Trends shown by the latest sales figures in the global electric vehicle market

By Jeff Lee 2022-10-03

Consumer demand for electric vehicles in today's global auto market is much higher than what we see in the sales reports. The reasons for this are simply the shortage of chips, the lack of raw materials, and the disrupted supply chain of components. These problems are more serious for EVs than for gasoline vehicles. The crisis traditional automakers are facing has actually given new EV brands an opportunity to take a breather. Once the problems not related to market demand get solved, EV sales will start to grow by leaps and bounds after next year, with figures surpassing any estimate made by any of the major market research firms prior to last year (e.g., IHS Markit estimated 12.2 million EVs sold worldwide by 2025 last year, but the sales volume is already approaching 10 million this year).

Leading analyst firm Counterpoint released its analysis of the global market of passenger EVs (including BEVs and PHEVs) a few weeks ago for the second quarter of this year. The highlights are as follows…

  • The sales reached 2.18 million units, the first quarter to exceed 2 million units, representing a 61% year-over-year increase. BEVs and PHEVs accounted for 72% and 28% mix, respectively.
  • China claimed a market share of 57%, far ahead of Europe and the United States. Even though the city lockdown in April hit both the economy and the car sales/supply chain hard, the Chinese market grew 92% year-over-year and took the lead in the growth of global EV sales.
  • BYD, reporting a whopping 266% year-over-year rise, overtook and dethroned Tesla for the first time to become the top-selling EV brand globally in Q2 2022. BYD has been expanding overseas, especially in Europe, where EVs are more widely accepted.
  • Tesla remained the leader in BEV sales, but BYD's BEVs are closing in fast.
  • The top five in sales share were BYD, Tesla, SAIC-GM-Wuling, BMW and Volkswagen respectively. Volkswagen was the only one that underwent a fall instead of a rise, down 9% year-over-year. The fall was due to common hindrances experienced by the entire auto industry such as chip shortages and disrupted supply chains resulting from the war. Plus, Volkswagen's own automotive software company, CARIAD, has suffered setbacks in its R&D progress, hence the delay in the development of new features and the production schedules for EVs.
  • Seven of the top 10 bestselling vehicles were Chinese self-owned brands’ models, while Tesla Model Y and Model 3, and Volkswagen ID.4 accounted for the rest.
  • The annual global EV sales volume is not expected to exceed 10 million units, mainly due to the complex factors mentioned above.

In terms of annual global EV sales, 6.75 million units were sold last year, indicating a 108% year-over-year increase, whereas the global car market only increased by 4.7%. If the global EV sales volume does not reach 10 million units this year, assuming it lands at 9.5 million units, it will be a 40% year-over-year increase, and EVs will exceed 10% share of the global car market for the first time (the global car market is expected to decline minimally by 2% this year compared to last year).

The market data and the competition between countries and between brands are de facto in a state of drastic change. Year-over-year summary reports vary greatly. There have been signs to follow in the evolution of the auto market over the past decades, but now qualitative change is evidently happening. The reason for that is the introduction of EVs has created a subversive wave…

  • China's self-own brands are rising. Capitalizing on huge resources and the strong momentum from government policies, Chinese self-owned brands are overtaking rivals on a bend in the EV race. They take new local business opportunities and gain nutrients to grow.
  • New power in automaking is emerging. It is key new technologies, not colossal capital from traditional automakers, that give OEMs the opportunity to enter the future auto industry.
  • Schedule planning of big traditional automakers for EVs is delayed. Most of the major automakers did not confirm development strategies for EVs until the past two years, so the development of new-generation EVs is postponed until 2025. This will give startups that initiated development plans early more time to seize the market opportunity. Meanwhile, fuel car brands that fail to transform are most likely be eliminated or merged in a decade whether they like it or not.
  • The rules of the game have changed for the ODM model. The dominant players in the auto industry will not necessarily be automakers. Instead, electronic OEM giants with complete supply chains can use the ODM model for cross-brand cooperation. They may even have greater influence than the brands and in turn, indirectly control sales changes among the brands.
  • Countries with copious natural resources will contribute to the growth of new brands. Because EV batteries require specific raw materials, the local auto industry in countries that have rich troves of minerals will gradually show its competitive edge. Let's put aside China and the U.S. for now. Canada and Indonesia, tapping into their mineral deposits, have recently found new business opportunities to partner with major automakers in the EV industry. Who's to say they can't develop their own brands in the future?

Overall, the next two years will focus on Chinese EV brands' technology level (whether it can stand up to the test of overseas markets), brand acceptance in the international market and capabilities to expand business, and of course, the operations of some Chinese and American startups. By 2025, traditional automakers will have launched their best EVs in full force. Global EV sales will soar from then on, ushering in the golden decade of the EV era.