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Climate change
CommentAsia
Kavitha Yarlagadda
Kavitha Yarlagadda

Opinion | Is the EV honeymoon over as demand decelerates and carmakers struggle?

  • Sales are not growing as strongly as expected, inventory is piling up in an oversupplied market and major markets like the US are showing a marked preference for hybrids
  • The slowdown in EV sales is likely to set back efforts to achieve net-zero emission targets

Reading Time:4 minutes
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A car showroom in Hong Kong on January 13. In mainland China, the world’s biggest EV market, sales growth is expected to slow to 20 per cent this year, from a projected 30 per cent last year. Photo: Bloomberg
Kavitha Yarlagadda
The popularity of electric vehicles has surged in the last few years, from just 1.4 per cent of passenger car sales worldwide in 2017 to 14 per cent in 2022. But something changed in the second half of last year and demand is decelerating, with EVs reportedly piling up at car dealerships.
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Analysts expect the growth in EV sales to continue slowing this year. Bloomberg last month estimated that EV sales made up 18 per cent of the global total for the third quarter, and expects EV sales of 16.7 million this year, from 14 million.

The main reason is China, according to a Strategy& study released last October. Third-quarter EV sales across 20 markets globally grew by 26 per cent year on year, a figure that would have been “considerably higher”, it said, “if it were not for waning growth in the Chinese market”.
A report on the Indian market found that EV sales slowed in the third quarter of last year despite a growing car market, with Tata Motors, Mahindra, Citroen and Kia affected. The main reason, it said, was due to EVs being more expensive than combustion-engine cars. For the first nine months last year, EV sales barely made up 2.6 per cent of India’s light vehicle sales.
With demand growing more slowly across the world and the EV market oversupplied, carmakers and suppliers have started this year with production cuts, at least one cancelled IPO – for Renault’s EV business Ampere – and even bankruptcies. Sentiment is weakening and a day after Tesla warned of slower sales this year, share prices fell, wiping US$80 billion off Tesla’s valuation.
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Many EV makers, including traditional carmakers such as Ford, are struggling to make money from EV sales, and unsold EVs are piling up in showrooms across the US, according to CarEdge data.

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