The global passenger vehicle volume and EV growth is likely to moderate in 2024 based on the analysis of Q4 Y2023 earnings call of key automakers such as Tesla, Ford, General Motors, Mercedes-Benz, Stellantis, Toyota Motor Corporation, Suzuki, Rivian says a report by Elara Capital. However, India might buck the global trend given the hybrid push by top car makers
The research agency points out the slowdown is primarily expected on the back of the impending threat of Chinese EV makers taking up a greater share based on the cost and scale advantage coupled with the relatively slowing pace of EV adoption in the last few months (although penetration continues to increase) and better growth for hybrids.
Moreover, the EV price wars and profitability is cause for concern for legacy OEMs, which would force them (legacy players) to undertake sharp cost reduction & innovative ways to manufacturing, and lastly, the slowing global PV growth.
The report states that the EV penetration levels continue to expand albeit at a slower pace. While global EV penetration and volume continue to rise to 11.1% (H1CY23 global EV penetration at 10.0% vs 9.5% in CY22), the pace of increase is slowing along with pressure on profitability. Total battery electric vehicle (BEV) and plug-in hybrid EV (PHEV) penetration was 15.8% of global light vehicle sales in CY23 vs 13.0% in CY22 and 8% in CY21.
The share of PHEV increased to 29.6% of overall EV+PHEV sales in CY23 vs 27% in CY22. In CY23, the EU registration of EV+PHEV was up 17% YoY, excluding Germany, up 32%. China sales rose 36% while sales in North America was up 46%. The stock price movement of global EV companies in the past six months has underperformed significantly against legacy OEM, owing to derating, given the cut in EV projections.
Elara Capital states that the global PV production growth outlook flat in CY24 with most companies have a cautious growth outlook, given the volatile global geopolitical issues and good growth that was witnessed in CY23. It says that as per S&P Global Mobility’s mid-January projection, global light vehicle production is expected to drop 1% YoY in CY24 post 11% growth in CY23. Region-wise, North America would grow by 1% while the EU and Japan & South Korea are expected to drop by 2% and 4%, respectively. China’s production growth is likely to remain flat.
Electrification & India market
The trend is significantly different in the India context. The country is expected to see an improved outlook toward hybrids, which bodes well for the country’s largest carmaker Maruti Suzuki India. With respect to India, while Suzuki wholesale numbers in December were low, due to inventory correction and to limit CY23 stock in the system, the retail numbers were encouraging. In addition, Tier II suppliers are experiencing a shortage of parts related to CNG vehicles, which is expected to be resolved in the short term.
