Declining Sales of electric vehicles: The beginning of the end or just a passing market cough?

Now that the general slowdown in demand for electric vehicles has been confirmed by the poor sales results of Tesla and BYD, the world’s two largest manufacturers of battery vehicles, everyone is wondering if this is the beginning of the end or just a passing market cough.

Recently, both Tesla and BYD have reached car manufacturing milestones. The Americans produced six million electric vehicles, and the result came just half a year after the five-millionth vehicle left the factory, while the Chinese, on the other hand, celebrated the production of the seven-millionth NEV vehicle.

In the dead race between American and Chinese manufacturers, which went to the Chinese at the end of last year, the situation this year does not look nearly as good, for either one or the other.

The sluggish demand for battery-powered vehicles is the result of several factors. High prices, removal of subsidies, rising insurance prices, slow construction of additional charging stations, general uncertainty in the market and even the arrival of competition like Xiaomi have slowed down these two big players and even most other manufacturers.

Tesla at minus 20.2 percent, BYD twice as bad
There are concerns on both sides. With deliveries in the first quarter of this year of “only” 386,810 cars, a drop of 20.2 percent compared to the previous quarter and minus 8.5 percent year-on-year, Tesla recorded its first sales decline in four years. In Germany alone, Tesla sold about 7,500 cars less in the first quarter than last year in the same period, recording a drop of more than 36 percent.

If we add to that that the American manufacturer produced much more vehicles (433,371 units) in the three gigafactory than it delivered during that period, it is evident that Elon Musk’s concern is even greater, and his reaction with the announcement of the layoff of 10 percent of the workers (14,000) she is not at all harmless.

On the other hand, there is a good amount of car inventory around the world, which means that lucky buyers could take advantage of this surplus in the coming period and get great deals at lower prices.

Roses don’t bloom for the Chinese either. BYD has reportedly received $3.7 billion in aid from the Chinese government over the past three years as part of its plan to take over the world throne of electrified vehicles. However, when everyone expected BYD to furiously kick into fifth gear and surpass Tesla already with the first quarter of this year, they also failed.

China’s largest electric vehicle maker reported that sales in the first quarter of 2024 fell by 43 percent compared to the last quarter of 2023, returning the title of the world’s largest seller of electric vehicles to Tesla.

After spectacular sales of 526,409 cars in the last quarter of last year, BYD sold only 300,114 vehicles in the first quarter of the current year, which is a dramatic drop. True, compared to the first quarter of 2023, BYD’s sales increased by 13.4 percent, but the general decline in demand and lower-than-expected figures clearly show that BYD is not doing as well as it expected.

Xiaomi stirred up the market, the Germans raised their hands

On the other hand, the arrival of new players on the EV market is proving to be a new disruptive factor. The world media sees Xiaomi as a potential “leading brand killer” in the making. It is evident that Xiaomi is trying to apply the same successful strategy in the automotive sector as it did in the smartphone industry, when it showed the whole world that it could offer a similar product for much less money than its rivals.

Their first car, the SU7, is a real threat to Tesla’s Model S and Porsche’s Taycan, as that model is sold in China for roughly three times the price of the Taycan in Europe. Completely expected, with a starting price of 27,500 euros, the Chinese recorded more than 100,000 reservations in just a few days from the start of sales.

In addition, while inflation continues to eat away at citizens, various studies show that electric vehicles are experiencing a terrible loss of value. It is another in a series of aggravating factors that does not favor the producers. At the same time, the largest European market, Germany, recorded a drop in sales of more than 14 percent in the first quarter of this year compared to the same period last year. The Germans have abolished subsidies, and the interest of buyers is at a very low level.

Norway is a paradise for electricians

However, this does not mean that electric vehicles have been completely written off. Take Norway for example. In this Scandinavian country, the electric vehicle market should surpass gasoline vehicles this year, and even diesel cars from 2029. Such a scenario is quite certain, because Norway is the only country in the world, which is on the way to ban the sale of new cars with internal combustion engines, starting in 2025.

At the same time, although European elections will soon be held, where the fate of cars with SUS engines after 2035 will be known, Brussels is forcing EU members to comply with the green transition agreement. Regardless of the status of ordinary cars in the near future, EU countries must build and expand the network of charging stations.

It is another indicator that electric cars really have a future and that the current situation is only a passing and temporary cough until they are firmly positioned on the automotive market. The only question that remains is whether from 2035 it will remain as the only option or coexist with gasoline (and diesel) vehicles, which is a much more realistic picture and opportunity, Klix.ba reports.