Two things were unambiguously true about 2023: it was the best year of sales the electric vehicle market has seen yet. It was also the most chaotic, uneven, and challenging year to date for almost every car company investing in the transition away from fossil fuels.
So how can we expect 2024 to go? Barely two days in, and it's already clear that we could be in for an especially weird year when it comes to electric vehicle adoption.
Last year was supposed to be the takeoff point for EVs globally, the one where electric sales would begin permanently eclipsing internal combustion sales for good in the kind of predictable trajectory that finance departments prefer. In many ways, it actually was; we saw record EV sales in the U.S., China, Europe and elsewhere, with American sales alone hitting the 1 million mark in early December and worldwide adoption now close to 20%. (It was also a landmark year for hybrid vehicle sales, which is good news for the climate too.)
But the second half of 2023, in particular, wasn't so smooth. Many dealers reported their EVs were piling up on their lots, leading some automakers to challenge the many assumptions they made about what customers want and even reconsider the pace of their investments.
It's key to understand that despite the gloomy headlines, that situation didn't befall every automaker. Many are full speed ahead on electric cars, and the rest of the industry—not to mention the car-buying public—is coming around to the idea that this will be a transformation with a lot of ups and downs.
With all of that in our rearview mirror, it's time to look ahead to some stories that could define the year ahead on the electric front.
EV Sales In The U.S. Won't Drive Off A Cliff, But They May Just Level Off
If you believe some of those headlines about last year's up-and-down sales trends, the EV space is headed for a crash in 2024. That isn't likely to be the case—not as the auto industry stares down tough fuel economy and emissions regulations and intense competition from China. (More on that in a bit.)
What's more likely is that any industrywide transition away from gasoline-powered cars is likely to happen in fits and spurts over the next few years. And what we may see in 2024 is a more steady adoption of EVs until something else—the switch to Tesla's plug standard, cheaper prices, longer-range batteries, better charging networks, or more likely, all of the above—creates another huge takeoff point.
My thinking here tracks with analysis from the consulting firm AutoForecast Solutions, which had this to say in December:
Production volumes increased, as did sales, but the two did not align. Everyone’s Econ 101 class kicked in and the market had too many products chasing too few buyers. To align the supply and demand curves, prices fell. Thousands of dollars came off the sticker prices of models across the board and still inventories rose. And here’s where the pundits changed their tune and claimed the sky was falling. It’s not.
Sales of EVs continue to rise and are likely to continue to improve, just not at the astronomical rate the industry saw in years past. More models are coming, more price changes will follow, more buyers will trade in their ICE models, and more manufacturers will feel out their position in the market. Expect the U.S. market share of EVs to top 10% in 2024.
We're also likely to see a lot more discounts and price cuts this year, according to a recent dispatch from Cox Automotive.
I'll give Ford credit for being clear-eyed and transparent about this situation. A transition is happening, just not as quickly as the automakers, analysts and Wall Street types anticipated. And in the meantime, the car companies have to figure out how to get costs down, including the cost that gets passed onto the consumer. "The ultimate success of our EV transition will be driven by our Gen 2 and Gen 3 products, which will be cost-optimized and guided by the learnings of our first-generation vehicles that are currently in the market," Ford CFO John Lawler said during the company's Q3 earnings call in late October.
For a lot of these companies, the stuff on the market now is almost a rough draft until they can figure out how to pivot to being battery- and software-focused businesses capable of competing with Tesla and China's EV giants. But they won't have the luxury of time forever.
The Startups Have A Lot To Prove. So Does General Motors
Here's the thing with investors, though. They're happy enough with the record profits the established auto industry is posting right now. But they don't see many car companies as great long-term investments; General Motors' stock price has been flat for about a decade now. That's a problem.
To single out GM, even if 2024 ends up a "plateau" year for EV sales, that only buys The General so much time to get existential and future-facing problems like software and batteries in order. GM announced a ton of new EVs last year; it also announced a ton of delays and ended 2023 under a bit of a cloud with the stop-sale order on the highly anticipated electric Blazer. It's hard to see another year going that way without some kind of check being due.
