{"id":6145,"date":"2024-07-16T23:36:38","date_gmt":"2024-07-16T23:36:38","guid":{"rendered":"https:\/\/businesstriumphs.com\/index.php\/2024\/07\/16\/ev-winter-west-still-lagging-behind-china-as-buyers-face-high-prices-range-anxiety-and-tariffs\/"},"modified":"2024-07-16T23:36:38","modified_gmt":"2024-07-16T23:36:38","slug":"ev-winter-west-still-lagging-behind-china-as-buyers-face-high-prices-range-anxiety-and-tariffs","status":"publish","type":"post","link":"https:\/\/businesstriumphs.com\/index.php\/2024\/07\/16\/ev-winter-west-still-lagging-behind-china-as-buyers-face-high-prices-range-anxiety-and-tariffs\/","title":{"rendered":"EV Winter? West Still Lagging Behind China as Buyers Face High Prices, Range Anxiety and Tariffs"},"content":{"rendered":"

Although electric vehicle (EV) sales have trended steadily upward over the last five years, industry experts present at Fastmarkets\u2019 Lithium Supply and Battery Raw Materials Conference are concerned that high price points, continued range anxiety and geopolitical tensions could impede future market growth.<\/strong><\/p>\n

Although EVs gained market share last year, accounting for 18 percent of the 75.3 million automobiles sold, figures from the International Energy Agency show that China continues to lead other regions by a wide margin. <\/p>\n

Of the 14 million EVs sold in 2023, most new registrations were made in China, which came in at 60 percent. Meanwhile, Europe and the US accounted for 25 percent and 10 percent, respectively.<\/p>\n

During a panel discussion at the event titled \u201cThe Future of Demand: Are We in EV Winter?\u201d participants highlighted several reasons why China is outpacing every other region when it comes to EV adoption. <\/p>\n

The most prominent factor is the sheer size of the Chinese automobile industry. \u201cChina is an automotive machine the likes of which the world has never seen before,\u201d said Michael Dunne, CEO of Dunne Insights. <\/p>\n

\u201cChina last year produced 30 million cars \u2014 that\u2019s three times as many as were produced here in the US. China can supply half the world\u2019s demand for vehicles,\u2019 added the market intelligence expert. <\/p>\n

Demographic factors have also led to purchase hesitation in markets outside of China. <\/p>\n

While awareness of EVs is no longer a significant hurdle, with brands like Tesla (NASDAQ:TSLA) gaining high visibility, convincing older drivers to switch from gasoline-powered vehicles remains a challenge. While 30 percent of American drivers aged 18 to 25 plan to buy an EV, 58 percent of people in the country still prefer gasoline vehicles.<\/p>\n

\u201cEV manufacturers are seeing that consumers, especially here in North America, like to drive heavy vehicles long distances at higher speeds. And that\u2019s the antithesis of what a battery-powered EV wants,\u2019 said Dunne.<\/p>\n

These trends have led to more consumers in North America opting for plug-in hybrid EVs (PHEVs) or traditional internal combustion engine vehicles. And they\u2019re not the only trends dampening purchases. <\/span><\/p>\n

\n

American drivers still lack EV enthusiasm <\/h3>\n

Another difference between China and other markets is general excitement, the panelists noted. <\/p>\n

Chinese consumers have become more excited about EVs, especially after the introduction of Tesla\u2019s Model 3, which changed perceptions around EVs, according to Dunne. He noted that before 2020, Chinese consumers weren\u2019t excited about EVs; however, once the Model 3 was released there was a shift.<\/p>\n

\u201cI saw a tremendous mindset change \u2014 a perception among Chinese consumers where suddenly EVs were the new cool (thing) when the Model 3 was introduced and manufactured in China,\u201d said Dunne.<\/p>\n

He went on to explain that suddenly, brands like BYD (OTC Pink:BYDDF,SZSE:002594) gained significant traction. Prior to that point, BYD was lagging in the auto industry, with sales declining in 2018 and 2019.<\/p>\n

Dunne believes that a domestic manufacturer in North America and Europe needs to release a standout model, proving that there is a company in these regions that can offer an excellent product at a reasonable price. Without that, customers may remain satisfied with their hybrids, PHEVs or gasoline-powered vehicles.<\/p>\n

Feeding into the lack of enthusiasm for EVs is their high price point, an area that Chinese manufacturers have addressed through a wide range of EV offerings at various price points.<\/p>\n

