Global EV (electric vehicle) sales rose 68% YoY to 7.8 million units in 2022 even as overall automotive sales fell around 1% in the year. EVs accounted for almost 10% of total car sales last year and hit a key milestone.
According to preliminary research from LMC Automotive and EV-Volumes.com, China and Europe have taken the lead in EV adoption even as the US has lagged behind despite being home to Tesla, the world’s largest electric car maker.
LMC Automotive estimates that fully electric vehicles accounted for 19% of all the cars sold in China last year while the commensurate figure for Europe was 11%. Looking at the US market, all-electric vehicles accounted for 5.8% of sales in 2022 as compared to 3.2% in 2021.
Analysts expect US EV adoption to increase in 2023 due to the Inflation Reduction Act. Now, Tesla, Toyota, and General Motors cars would be eligible for the $7,500 EV tax credit. While many expected that Tesla might raise car prices in the US as the company’s cars now qualify for the tax credit, it has instead cut vehicle prices.
Tesla has lowered car prices across its models including the best-selling Model 3 and Model Y. Notably, in December, Tesla offered a credit of $7,500 to US buyers who took delivery of Model 3/Y in the month.
According to TroyTeslik, an independent EV researcher, Tesla has lowered the Model Y prices by as much as 19% depending on the configuration. The company has lowered Model 3 prices between 6-14%.
Global EV Sales Reached a Key Milestone in 2022
Analysts believe that the Inflation Reduction Act is a positive for Tesla stock. Many brokerages issued bullish notes on TSLA stock after the Act was passed and Wolfe Research upgraded Tesla stock to a buy and raised its earnings estimates.
China has been promoting EV adoption in the country as it tries to wean away the economy’s reliance on oil imports. China is the world’s largest automotive market as well as oil importer.
The country sees electric cars as a key pillar of its “Make in China 2025” strategy. China has also taken a lead in autonomous cars. In December, Baidu (NYSE: BIDU) started offering robotaxis during the night in Wuhan.
The company has been scaling up its autonomous driving operations even as many other companies have reversed course on their autonomous driving business.
Volkswagen is bullish on its electric car sales in China. Ralf Brandstätter, who heads the company’s China business said, “Last year, every fourth vehicle we sold in China was a plug-in, and this year it will be every third auto.” He added, “We haven’t reached the tipping point yet, but we’re expecting to get there between 2025 and 2030.”
Tesla Sells the Most Electric Cars Globally
In 2022, Tesla sold 1.31 million EVs globally and was the market leader. However, BYD is the largest seller of NEVs (new energy vehicles) globally. NEVs also include plug-in hybrid cars. BYD almost sold 1 million EVs last year and many expect its EV sales to surpass Tesla in 2023.
BYD is the largest seller of NEVs in China and is expanding its operations in other countries. It featured its BYD Seal at an Auto Expo in India recently. In November, BYD began deliveries of its Atto 3 in Thailand.
It is also expanding its presence in Europe and is looking to set up manufacturing plants in the continent. The company is also looking to expand its product portfolio and would launch two luxury models, one sports car, and one SUV in 2023.
BYD, which is backed by Warren Buffett’s Berkshire Hathaway, offers multiple EVs and hybrid cars at various price points. The Seal for instance is much cheaper than Tesla Model 3.
EV Stocks Crashed in 2022
Meanwhile, even as global EV sales soared in 2022, it was a different ballgame when it came to EV stocks. Tech stocks in general underperformed the markets last year.
Tesla lost a whopping 65% last year and had its worst year ever. Many names like Arrival, Lordstown Motors, Nikola, Rivian, Lucid Motors, and Xpeng Motors fell to their all-time lows.
EV stocks fell recently also after Tesla’s price cuts as they have raised fears of a price war in the industry.
The price war in the EV industry would also lead to more losses for startup companies. Barring Tesla, not many companies are making profits by selling electric cars.
Even Tesla’s margins might take a beating after the price cuts but the company would hope to offset that with economies of scale as new plants ramp up production.
Analysts anyways don’t expect EV sales growth in 2023 to match 2022 amid a slowing economy. A price war might be yet another blow for cash-starved and loss-making startup EV companies, many of which are anyways facing trouble in raising cash.
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