Tesla accounted for 75% of global electric vehicle sales in the first quarter of 2022. But a recent study states that the automaker may lose its position as the world’s biggest electric car manufacturer to Volkswagen by 2024.
The study was conducted by the Bloomberg Intelligence (BI). It expects Volkswagen to become the world’s largest automaker by growing sales in Europe and China. According to the report, the German giant would have doubled its production of battery-powered vehicles in 2024, surpassing Tesla. According to a new significant analysis on the global EV sector, Tesla is projected to keep its global number one battery electric vehicle (BEV) sales place for at least another 18 months as traditional automakers struggle to sell a meaningful share of BEVs in 2022 and 2023.
According to Bloomberg Intelligence, China’s BYD is on track to rank third in worldwide EV sales in 2025, followed by a slew of ‘legacy automakers.’ It expects that U.S. and Japanese automakers will only be significant contenders for a top-three slot in the EV sales rankings until later in the decade.
In a bid to compete with Tesla’s $686 billion market cap, which is nearly double that of all US and EU car brands combined, the report claims that traditional automakers will struggle to divest EV-related assets that are deeply entwined with their combustion operations.
The EV evolution
According to Kelly Blue Book, Tesla was an early adopter of the electric vehicle revolution, accounting for 75 percent of all-electric vehicles sold in the United States in the first quarter of 2022.
Competitors are gradually eroding some of that market share. But with the rising battery costs and limited production capacity, most traditional car makers, such as Ford and General Motors, lack the profit incentive to catch up to Elon Musk’s company.
Volkswagen is an exception to this, says the report. While Tesla is expected to be the top EV seller in the United States for some time, the analysis claims that the Wolfsburg-based company will eclipse Tesla’s electric car volume in 2024, with global demand for battery-powered vehicles expected to more than double by 2025.
According to the research, the company is substantially ahead of peers, with a projected 30 percent electric car sales mix in 2023 and roughly 45 percent in 2025, and may attract a luxury-based €85 billion IPO valuation and, possibly, an even higher tech-oriented price.
Production of the ID Buzz, which has been much awaited, began recently at the company’s Hanover plant, with the first vehicles expected to be delivered to consumers in the autumn.
Automakers will continue to challenge Tesla
Volkswagen focuses its production and sales in Europe. By 2030, the business plans to invest up to €30 billion in the supply chain, including constructing six new battery-cell facilities in Europe. Swedish battery manufacturer Northvolt will begin producing premium cells for VW 2023.
“Car manufacturers in China, Europe, etc., will keep challenging Tesla with an impending wave of new car models, even though profit incentives will be limited owing to a lack of scale and increasing battery costs,” Michael Dean, senior European automotive industry analyst at Bloomberg Intelligence, explains.
According to VW’s annual report, US sales accounted for less than 10% of overall sales last year, and Bloomberg predicts the corporation will increase more in China rather than America. Hence, Bloomberg explains that Tesla sales in China, where it now produces two car models, are likely to suffer.
China and electric car markets
China will become one of the major electric car markets in the next three years, with fully electric vehicles accounting for a quarter of all passenger vehicle registrations by 2025.
“Despite erratic component supply, sales in China have increased since the launch of the country’s new energy vehicle credit program,” says Steve Man, Bloomberg Intelligence’s Chinese market expert.
BMW, Volkswagen, and other foreign brands’ sales in China may come at the expense of ROI, profitability, and pricing. While GM is working on its next-generation “Ultium” batteries, Volkswagen is thinking about its sports vehicle brand Porsche, which also has an electric model.
On the other hand, Tesla has increased production and taken advantage of the economies of scale among early adopters. In March, it started delivering automobiles from its gigafactory in Berlin with the aim to produce 500,000 cars each year.
Other local companies are quickly narrowing the technology and branding gaps, enticing customers with increased driving range and power and reduced costs, luxury trim, and even virtual-reality entertainment.
According to the report, Ford has led the charge with 200,000 orders for the Ford F-150 Lightning. The Ford F-150 boasts a long list of excellent performance, speed, and design features.
According to Kevin Tynan, Senior North American Automotive Industry Analyst at Bloomberg Intelligence, “Ford is set to bridge the gap with Tesla by becoming the full-size battery-only pickup truck, with Elon Musk’s brand and General Motors not set to compete in this sector until 2023, and Rivian’s small scale output of R1T trucks described as ‘unthreatening.”
Elon Musk, the CEO of Tesla, joked that he was getting “free promotion” from his competitors in a tweet on Friday that highlighted similar marketing techniques among manufacturers, attempting to deflect the threat of conventional automakers. In an interview on the Tesla Owners Silicon Valley YouTube channel aired on Tuesday, Musk suggested Rivian and Lucid were on the verge of bankruptcy if they didn’t cut expenses.
Feature image credit: Elon Musk at the Tesla Annual Shareholder Meeting by Steve Jurvetson under CC BY 2.0