The electric vehicle (EV) industry is growing rapidly, with new players entering the market and existing ones expanding their operations. The EV revolution is not only driven by environmental concerns, but also by business opportunities and competitive advantages.
Tesla Faces More Competition in the US and China
Tesla (NASDAQ: TSLA) is widely regarded as the pioneer of the EV industry, both in the US and China. However, the company is now facing intense competition on both fronts. In the US, Tesla’s market share has declined from 81% in 2018 to 69% in 2020, according to a report by Cox Automotive and Kelley Blue Book1. Some of the challengers include Ford (NYSE: F), General Motors (NYSE: GM), Volkswagen (OTC: VWAGY), and Hyundai (OTC: HYMTF).
In China, Tesla’s sales have also been affected by quality issues, consumer complaints, and regulatory scrutiny. The company’s share of the Chinese EV market dropped from 21% in 2019 to 11% in 2020, according to data from the China Passenger Car Association1. Meanwhile, local rivals such as Nio (NYSE: NIO), Xpeng (NYSE: XPEV), Li Auto (NASDAQ: LI), and BYD (OTC: BYDDF) have gained popularity and market share.
To fight back, Tesla has started a price war at the beginning of the year, slashing the prices of its Model 3 and Model Y vehicles in China by up to 8%. The company also reduced the prices of some of its models in the US and Europe. However, this strategy may hurt Tesla’s profitability and brand image in the long run.
India Emerges as a New EV Hotspot
India is another country that is witnessing a surge in EV adoption, especially in the two-wheeler segment. India’s automobile industry is the fifth largest globally and is expected to become the third largest by 20302. Two and three-wheelers outnumber other means of transport, such as cars, by about four times2.
According to an estimate, India sold 12,43,258 units of electric vehicles in 2022-23, which is 154% more than the figures registered in 2021-223. Electric mopeds that sell for as little as $1,000 now zip along many congested roads. They are touted by environmentalists and the government as a way to clear some of the toxic smog that often chokes metropolises across the country.
One of the leading players in this segment is Ather Energy, an electric scooter manufacturer that has enjoyed a recent explosion of demand. The company sold about 200 units a month three years ago, but now it easily clears about 15,000 units monthly2. The company has also expanded its production capacity and distribution network across India.
Other notable players include Ola Electric, a subsidiary of India’s largest ride-hailing company Ola; Hero Electric, a unit of India’s largest two-wheeler maker Hero MotoCorp; and Bajaj Auto, another major two-wheeler manufacturer that has launched its electric scooter Chetak.
The Challenges and Opportunities Ahead
The EV revolution has tremendous promise for reducing greenhouse gas emissions, improving air quality, and creating new jobs. However, there are also significant challenges and barriers that need to be overcome.
One of the main challenges is the lack of adequate charging infrastructure, which limits the range and convenience of EVs. According to a report by BloombergNEF, there were only about 1.3 million public charging points globally at the end of 2020, compared to more than 10 million EVs on the road4. The report estimates that at least 290 million charging points will be needed by 2040 to support the projected growth of EVs.
Another challenge is the high cost of batteries, which account for a large portion of the total cost of EVs. Although battery prices have fallen significantly over the past decade, they are still too expensive for many consumers. According to BloombergNEF, battery pack prices averaged $137 per kilowatt-hour in 2020, down from $1,100 per kilowatt-hour in 20105. However, they need to drop below $100 per kilowatt-hour to reach parity with internal combustion engine vehicles.
A third challenge is the environmental impact of battery production and disposal. Batteries require large amounts of raw materials such as lithium, cobalt, nickel, and manganese, which are often mined in countries with poor labor and environmental standards. Batteries also pose a risk of fire and explosion if not handled properly. Moreover, batteries have a limited lifespan and need to be recycled or disposed of safely at the end of their use.
Despite these challenges, there are also many opportunities and innovations that can accelerate the EV revolution. For example, wireless charging, solid-state batteries, and vehicle-to-grid technology are some of the emerging trends that can improve the performance, safety, and efficiency of EVs. Furthermore, government policies, consumer preferences, and social movements can also influence the adoption and development of EVs.
The EV revolution is not only a technological transformation, but also a social and economic one. It has the potential to create huge benefits for the environment, the economy, and the society. However, it also requires careful planning, coordination, and collaboration among various stakeholders, such as governments, businesses, consumers, and civil society.