Electric Vehicle Market Update: Q3 2022 in Review

EV market update: What happened so far in 2022

Last year, sales of electric vehicles doubled from the previous year to a new record of 6.6 million, with nearly 10 percent of global car sales being electric.

Growing regions such as Europe saw continued interest from consumers, while in leading country China more electric vehicles were sold than global electric vehicle sales in 2020, according to the International Energy Agency.

Speaking with INN about the main trends seen in the third quarter of 2022, Charles Lester of Rho Motion said passenger car and light duty EV sales in China have performed the best, with just over 4 million sold so far up to September.

“In the EU and EFTA and UK, the EV market has grown by around 9 percent so far,” he said. “However, the total vehicle market in Europe has been hit significantly this year by the ongoing semiconductor shortage, change in original equipment manufacturers' (OEMs) strategy ⁠— towards higher margin vehicles and away from the volume segment ⁠— shipping, and general supply chain disruption.”

Last year, globally, there were over 450 electric car models available, an increase of more than 15 percent compared to 2020 and more than twice the number of models available in 2018. In 2022, despite challenges, automakers have continued to roll out new models, expanding segment and price point availability for EVs.

In China, the largest EV market, about a quarter of all new cars registered are electric or plug in hybrids. Furthermore, about 6 million new EVs are expected to be registered in the country this year, according to the China Passenger Car Association.

With about half of the world’s electric cars being sold in China, the country is undoubtedly a leader in adoption. But an interesting trend seen this year has been Chinese OEMs expanding further than the domestic market.

“As Chinese OEMs are looking for more market share globally, more automakers or battery producers are entering overseas markets,” Lester said. “Compared with North America, OEMs prefer to take the first step in Europe.”

Most notably, China’s biggest electric car maker BYD has started to sell major models in Europe. Another big EV player Nio has also outlined plans to enter the European market.

Speaking at the Paris Motor Show, Stallantis CEO Carlos Tavares warned established European carmakers by saying the market is wide open to the Chinese OEMs.

“We don’t want to have Chinese neighbors that sell at a loss in Europe, and then put the automotive industry on their knees,” he added.

One in 20 new pure electric car deliveries in Western Europe are from Chinese manufacturers, data from Matthias Schimdt shows.

“Chinese OEMs, once having been the butt of all automotive jokes following failed crash tests and poor quality standards, now feel confident enough to give it another shot with a fully-charged line-up,” the report reads. “The class of 2022 is almost unrecognizable from those models arriving 15 years ago.”

About 60 percent of the sino-models arriving at European ports are either battery electric vehicles (BEVs) or plug-in hybrids (PHEVs).

Pushing to strengthen its domestic electric vehicle industry, another major catalyst for the electric vehicle sector during the quarter has been the introduction of the Inflation Reduction Act in the US, which includes climate-related incentives.

In the country, the current tax credit was capped after a manufacturer sold 200,000 EVs in the US, which Tesla (NASDAQ:TSLA) and General Motors (NYSE:GM) had already met.

“The new credit will not have a cap and is proposed to last through 2032, remaining at the current $7,500 level,” Lester explained. “However, there are key battery components and critical mineral requirements, ultimately to localize the critical minerals supply chain.”

To be eligible for the credit, the car's battery must meet a minimum level of parts sourced from the US or countries with which it has a free trade agreement.

By 2030, data from BloombergNEF suggest that just over half of passenger cars sold in the US will be electric vehicles on the back of consumer incentives, which are likely to boost the pace of EV adoption.

EV market update: What’s ahead

Looking ahead, by the end of 2022, global plug-in sales, which includes BEVs, PHEVs and range extended BEVs, are on pace to exceed 10 million vehicles according to data from S&P Global.

Similarly, Rho Motion is expecting over 10 million EVs, including BEV and PHEV, to be sold in 2022, with strong sales from China in the final couple of months of the year. The EV penetration of retail sales reached 32 percent in September in China, with sales of new energy vehicles up 93.9 percent from the previous year, according to the China Association of Automobile Manufacturers.

Even though the Chinese government has extended the purchase tax exemption for new energy vehicles, the subsidy program is likely to end this year. This is why analysts are also expecting a rise in sales in the last quarter.

“The government has extended the purchase tax exemption, but the subsidy program is likely to end on 31st December 2022,” Lester said. "Therefore, we expect a push in sales towards the end of the year."

Looking further ahead, automakers have forecast plans to build 54 million battery electric vehicles in 2030, representing more than 50 percent of total vehicle production, according to Reuters. The analysis also suggests that the world's top automakers are looking to spend nearly US$1.2 trillion through 2030 to develop and produce millions of EVs, together with batteries and raw materials needed for that production.