The same could be said of some EV startups, too. Lucid has been repeatedly crucified for burning cash, and Fisker's early-stage problems come at a time when it faces the most serious competition the EV space has ever seen. And it's not like the capital markets are all that great these days with interest rates being as high as they are.
Whether you're a newcomer or a legacy giant trying to pivot, you have a lot to prove this year.
Buyers May Be Entering A 'Wait And See' Period Until The NACS Era Begins
Arguably the biggest EV-related development in 2023 came when Ford announced it would switch to Tesla's North American Charging Standard (NACS) plug from 2025 onward, granting owners native access to the sprawling and reliable Supercharger network. Since then, just about every other automaker has also confirmed a switch to the NACS plug. In other words, starting next year, new EV ownership is about to be a lot more seamless and Tesla-like for many drivers.
But what about this year? If you buy an EV in 2024 that has the current CCS port for fast charging, are you signing up to spend years paying for hardware that will be obsolete? That's an extreme way to think about things; after all, the CCS chargers will be around for a long time, and they remain the go-to standard in Europe. Still, a lot of prospective EV buyers may decide to wait a bit and get something where a Tesla Supercharger is a viable charging option instead of just another busted Electrify America station.
A bigger question here might be what happens to the used market in a few years for all those CCS-equipped cars, but we're a long way from being able to game that one out.
The Charging Industry Is Headed For Consolidation
There's a reason the rally behind NACS happened: the current public charging status quo just isn't working.
Sure, a lot of taxpayer money is being funneled into the charging space as the Biden Administration seeks to push America to a 50% EV market by 2030. And those dollars come with strict requirements for charger uptime and reliability.
But very few of them have gone online yet, and even as it grew exponentially in 2023, the U.S. charging network is still inconsistent and plagued with problems. Moreover, who actually likes having a dozen apps on their smartphone just to keep their vehicle fueled up? Investors aren't happy with the lackluster financial results these companies have yielded thus far, either, and now even the automakers find themselves increasingly forced to get into the charging space. (Plus, competing with Tesla as a charging company will be no easy task.)
Put it all together and you have an industry ripe for consolidation. This year will likely see small and medium players die out or merge with larger ones. Monopolies are rarely a good thing for consumers, but let's face it: amateur hour is over in the charging world.
Hyundai, Kia And Genesis Are The Ones To Watch In 2024
I like to imagine that Hyundai Motor Group Chairman Euisun Chung listens to Jay-Z's "Dirt Off Your Shoulder" on repeat every day. That's because as several other so-called "legacy" automakers are slowing their pace on EVs a bit, Hyundai, Kia and the Genesis luxury brand seem completely undeterred. It's actually dropping internal combustion plants to make more EVs, seeing strong sales everywhere and is dead-set on being an electric leader across the world. If you're not talking about this Korean giant in the same breath as Tesla and BYD yet, you likely will be in 2024.
What's more, unlike a lot of other automakers, when the Hyundai Motor Group says it's going to do something, it does it—the cars aren't vaporware or concepts. They're very real, and people are waking up to how good they are. There's a reason I used the Kia EV9 for the top photo of this story. Given how well-received it is so far and America's insatiable love of the three-row crossover, it seems all but guaranteed to be a smash success in 2024.
Having said that, the Hyundai Group's cars will be an interesting bellwether for EV sales in general in 2024, especially since none of them currently qualify for any U.S. tax credits unless they're leased. If sales indeed plummet—which I think is unlikely—it is a sign of far more worrying trends around electric demand.
Volkswagen vs. China Will Say A Lot About The Industry
We don't see this as much in the U.S. with BMW showing remarkable progress with new EVs and Mercedes working to build out a charging network of its own, but the fact is that the German auto industry is really feeling the heat right now. I can't overstate the apocalyptic vibes in this Wall Street Journal story about Volkswagen's troubles in Europe and other markets as it finds itself increasingly unable to make any sort of "people's car" for the electric era:
Sales of its electric flagship, the ID. series, have disappointed, so last year VW decided against scrapping the 50-year-old Golf and is developing an all-electric version that the company said could be launched by the end of the decade.
