufacturers may follow a similar path to gain market share, but also to comply with increasingly strict European CO2 emissions standards, according to German analyst Matthias Schmidt.
“2022 was a supply issue, (but) we are likely to see a complete switch,” he said.
“If (manufacturers) start to panic, we’re likely to see more and more cuts.”
Producers may also react to Chinese manufacturers ramping up production, with plans to produce at lower cost in Europe.
Smaller and cheaper models, such as the Renault 5, are also slated to hit the market in the next few years.
Schmidt said that in 2023, manufacturers will have to “go to their customers and push the vehicles forward”.
Charging Points
Fear of breakdowns is one of the main factors preventing drivers from switching to electric vehicles.
Most are limited to a few hundred kilometers and recharging can take anywhere from twenty minutes to several hours depending on the terminal.
This means that the development of a network of fast and accessible charging terminals is critical for cars that are viable for long journeys.
According to a report by the consulting firm McKinsey, the EU will require 3.4 million charging stations by 2030, along with upgraded power networks to handle the demand.
In total this could represent a cost of around 240 billion euros, with companies including Fastned and Ionity ramping up investment in networks of charging stations.
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