Has the truth about EV cars come out, why is the EV car market falling?

Sristi Singh By Sristi Singh - Content Writer
6 Min Read

Has the truth about EV cars come out, why is the EV car market falling? The ascent of electric vehicles (EVs) to prominence on the global automotive stage has been remarkable, with battery-powered personal mobility options experiencing a surge in popularity in under a decade. Pioneering companies such as Tesla and BYD have disrupted the industry, presenting a formidable challenge to established automakers with decades of legacy.

However, despite recent successes, the outlook for the near future appears bleak, notably with declining demand for electric cars and anticipated deceleration in sales growth rates across key automobile markets worldwide.

Over the past four years, the majority of electric vehicle (EV) manufacturers across various segments have experienced notably lucrative periods. The burgeoning market witnessed the introduction of new models, resulting in record-breaking sales and substantial profits. In 2021, EV sales reached 6.75 million units, marking a remarkable 108 percent increase from the preceding year.

This figure continued to climb, reaching 3.66 million units in 2022 and peaking at 14.2 million units in 2023, encompassing both full electric models and plug-in hybrids. However, by October, November, and December of 2023, ominous indicators of market instability began to emerge.

In numerous major automotive and electric vehicle (EV) markets worldwide, there has been a notable but significant downturn in EV demand.

China, renowned as the world’s largest automotive and EV market, experienced a decline in new-energy vehicle (NEV) sales, which totaled 729,000 units in January according to data from the China Association of Automobile Manufacturers (CAAM). This represented a direct decrease of 39 percent compared to the previous month, while EV production fell by 33 percent to 787,000 units.

The China Passenger Car Association (CPCA) attributes this decline to two primary factors: the escalating prices of certain popular models and diminishing incentives from local governments for NEV purchases. In January, EVs accounted for 29.9 percent of all new car sales in the country, marking the first time it fell below the 30 percent threshold since May 2023, as reported by S&P Global Commodity Insights.

In the United States, the second-largest automotive market globally, the electric vehicle (EV) market is indeed expanding; however, the concern lies in its growth rate falling short of earlier predictions. EVs comprised 7.6 percent of all new car sales, a modest rise from 5.9 percent. Yet, according to data from media reports, sales of EV models increased by a mere 1.3 percent in the final months of the previous year.

Industry insiders assert that while Americans are indeed purchasing more electric vehicles (EVs) than ever before, the actual figures fall short of earlier predictions, with many potential buyers hesitating to make the switch, at least for now. This hesitation is largely attributed to the absence of substantial dealer and company discounts.

General Motors (GM) CEO Mary Barra acknowledged this trend, stating, “It’s true, EV growth has slowed, which has created some uncertainty. We will build according to demand.” Initially, GM reduced EV production, and subsequently, Ford followed suit.

In numerous European markets, the demand for electric vehicles (EVs) appears to be on the decline. Germany’s decision to terminate incentive programs for such vehicles had an instant adverse effect on demand. Similarly, in Britain, the Society of Motor Manufacturers and Traders noted that EV sales are not progressing as rapidly as in recent years. Experts suggest that the government’s zero-emission vehicle (ZEV) mandate, requiring 22 percent of all new cars sold in 2024 to be completely emission-free, is likely to be unmet.

While some may question the long-term viability of electric vehicles (EVs) and speculate if they’re merely a passing trend akin to fleeting fashion styles, most experts believe otherwise. They argue that EVs represent a prolonged commitment rather than a sudden craze, contrary to earlier perceptions.

A New York Times report on the potential decline of EV sales in the US in 2024 underscores that EVs are no longer a novelty. Instead, the focus shifts to the remaining market segment. As the report states, enthusiasts of tech innovators like Elon Musk have largely embraced EVs, leaving major automakers to contend with customers less impassioned about cars.

Manufacturers are prioritizing financial sustainability, aiming to maintain profitability and avoid losses. Brands ranging from Tesla to BYD have implemented price reductions in both China and the US, potentially reigniting growth trajectories to previous levels. Even in India, where electric car acceptance remains low, companies such as Tata Motors and MG Motor India have recently slashed prices on several full electric models. Whether this strategy will yield desired results remains uncertain for now, prompting a cautious approach of observation and evaluation.

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By Sristi Singh Content Writer
I'm Sristi Singh, an expert in computer technology and AI. Adhering to Google's E-A-T policy, I ensure authoritative content. As a Computer Science Engineer with a journalism degree, I excel in conveying complex tech trends in an engaging manner. My dedication reflects in bridging the gap between intricate technology and my audience.
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