“The situation is very critical,” Thomas Schäfer, CEO of VW’s namesake brand, told labor representatives at a meeting in Wolfsburg at the end of November, according to a transcript seen by The Wall Street Journal. “With many of our current structures, processes and high costs, we are no longer competitive.”
In China, a new generation of homegrown low-cost, high-tech electric models have overtaken the German company’s EVs in the country, which accounted for about 34% of its sales in the first 11 months of the year. So far this year, VW sales barely grew in China, its weakest showing in major markets worldwide. The new Chinese competition is also targeting Germany and Europe.
That last sentence is key, especially when you look at the tremendous sales year China's BYD just had. Stiff tariffs keep BYD and the other Chinese automakers out of America for now, but they are increasingly making inroads into VW's home turf. And none of these companies can count on China to be some unlimited cash cow forever.
Whether or not VW can fend off that country's EVs is now a central question for its future, and a key trend to watch this year.
In America, Tesla Is Still The One To Beat
Let me give you an idea of how useful these "prediction" stories are, though: writing for The Verge at the end of 2022, I said that the following year "will test [Tesla's] ability to remain a leader in the modern EV market it effectively created" thanks to increased competition from Ford, GM, VW and the rest.
I hope the article you're reading now ages a little better. Because even though Tesla is facing more direct competitors than ever and its market share is declining, in everywhere but China, it still remains far and away the EV leader. BYD doesn't sell in America, and no other company can come close to the success the Model 3 and Model Y had last year, full stop. Those cars have been a lot of people's first EVs; that will likely be the case in 2024 as well.
This isn't to say Tesla doesn't have problems. Its all-in bet on Autopilot and "Full Self-Driving" continues to spark controversies, lawsuits, investigations and even a Justice Department probe. Even with updates like the "Highland" Model 3 (which remains MIA in America), its core lineup is getting old. It continues to take heat for quality problems. Even by CEO Elon Musk's own admission, the Cybertruck won't be some Ford F-150-killer. And Musk's own dumpster fire ownership of Twitter/X is both a frustrating distraction and a financial liability that's hurting the Tesla brand.
But for now at least—and specifically in America—no other competitor seems poised to overtake the crown from Tesla, and it's about to unlock billions in revenue as it becomes a charging company for the whole industry. It's going to be fascinating to see where Tesla's sales and market share end up by the end of 2024.
The 2024 Election Is The Wild Card
The auto industry is indeed a global one. But here in America, the vast majority of cars we drive are tailored to the tastes and needs of our market, and the Inflation Reduction Act highly incentivizes EVs and batteries that are built here as well. So what happens if the administration that ushered in that act finds itself out of a job in November?
It's not partisan invective to say that if President Biden loses this year, whatever Republican takes the White House instead will likely act to reverse the strict EPA fuel economy rules that are helping drive America to be a more electric-focused car market. After all, President Trump rolled those same standards back during his time in office.
In the near term—and while many of them will never admit it—it's entirely plausible that more automakers will take their own "wait and see" approach to expanding EV models, production and battery plants. If a new administration doesn't have them so under the gun to go electric, they could take their sweet time getting there. That could have profound impacts on the American auto industry's ability to be competitive against players like BYD, and on our climate as well.
This isn't to say that Biden leaving the White House will somehow end the electric vehicle market; far from it. But more than likely, a change in policy will result in a much slower EV development and adoption process as automakers get leeway to focus on the gas-powered cars that are driving their profits right now.
After all, presidents come and go, but overemphasizing quarterly returns above all else? That's the American way, baby.
Your Turn
My read on things can't possibly cover every single outcome in 2024, and this doesn't even cover the growth of the hybrid market or the many challenges automakers face with software specifically. And we'll see if I'm right about any of this as the months go on.
What are your predictions for the EV world this year? Drop us a line in the comments.
Contact the author: patrick.george@insideevs.com
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