All those enthusiasts who believe Elon Musk and his ‘"affordable" car story for Tesla, sorry but the Chinese car companies are already there and eating your lunch -- not in the US, but in every market where Tesla could hope to improve sales.
Musk’s rediscovery of the idea of a cheap and "affordable" small Tesla might have convinced the believers on Wall Street -- for the time being -- but the reality is that the Chinese EV sector is already there.
In fact, BYD, the big Chinese electrified car maker, reveals its March quarter financials later Monday and is expected to talk about sales targets and about new much cheaper models.
It might be an "affordable" car in US terms, but for the rest of the world, it will still be an expensive US-made product that will be rapidly overtaken by newer, smaller and cheaper vehicles.
That’s not a wild assertion -- it's from the International Energy Agency, for example, and a couple of other recent reports.
In a largely ignored update on EVs globally, the IEA took a far more optimistic view than all those gloomy stockmarket analysts and industry sages.
The IEA forecast this week that EVs could account for one in five cars sold this year.
The engine of EV sales growth -- and of falling prices -- will still be China, which will lead the way in exports and domestic sales, keeping European and US rivals on the defensive as too many people believe the gloomsters.
By 2030, every second car sold worldwide will probably be an EV, the IEA says. The IEA says growth is coming from strong competition among carmakers, falling battery and car prices, and generous amounts of taxpayer support -- especially in China.
The IEA forecasts that global electrified car sales will reach around 17 million by the end of 2024, with 10 million of those sold in China.
In the first quarter, sales grew by about 25% compared with the same period in 2023 -- similar to the growth rate seen in the same period a year earlier, but from a larger base. That boom was comprehensively missed by Tesla, and no amount of spending on an affordable version of the Tesla will be able to recover those lost sales.
The number of electric cars sold globally in the first three months of this year is roughly equivalent to the number sold in all of 2020.
In 2024, electric cars sales in China will be about 45% of all car sales in the country.
The IEA says that, in China, more than 60% of electric cars sold last year were already less expensive to buy than their conventional equivalents.
"However, in Europe and the United States, the purchase prices for cars with internal combustion engines remained cheaper on average, though intensifying market competition and improving battery technologies are expected to reduce prices in the coming years.
"Even where upfront prices are high, the lower operating costs of EVs mean the initial investment pays back over time,” the IEA said -- a message that Tesla and Musk consistently ignore when it should be a major selling point.
"Based on today’s policy settings alone, almost one in three cars on the roads in China by 2030 is set to be electric, and almost one in five in both the United States and European Union. This shift will have major ramifications for both the auto industry and the energy sector,” the IEA said.
Growing electric car exports from Chinese automakers, which accounted for more than half of all electric car sales in 2023, could add to downward pressure on purchase prices.
Chinese car companies (led by the biggest, BYD), are also setting up production facilities abroad to make a range of models suited to the various markets.
The IEA said the Chinese companies have already seen strong sales of more affordable models launched in 2022 and 2023 in overseas markets.
This highlights that the composition of the main EV-producing economies is diverging considerably from the traditional auto industry.
In the United States, roughly one in nine cars sold are projected to be electric. In Europe, despite a generally weak outlook for passenger car sales and the phase-out of subsidies in some countries, electric cars are still set to represent about one in four cars sold.
Last year, global electric car sales soared by 35% to almost 14 million. While demand remained largely concentrated in China, Europe and the United States, growth also picked up in some emerging markets such as Vietnam and Thailand, where electric cars accounted for 15% and 10%, respectively, of all cars sold.
And while Musk was talking up affordable cars, he and Tesla were doing something different - on Tuesday the company launched an updated version of its Model 3 Performance vehicle at $US52,990.
But in China Tesla the updated Model 3 Performance starts at RMB 335,900 ($US46,360), which is RMB 104,000, or 44.85%, more expensive than the sedan's entry-level version, according to information on Tesla's China website (as detailed on a Chinese EV website). Tesla also officially started its zero down purchase plan to coincide with the new vehicle.
