Written by: Seungjoo Kim
Since 2019, the Electric Vehicles market has experienced overall growth due to the global pursuit of climate goals and transport decarbonization. Nearly 14 million EVs were registered globally in 2023, a 35% year on year increase (IEA, 2024). The combined market capitalization of EV makers boomed from USD 100 billion in 2020 to $1 trillion at the end of 2023, primarily driven by Tesla (IEA, 2024). The Electric Vehicles market is more complex than ever due to technology, government policies, companies’ strategies, and the recent rise of China as an EV producer.
Sales of Electric Vehicles increased globally, but 60% of the total sales came from China (IEA, 2024). China has become the world’s largest EV market and its dominance is continuing by taking over more than 50% of global market share in EV markets (IEA, 2024). The Chinese government supports EVs through subsidies, tax breaks, and reducing regulation on domestic automakers. From 2009, the Chinese government initiated a ‘pilot subsidy program’ to subsidize new electric and hybrid vehicles in the public transportation sector; these subsidies became available to individual customers in 2013, resulting in $231 billion in total subsidies (Cunningham, 2024). In July 2024, 51% of vehicles sold in China were battery electric or plug-in hybrid (DWS Group, 2024). Chinese EV makers gained the upper hand in the domestic market by lowering the EV prices below petrol-based cars, pushing foreign automakers out of China.
Not only have Chinese EV makers gained a significant share in the domestic market, but they are also aggressively expanding overseas. The EV market was driven by Tesla the most in the past, but the trend also has changed due to China. Chinese EV maker BYD had overtaken Tesla for plug-in hybrid in 2022 and became the world’s best-selling battery electric car maker in 2023 in share of global electric car markets by 18% and kept expanding its position in the global market (IEA, 2024). BYD’s shares in global EV markets are mainly driven by the domestic market, but its expansion in multiple regions around the world is continuing. However, the reaction and environment around the world towards Chinese EV are not positive.
President Biden’s administration increased tariffs on EVs from 25% to 100% and the tariffs on lithium-ion batteries increased from 7.5% to 25% in 2024 (White House, 2024).. The European Union also has raised tariffs on Chinese EV up to 45% recently (Bloomberg, 2024). High tariffs on Chinese EVs in the U.S. and Europe have largely offset the market for low prices, the biggest advantage of Chinese EVs. For Chinese EV vehicle makers, especially regions like Europe, one of the top importers for Chinese EV.
Due to the relatively low prices on Chinese EV, global automakers are also focusing on various strategies to revolve their share on EV markets. One of the main strategies that global automakers are taking is lowering the price of the vehicles to gain price competitiveness back from the Chinese EVs. Average starting price for the top 10 best-selling electric cars in America is $48,889, which is lower than six months prior (Fischer, 2024). Tesla, one of the main market leaders, have released lower prices models and keep slashing the prices of their model lines.
Another strategy that companies are adopting is forming partnership agreements between firms to compete with Chinese EVs more efficiently. A representative example is the comprehensive partnership agreement between Hyundai Motor and GM. This partnership would involve the joint development of eco-friendly vehicles, utilizing each company’s complementary strengths. The combination of Hyundai’s technology in hybrid and electric vehicle platforms and GM’s strength in SUV and pickup segments is expected to assist both companies to solidify their position in the electric vehicle market through mutual cooperation.
https://www.iea.org/reports/global-ev-outlook-2024/trends-in-the-electric-vehicle-industry
https://www.coxautoinc.com/market-insights/q1-2024-ev-sales/
https://www.motorfinanceonline.com/news/global-ev-sales-hit-record-high-in-q2-2024-new-automotive/