There used to be a tremendous amount of excitement about electric vehicles (EVs) in the automotive industry. But it is facing a slowdown in sales growth in 2024. Due to which the strategies among the manufacturers are being evaluated once again. The global electric-vehicle market is expected to witness a decline in EV sales this year, with an estimated growth rate of 27.1 percent, the media report quoted Canalys as saying.
A recent Goldman Sachs research report on electric vehicles indicates that the EV market is at an inflection point. Where hybrid and plug-in hybrid vehicles are now giving a tough challenge to EVs. Europe, which has been a major witness of EV growth, has shown signs of stagnation as early as 2024.
The slowdown in EV sales can be attributed to several factors. These include concerns about EV capital costs due to low prices of second-hand EVs, lack of government policies and lack of rapid charging stations. For these reasons, customers are becoming interested in hybrid EVs and plug-in hybrid EVs.
Despite the current recession, the bear-case scenario still expects EV sales volumes to grow by 21 percent year-on-year in 2024. However, if negative growth occurs, it could lead to oversupply throughout the EV supply chain.
The Goldman Sachs report suggests that EVs are nearing a turning point in terms of economic feasibility. Governments around the world are reducing subsidies that have reduced initial investment. While aggressive pricing strategies by Chinese manufacturers and fuel savings are also contributing factors.
However, concerns remain about falling used EV prices and battery innovation.
The recent decline in battery prices has been driven not only by technological advances but also by oversupply in China’s EV supply chain. As EV penetration continues to increase, issues with charging station infrastructure are becoming increasingly apparent. Especially for automakers like Nissan and Mitsubishi Motors, where there are growing concerns about driving range and charging infrastructure, especially in rural areas.
Significant growth in India
In contrast to the global decline in electric vehicle (EV) sales, sales of electric two-wheelers in particular are increasing in India. Data from the government’s vehicle portal dashboard shows a steady increase in EV registrations. There has been a significant increase in January 2024 to 1,44,877 vehicles, while there was a slight decline in February with 1,41,382 units. And by the end of March there has been an increase of 32 percent with sales of 1,86,143 vehicles.
In contrast to the global decline in electric vehicle (EV) sales, sales of electric two-wheelers in particular are increasing in India. Data from the government’s vehicle portal dashboard shows a steady increase in EV registrations. There has been a significant increase in January 2024 to 1,44,877 vehicles, while there was a slight decline in February with 1,41,382 units. And by the end of March there has been an increase of 32 percent with sales of 1,86,143 vehicles.
This trend in India is in sync with a report by Goldman Sachs. Which suggests that global hybrid electric vehicle (HEV) sales could exceed expectations by 10-20 million vehicles. Automaker Toyota has also confirmed that sales of HEVs outpace those of gasoline engine cars. Which highlights the economic benefits of HEVs, including higher margins, comparatively lower capital costs and stronger confidence in used car prices.
The report indicates that the additional cost of an HEV is offset by fuel savings and the higher resale value of used HEVs. However, the report also says that if EV costs continue to decline and become more competitive by 2030, the benefits of EVs could once again become the focus of discussion.