Two forces have impacted the global automotive industry since 2020, the rampant COVID-19 pandemic and the issue of net-zero emissions. Now we can say a consensus on banning the sale of new gasoline cars by 2035 is forming gradually in major markets around the world. The EU has announced such a ban, and in the U.S., California and New York state have passed laws (other states are expected to follow suit). China, the largest market, has not yet legislated against the sale of new gasoline cars, but their pace of electrification is so rapid I don't think binding rules and regulations will be needed at all. Considering the circumstances, auto giants have been rolling out transformation plans over the past two years. While it is simple to draw up plans, however, carrying out the plans can be overwhelmingly hard and complicated. "Time" no doubt imposes the greatest pressure on car manufacturers today. While 2023 is just around the corner, subversive changes will inevitably surface before you know it.
The year 2022 has reached its end in the blink of an eye, and the dust has mostly settled in the car market for the whole year. The global car market will have declined slightly this year from last year. If we factor in the highly unstable supply chain, the sales result is not under expectation. The focus of the global automotive industry is now on EVs (BEVs and PHEVs), and despite the declining global market, the EV market will exceed 10 million units, representing a whopping 50% year-over-year increase. What's even more amazing, though, is that not until the next few years will we usher in the golden age of EVs. I've been analyzing various aspects and trends of the automotive industry for you these days, and I'd like to share the predictions I have compiled for automotive megatrends in 2023 at the end of the year…
- The global production capacity will be affected by unsolved supply chain issues such as chip shortages in the first half of the year. It may recover slowly in the second half of the year, but the supply of high-end chips will remain insufficient. No marked improvement will be seen in the overall auto market.
- The momentum for the growth of the EV market will heavily depend on the Chinese market. With oil prices unlikely to fall and charging facilities widely available, China's self-owned brands, whose EVs have a broad price range, will likely leap again from 5.5 million units this year to more than 8 million units (monthly sales are currently at 600,000 units) in market share and further push the development of EVs with major international joint ventures.
- The global EV sales volume reports approximately 10 million units this year. Suppose China's EV market has 8 million units next year, with this year's proportion applied, the global sales will reach 15 million units next year.
- China's self-owned brands will step on the accelerator to push for their presence in overseas markets. German and Japanese car manufacturers will see a drastic decline in market share due to slow development of new EV models. Others, such as Tesla and EV startups, will expand their market share gradually. In addition, Korean brands will continue to gain ground and boost sales with the help of their local battery manufacturers.
- Intelligentization will follow electrification to be the focus. The next main battleground for car manufacturers will be L2+ assisted driving and navigation in cities. Full autonomy will not be in place anytime soon, and the war of capital attrition will force some technology players to slow down and shift to L2+ technology that can be lucrative in no time.
- The development of intelligent cockpits will be speeding up. Voice recognition, biometrics, and even AR/VR applications will become more widespread.
- Battery manufacturers, first-tier supplies, and high-end chip tech companies will exert greater influence on the automotive industry. Car manufacturers will gradually release the domination of the automotive industry.
- The U.S. "anti-globalization" Inflation Reduction Act (IRA) has been postponed to the second quarter of 2023 due to protests from various countries. In the meantime, how the U.S. relaxes its stringent terms of the localization of the EV industry will be worth continued attention.
- Toyota, the world's leading car manufacturer, has not ceased to question the global trend of vehicle electrification, but the general direction is already set. Major markets across the globe such as China, the U.S. and Europe continue to move toward EVs, leaving Toyota with little time to adjust its R&D strategy. Other Japanese brands such as Honda, Mazda, and Subaru are determined to move toward the EV era. Whether or not Toyota adjusts its strategy, and to what extent if it does, will shape the sales landscape of all major car manufacturers in the next few years.
Looking at the evolution of the car market over the past few decades, I figure 2022 has probably witnessed the most dramatic changes. The total global sales volume may seem pretty much unchanged, but the booming market of new energy vehicles, intelligentization engineering, sales changes among brands, and the level of participation of the technology industry are all unprecedentedly amazing! Nonetheless, I don't think the big picture of the auto industry in the next 20 years will be clear until 2023 to 2025, and of course, it will be even more exciting than what we've observed in 2022!