Competition heats up for Tesla in electric vehicle market

Globally, there are approximately 1.2 to 1.3 billion cars on the road, including around 60 million electric vehicles. Therefore, the market share of electric vehicles is low, but it is early days. Tesla is clearly the pioneer in the design, manufacture and sale of electric vehicles. Tesla sold its first EV, the Roadster, in 2008. Initially, the cost of purchasing an EV was prohibitive for the general public. However, with improvements in technology, lower priced models have been introduced and the barrier to entry is considerably lower. Which companies have the largest market share in the EV space? Will electric vehicle prices reach parity with the cost of internal combustion vehicles? Will the internal combustion engine die out?

Global market share of electric vehicles

Tesla leads all the rest, selling just over 936,000 units in 2021. This gave the company a nearly 14% market share. Close behind Tesla was the VW Group, with just over 11% of the market last year. China-based BYD was third (9%); followed by GM (7.6%); Stellantis, an Amsterdam-based company (6%); Hyundai Motor (5%); and BMW Group (4.8%). Mercedes and Toyota were in the top 12. Ford was notably absent.

Which countries have the largest market for electric vehicles? According to the country breakdown of the Bloomberg Electric Vehicle Index, China has the largest electric vehicle market at 34%, followed by the US (28%) and Germany (11%). Asia leads the transformation to electric vehicles, followed by Europe and the US.

Catalysts for the growth of electric vehicles

Several governments have offered incentives for electric vehicle buyers. These incentives included, among others, tax credits and lower interest rates on loans for electric vehicles. However, many of these incentives are coming to an end. According to Anthony Sassine, CFA, senior investment strategist at KraneShares Funds, it is more difficult to register a traditional internal combustion engine in China than an electric vehicle.

What motivates electric vehicle buyers? The strongest motivation to buy an EV is environmental. The second main reason is the design and technology of electric vehicles. The result? In Norway, 75% of cars sold last year were electric vehicles. In fact, the Norwegian government plans to completely phase out internal combustion vehicles by 2025. By 2021, 28% of all cars sold in Europe were electric vehicles.

Charging stations are a must for the full adoption of electric vehicles. China again leads the way with approximately 800,000 public charging stations. The United States has just under 100,000. The Netherlands, South Korea and France complete the top five.

How far can you drive in an EV? That largely depends on the type of battery. Tesla started with a nickel-based battery, which offers longer range, higher reliability, but is the most expensive. Others, like the lithium-ion battery, are less expensive but have a shorter range. The Tesla Model S has the longest distance rating, but it will cost $100,000 or more. So the cost of a long range EV is considerable.

Will the cost of electric vehicles reach parity with internal combustion vehicles? KraneShares Anthony Sassine says that they are now close to parity. He also believes that electric vehicles will completely replace internal combustion engines at some point.

Electric vehicles are an undeniable trend. Over the next several years, expect to witness a historic transition from internal combustion to electric vehicles. However, there are many questions still to be answered. Will countries build the necessary infrastructure (eg, public charging stations) to meet the demand for electric vehicles? What happens if the power grid is overloaded? Will hackers target the power grid, leading to an increase in cybercrime? Despite the questions, electric vehicles are clearly here to stay. At least for the foreseeable future.

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