For Phoebe O\u2019Hara, battery raw materials analyst at Fastmarkets, the issue of affordability and lack of choice are two sides to the same coin. \u201cChina is the only region where EV prices went down last year; in the US and Europe they went up,\u201d she said, noting that the cost of the average EU EV is 2.4 times higher than the average national income.<\/p>\n

\u201cIf we\u2019re trying to open up to low- and middle-income consumers, which is most of the market, there simply aren\u2019t any (EVs) available,\u201d said O\u2019Hara, adding that in the UK there are 600 internal combustion engine vehicle models, compared to two EV models. \u201cI think China is the answer when it comes to affordability,\u201d she said.<\/p>\n<\/div>\n

\n

Geopolitical tensions spur pricey tariffs <\/h3>\n

EV sector tariffs are also throwing a wrench in widespread adoption outside China. <\/p>\n

Currently EVs manufactured in China are subject to tariffs in the EU and North America. On July 4, the EU raised tariffs on Chinese EVs, with new rates ranging from 17.4 to 37.6 percent on top of the existing 10 percent duty. <\/p>\n

While this move aims to protect the EU\u2019s motor industry, it may increase EV prices for consumers.<\/p>\n

The new tariffs also impact Beijing, which is already in a trade war with Washington, as the EU is a key market for Chinese EVs. EU officials claim China\u2019s \u2018unfair subsidization\u2019 allows the country\u2019s EVs to be sold cheaper than EU-made vehicles, an allegation that China denies. Likening China\u2019s advantage to the US\/Russia space race of the 1960s, Dunne noted that \u201cautomakers globally recognize China has a huge lead in terms of batteries, power supply chains and costs \u2026 (however), the urgency doesn\u2019t seem to be there, and that\u2019s really concerning.\u201d<\/p>\n

Despite tariffs, Chinese automakers have maintained profitability and competitive prices in markets like Europe, except in the luxury EV segment, where tariffs on Shanghai Automotive Industry vehicles have increased costs for consumers.<\/p>\n

\u201cBut I think the people that inevitably lose out are consumers,\u201d said O\u2019Hara.<\/p>\n

Overall, the panelists suggested that while tariffs have added some complications, the bigger challenge is developing domestic supply chains and manufacturing capabilities to reduce reliance on imports.<\/p>\n

Ultimately, the experts acknowledged China\u2019s significant competitive advantage due to its massive automotive manufacturing capacity and supply chain capabilities. With that in mind, they suggested that western automakers should adopt and learn from China\u2019s strategies to become more competitive.<\/p>\n

At the same time, they cautioned against becoming overly reliant on China, which could lead to losing domestic market share and increasing geopolitical tensions. Overall, a balanced approach was recommended \u2014 leveraging China\u2019s strengths while investing in domestic supply chains and capabilities to reduce dependency.<\/p>\n

While many Chinese EVs face tariffs, subsidies have offered some support to the industry. The US$7,500 consumer tax credit for new EVs included in the Inflation Reduction Act has helped spur EV sales in the US. <\/p>\n

As of January 1, 2024, that rebate can be applied at the dealership, effectively lowering the total upfront cost. According to a February Reuters report, the US government issued US$135 million in EV tax credits over the first month of the year.<\/p>\n

Speaking about the benefits of subsidies, O\u2019Hara noted that when the UK removed EV subsidies in 2022, sales plummeted 22 percent year-over-year. The panelists explained that when subsidies and incentives are used strategically, they can support industry development, but emphasized that they shouldn\u2019t be used as a crutch that prevents automakers from making the necessary investments and innovations to succeed on their own. <\/p>\n

Something that O\u2019Hara thinks is more beneficial than short-term subsidies is leadership.<\/p>\n

\u201cHonestly, it\u2019s rhetoric,\u201d she said. \u201cIf you don\u2019t have somebody in power who\u2019s supporting the energy transition, who\u2019s saying positive things about vehicles and supporting OEMs \u2014 if you can\u2019t do anything in a business way, you do it with soft power. And I think the UK is great example where that has fallen completely to the wayside.\u201d<\/p>\n<\/div>\n

Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.<\/strong><\/p>\n<\/p>\n

This post appeared first on investingnews.com<\/div>\n","protected":false},"excerpt":{"rendered":"

Although electric vehicle (EV) sales have trended steadily upward over the last five years, industry experts present at Fastmarkets\u2019 Lithium Supply and Battery Raw Materials Conference are concerned that high price points, continued range anxiety and geopolitical tensions could impede future market growth. Although EVs gained market share last year, accounting for 18 percent of […]<\/p>\n","protected":false},"author":0,"featured_media":6146,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-6145","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/6145","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=6145"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/6145\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/6146"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=6145"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=6145"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=6145"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}