The Beginning of an Early End for the Electric Vehicle Revolution or Just a Hiccup?

Tesla and the potential market slowdown 7 photos
Photo: Tesla
Tesla and the potential market slowdownTesla and the potential market slowdownTesla and the potential market slowdownTesla and the potential market slowdownTesla and the potential market slowdownTesla and the potential market slowdown
Now that the general EV market slowdown has been attested by Tesla and BYD's most recent sales results, everyone and their mother are wondering what will happen with the incipient 2020s zero emissions vehicle revolution.
Not long ago, Tesla announced a humongous milestone for a former startup – it produced six million EVs, and the result came just six months after building the five-millionth vehicle. Naturally, between applause and cheers, there was also a question – can it keep up the pace? Apparently not; the answer came just a few days later when Tesla beat all Wall Street expectations – only it did so negatively, not the other way around.

More precisely, Tesla posted its first sales decline over the past four years, with the first quarter of 2024 deliveries numbering 'just' 386,810 units, down 20.2% from the previous quarter and minus 8.5% year-over-year. Additionally, it produced many more vehicles - 433,371 units – during the period. So, there's a good deal of inventory worldwide. This means that customers might get some great deals with price reductions across various markets in the coming period.

But, overall, it's not rosy. Over the past year or so, we have witnessed the beginning of an EV market slowdown that was triggered by rising insurance quotations, the slow rollout of additional charging infrastructure, and the fact that although there are many more new models out there, none of them are properly affordable. Plus, the tensions surrounding oil supply have eased, and the energy crisis is probably behind us. While inflation still bites, studies show that EVs lose value as if someone is sending them down the drain and flushing the water after them, too.

On the 'bright' side, whatever that may be when the planet is drenching in pollution, and folks don't want to leave their cars at home even when they go to the grocery store at the end of the road, Chinese carmaker BYD will lose its crown as the world's largest producer of EVs as it only delivered a little over 300k 'new energy vehicles' during the first three months of the year after a massive sales plunge in February. Those who were afraid that Chinese carmakers will kill off legacy automakers with their cheap EVs probably won't have to worry if the EV market slowdown becomes even more advanced.

However, that doesn't mean electric vehicles are dead in the water like it happened the past few times when automakers revealed they were preparing for the EV revolution – Norway, for example, is poised to see EVs outnumber ICE-powered gasoline cars this year and combined gas plus diesel could get overthrown by EVs sometimes around 2029. Of course, this is only logical because the country is the only one in the world on track to ban all sales of new ICE-powered gas or diesel cars by 2025.

Plus, there are potential 'flagship killers' in the making – Xiaomi is trying to apply the same successful strategy in the automotive business as it did years ago in the smartphone game when it showed you could do just about the same things with a lot less money. Now they're trying to be the Tesla Model S and Porsche Taycan killers with the first EV – the SU7 full-size sedan, which is sold in China at around half the price of a Porsche Taycan.

Well, even Elon Musk is bracing for a slower 2024, although Tesla did provide some explanations regarding its setback – the Fremont factory retooling for the upgraded Model 3 'Highland,' shipping issues related to the latest world conflict, and a sudden shutdown at its Berlin factory. However, all that doesn't account for the discrepancy between production and deliveries. Also, BYD didn't provide any reasoning for its nosedive from the final quarter of 2023, when it sold more vehicles than Tesla, to this Q1's lackluster performance.

With BYD and Tesla being on two far sides of the world, it's pretty easy to say that they show the worldwide rather than local trends. Alas, it remains to be seen if this was just a hiccup – more and more EVs are coming live, and carmakers have mostly embraced electrification as the new lifestyle. Tesla itself will bring to market the new Model 3 Performance/Ludicrous, and the other companies will have to start selling EVs at lower price points to make sure they sell them at all.

Maybe the zero-emissions market is just settling into its own. In the meantime, Toyota is patting itself on the back due to its reluctance to adopt EVs and its growing sales of HEVs – which shows that people really want a hassle-free experience and the best of both worlds, often seeing traditional hybrids or PHEVs as much more advantageous than either ICE-only or EV models. So, what do you think? Is this the beginning or the end of the EV revolution, or is it just a temporary pause to reposition itself firmly in the automotive market?
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About the author: Aurel Niculescu
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Aurel has aimed high all his life (literally, at 16 he was flying gliders all by himself) so in 2006 he switched careers and got hired as a writer at his favorite magazine. Since then, his work has been published both by print and online outlets, most recently right here, on autoevolution.
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