The market share of electric vehicles charged ahead in 2022, with fully electric BEV sales surging in most major auto markets around the world.
2023 is shaping up to be a watershed moment for the electric vehicle revolution, and a year of reckoning for legacy auto manufacturers who are now shackled to a decade of disastrous strategic decision making, and a lack of vision.
In Germany battery electric vehicle sales increased to 470,559 for 2022, making up an 18% share of Europe’s largest car market. Germany’s Federal Motor Transport Authority (Kraftfahrt-Bundesamt) reported that BEV sales in December alone reached 104,325, representing an impressive 33% market share for the final month of 2022.
The numbers for the UK were almost identical, with 17% BEV market share for the full year rising to 33% for the month of December.
BEVs also saw solid growth in China, with a 21% market share, up from 16% in 2021. By December fully electric vehicles made up a quarter of all sales in the world’s largest car market.
Despite starting from a very low base, BEV sales in Australia also jumped in December to hit a record 5.8%, more than trebling the rate over the previous two years.
As the graph below shows Australia still has a long way to go to catch up with the rest of the world, but if this growth rate continues that might not take very long.
Winners and losers
The bulk of this growth in new EV sales is coming from Tesla and Chinese auto manufacturers like BYD. These companies, who have invested heavily in battery development and EV manufacturing are now taking huge chunks of market share away from the German and Japanese incumbents who have so far failed to shift away from petrol and diesel cars.
The speed at which consumer sentiment is now changing should be deeply concerning for legacy auto manufacturers, many of whom have been caught completely flat footed. This is especially true for world’s largest car maker Toyota which currently holds around 14% of the 70 million unit global car market.
By October, Toyota had only sold around 14,000 EVs globally in 2022. An annualised production rate of less than 20,000. This means EVs make up just 0.2% of Toyota’s total production. A staggeringly low proportion considering the rapid growth in EV market share globally.
And there’s no indication of any strategic shift with CEO Akio Toyoda recently saying that the ‘Silent Majority’ has doubts about pursuing only EVs and that Toyota would continue its diversified approach with hybrids and hydrogen powered cars.
This is despite governments ending incentives for hybrids (which are really just petrol cars) and virtually zero consumer demand for hydrogen vehicles.
Other Japanese automakers are also yet to prove they can manufacture EVs at scale. In 2022 EVs made up just 0.35% and 2.2% of production for Honda and Nissan.
Global EV market share doubled from 4% in 2020 to over 8% in 2021 and is expected to exceed 13% when the December 2022 numbers come out. Based on the exponential growth in countries like Germany and the UK, global EV market share could be over 30% by 2025.
They are also being challenged by significant price cuts announced by Tesla, across its entire range, something it is able to do because it already boasts the best margins in the car industry.
Morgan Stanley's Adam Jonas notes that legacy auto companies, their management teams and board of directors must now recalculate the payback periods and risk/return profile of their entire EV strategies.
He said these were already a net consumer of cash even during the peak EV pricing era, and it is not clear that they will be willing or able to keep funding them. "Everybody will need to cut price, but we don’t think everybody will be able to cut costs and fund the business," Jonas notes in a recent report.
Which means that companies like Toyota risk having little to offer this rapidly changing market and it could take years for them to develop high volume EV manufacturing lines.
After dominating the film camera market for decades, Kodak failed to adjust its business when the world shifted to digital cameras and filed for bankruptcy in 2012. If big legacy car companies don't rapidly change their strategies in 2023 they may be soon facing their own Kodak moment.
*Graph Data: Australia - EV Council, China - CAAM, USA - IEA, Germany - KBA, UK - SMMT.
Daniel Bleakley is a clean technology researcher and advocate with a background in engineering and business. He has a strong interest in electric vehicles, renewable energy, manufacturing and public policy.