AUTOMOTIVE OUTLOOK

by Lawrence Makagon EVs; an Update

The total global annual spending on passenger EVs in 2022 was $388 billion, up 53% from the figure for 2021. So if we add this amount to the foregoing total for EVs, the global total has now passed $1 trillion. Is this a big number? Sounds like it. But it’s not that much more than the $918 million that GM will invest in four U.S. plants, mainly for the production launch of a new, small block ICE, as we reported last month.

But global auto sales are worth some $2.5 trillion a year. This means that since EVs effectively saw the real light of day, the value of total car sales has been around $25 trillion. Looked at this way, the cumulative value of EVs is quite modest. There again, it’s not that long ago that we were wondering if the EV would really take off. That they did can be illustrated by the following passenger EV sales from 2016 through 2022, transposed from a

BloombergNEF chart: 2016 - $25Bn; 2017 - $45Bn; 2018 - $80Bn; 2019$85Bn; 2020 - $125Bn; 2021 - $260Bn; 2022 - $388Bn.

So more than 50% of EV spending occurred in just the past 18 months. Bloomberg expects EV adoption to continue to rise in 2023, but at a slightly slower pace than the last two years, which saw sales jump from 3.2 million in 2020 to more than 10 million continued in 2022. They expect 13.6 million plugin passenger vehicle sales in total for 2023, with around 75% of those being fully electric. But even so, 2023 global passenger EV sales could top 13.6 million.

China is set to be number one in EV sales again, with 8 million passenger EVs sold despite its phase-out of subsidies. The U.S. will do well, thanks to a combination of new EV manufacturing capacity and restored federal tax credits. At around 1.6 million plug-in vehicle sales in 2023, the U.S. will still be well behind Europe, but the gap is starting to narrow. Growth will be modest in Europe, but Chinese automakers are nipping at their heels and already account for over 10% of the region’s EV market.

There are now 27 million electric vehicles on the road globally, and this should exceed 40 million by the end of the year. That’s still only around 3% of the global vehicle fleet, but it’s a huge leap from less than 1% at the end of 2020. Plug-in vehicles now represent around 15% of global car sales, and their fortunes are increasingly tied to an overall global economy that is on shaky footing.

Sales of zero-emission vans and trucks will likely continue to rise quickly and should hit almost 600,000 globally in 2023, up over 80% from 2022. Since 2020, sales have jumped almost four-fold against the backdrop of a largely stagnant market for commercial vehicles. Commercial vehicles are used much more intensively than passenger cars, so electrifying them will lead to large reductions in both emissions and oil demand. China is the world’s largest commercial vehicle market, so what happens there determines the global picture. At 10% electric share, China is well ahead of almost all other countries in this segment. Only South Korea has a higher adoption rate, with more than 20% of its light commercial vehicle sales electric in 2022.

So with all these EVs on the highways and many more to come, what’s happening with the charging situation? Industry Week fills us in on this. Federal agencies have agreed to standards for government-funded electric vehicle (EV) charging stations. This development should make it easier for manufacturers to develop systems to take advantage of nearly $5 billion in public funds. BidenHarris administration officials say this groundwork could lead to a made-in-America charging network that’s reliable and convenient. With the Department of Transportation and the Department of Energy partnership, the finalized standards support EV charging of any type of car in any state. To qualify for public funds, chargers must be made domestically.

White House officials state that “the plan requires that, effective immediately, final assembly and all manufacturing processes for any iron or steel charger enclosures or housing be carried out in the United States. By July 2024, at least 55% of the cost of all components will need to be manufactured domestically as well.”

U.S. manufacturing is poised to benefit from EV chargers purchased through the National Electric Vehicle Infrastructure program (NEVI), creating jobs and incentivizing companies to invest in U.S. production. Three years ago, there was little American footprint in the advanced EV charging industry. Now, producers are making investments to establish new headquarters, facilities, or production lines to build the next generation of EV chargers in the United States. These actions build on the previous commitment by Biden to put together a network of 500,000 EV chargers by 2030.n