Nearly one in five cars sold in 2023 was electric. (Credit: Canva)

2023 proved a pivotal moment for the automotive industry as nearly 14 million new electric cars debuted on roads worldwide, signaling a monumental leap forward in sustainable mobility. This significant surge, as reported by the 2023 edition of the Global EV Outlook (GEVO-2023), not only shattered previous records but also propelled the total number of electric vehicles (EVs) in operation to an astounding 40 million. This milestone underscores the accelerating momentum of the electric revolution, highlighting a shift towards cleaner, greener transportation solutions on a global scale.

The increase in electric car sales witnessed a 35% year-on-year increase, marking a substantial leap from previous years. This surge represents a seismic shift, with electric car sales surpassing six times the figures recorded five years earlier in 2018.

With over 250,000 new electric car registrations per week in 2023, the pace of adoption outstripped the total annual figures from a decade prior, emphasizing the exponential growth trajectory of the electric vehicle market. Notably, electric cars claimed an 18% share of total global car sales in 2023, up from the 2% recorded in 2018, signaling a profound shift in consumer preferences and industry dynamics.

However, the market remains heavily concentrated in a select few regions. China, Europe, and the United States emerged as the powerhouses driving the EV revolution, collectively accounting for 95% of global electric car sales in 2023.

China: Leading the Charge with Affordable Electric Models

China, in particular, stood out as the undisputed leader in electric car adoption, with 8.1 million new electric car registrations in 2023, representing a 35% increase compared to the previous year. Despite the phasing out national subsidies for EV purchases, China’s electric vehicle market continued to flourish.

In China, the jump in electric car adoption has been remarkable, with the sales share of electric cars consistently high over several years. Notably, the sales-weighted average price of electric vehicles in China, before purchase subsidies, is already lower than that of Internal Combustion Engine (ICE) cars. This affordability trend extends across various segments, including small cars and SUVs, with electric SUVs achieving price parity with conventional ones as early as 2022.

The reduction in electric car prices has been significant since 2018, with around 55% of electric cars sold in China in 2022 being cheaper than their average ICE equivalent. This figure soared to around 65% in 2023, reflecting the rapid pace of price declines in the electric vehicle market. These encouraging trends suggest that price parity between electric and ICE cars could be attainable in other countries by 2030, especially if the sales share of electric vehicles continues to grow and supporting infrastructure, such as charging stations, is sustained.

China stands out as a global exception in offering inexpensive electric models. Local carmakers market nearly 50 small, affordable electric car models, many of which are priced under $15,000. This pricing aligns closely with best-selling small ICE cars in 2023, further democratizing access to electric mobility. The Wuling Hongguang Mini EV, priced around $6,200, emerged as a top contender in 2022, capturing 10% of all Battery Electric Vehicle (BEV) sales. However, in 2023, it faced competition from larger models like Tesla’s, as consumers increasingly seek longer ranges and higher-end options.

United States: Closing the Gap as Competition Heats Up

The United States witnessed a more than 40% increase in electric car registrations in 2023, fueled by revised Clean Vehicle Tax Credit qualifications and price reductions on popular EV models. However, implementing stricter eligibility criteria for tax credits posed challenges for some manufacturers while spurring innovation and market adaptation.

The sales-weighted average price of electric cars witnessed a steady decrease from 2018 to 2022, driven primarily by significant price drops in Tesla cars, which command a substantial market share. While electric models remained more expensive than their conventional counterparts in 2022, the gap has begun to narrow as market size expands and competition intensifies.

In 2023-2024, Tesla’s Model 3 and the new Model Y entered the market at competitive prices ranging from $39,000 to $50,000, comparable to the average price for new ICE cars. Rivian also announced plans to launch its R2 SUV 2026 at $45,000, signaling a shift towards more affordable electric options. However, smaller and cheaper electric models still have ground to cover, with only about 5% of electric cars sold in the US in 2022 being more affordable than their average ICE equivalent.

Few electric car models directly compete with small mass-market ICE models despite introducing tax credits. While initiatives like GM’s production halt for the Bolt and Ford’s strategic shift towards smaller electric cars aim to incentivize broader adoption, achieving price parity across all segments may take longer.

Europe: Varied Pricing Trends Reflect Market Dynamics

In Europe, electric car registrations surged to nearly 3.2 million in 2023, with several countries achieving significant milestones in EV adoption. Germany, in particular, emerged as a frontrunner, recording half a million new battery electric car registrations and solidifying its position as a critical player in the global EV landscape.

Norway leads the way in electric affordability, with electric cars already cheaper than ICE equivalents across all segments. The progressive reintroduction of sales taxes may influence future pricing dynamics in Norway and other European countries.

Germany has a relatively low electric premium compared to other EU nations, with over 40% of medium electric cars sold in 2022 being cheaper than their average ICE equivalent. However, in France, the electric premium remains around 40-50%, with electric models like the Renault Zoe holding steady in pricing despite advancements in battery technology.

In the United Kingdom, the sales-weighted average electric premium decreased between 2018 and 2022, yet electric SUVs and smaller models still command premiums over ICE equivalents. While introducing subsidies has eased some buyers’ burden, achieving price parity across all segments remains a challenge.

Overall, Europe and the United States are poised to witness a gradual decline in electric car prices as battery costs fall, manufacturing processes become more efficient, and competition intensifies. However, achieving widespread price parity will depend on various market factors and regulatory initiatives, underscoring the complexities of transitioning to electric mobility on a global scale.

 

Resource：Environment + Energy Leader
Photo credit to：Canva