The last year has been sobering for those who invested in Tesla Inc, and other electric vehicle startup competitors that hoped to replicate Elon Musk as CEO.
Many shares of EV startup companies fell as interest rates rose, and the financial markets wailed. Rivian Automobil Inc, a company with a greater market value than Ford Motor Co. just after its 2021 public listing, has lost over 70% in the last year.
Others EV startup failed worse. Arrival, an electric van manufacturer, warned that it might run out of money in less than one year. Lucid Group Inc. was backed by Saudi Arabia’s sovereign wealth fund. It struggled to make its Air luxury EVs. Xpeng Inc, a Chinese Tesla competitor, shares have lost over 80%.
The hard part is now: Persuading mainstream customers to join the fun.
Automobile industry invests more than $1 trillion in a revolution from the combustion engine to electrical vehicles controlled by software. Automakers, government officials, and politicians from Detroit to Shanghai have all embraced electric vehicles’ promise to offer safer, cleaner transportation. California and Europe have both set 2035 for the end of sales of all new-generation passenger cars.
Tesla Inc.’s rise to be the most valued automaker in the world – achieving a valuation of $1 trillion last year – has humbled other established carmakers like Toyota Motor Corp, and Volkswagen AG, which once were reluctant about going electric.
A new wave of electric vehicles, from pickup trucks and SUVs to the middle-market, will be available in all major cities around the globe starting next year.
Forecasters and industry executives are not in agreement about how quickly electric cars could overtake half of the world’s vehicle market.
China is the largest automotive market in the world, and battery electric cars have taken 21% of that market. EVs make up about 12% in passenger vehicle sales in Europe. However, the EV market is just 6% in America.
Analysts and industry professionals pointed out that there are two main barriers to EV adoption: a lack of fast-charging infrastructure and rising costs of EV batteries. This is due to a shortage of key materials, as well as uncertainty about government subsidies, which have boosted EV sales in large markets such the United States, China, and Europe.
According to AutoForecast Solutions (a consulting firm), electric cars could make up a third of North America’s market by 2029 and around 26% worldwide.
According to AFS President Joe McCabe, electric vehicle sales are unlikely to rise in a steady, upward-moving curve. If the economy experiences a recession in 2019, as most economists predict, it will affect EV adoption.
Wards Intelligence predicts that North American combustion vehicle sales will be just below 80% by 2027. Wards Intelligence analyst Haig Stoddard stated at a conference that automakers “expect strong ICE [internal combustion engines] volume going into the next decade” based on their product plans.
Several new electric cars were unveiled by established carmakers like Ford, Mercedes and General Motors Co. in 2022 to compete with Tesla and other upstarts.
The mass production of the majority of these cars kicks in between 2023-2024.
McCabe stated that there may be up to 74 electric vehicles in North America by 2025. McCabe predicts that less than 20% of these models will sell in volumes exceeding 50,000 units per year. The automakers may be restricted by too many models in niche markets and not enough capacity.
Global vehicle demand is also being threatened by slowing economies in Europe and China.
New auto companies were founded in the first years of the 20th century by investors looking to capitalize on the mass-mobility wave that Henry Ford and other pioneers of automobile technology started. The global automotive industry was a well-established one by the 1950s. Brands like Duesenberg were no longer recognizable.
It will be interesting to see if the 21st century’s electric car brands follow this path in the coming years.