Why OEMs can't take their foot off the BEV gas pedal
On the 23rd of April, Ayvens hosted a client webinar delving into the macroeconomic factors influencing the automotive industry. Led by Gavin Eagle, Lead International Sales & Client Relations at Ayvens , alongside industry experts Dr. Jose Pereira from Frost & Sullivan and James Patmore, Lead Global Vehicle Procurement at Ayvens, the webinar examined how OEMs (original equipment manufacturers) are reacting to shifts in government incentives and market dynamics.
A summary of key points from the webinar can be found below or you can watch it back.
2023 automotive industry highlights:
The automotive industry witnessed remarkable milestones in 2023. Globally, 14 million electric vehicles (EVs) were sold, marking a significant 16% penetration rate. In 2023, China led the way in BEV adoption, with 23% of new car sales being BEV, outpacing Europe, the Americas, and APAC (excluding China).
BYD secured its position as the market leader in BEV sales, with 2.9 million vehicles sold. Additionally, CATL continued its dominance in the battery market, capturing a substantial 33% market share. Tesla's initiative to open fast chargers to other OEMs and the widespread adoption of Tesla charger standards in the US underscored a collaborative approach towards EV infrastructure development.
Looking back: 2015 to today
Reflecting on the period from 2015 to the present, the automotive landscape has undergone a significant transformation. In 2015, ICE (internal combustion engine) vehicles dominated new car sales, leaving a tiny market share to BEVs and hybrids. However, from 2020 onwards, BEVs began to gain momentum, primarily driven by stringent CO2 emission regulations in the EU. While the impact of the COVID-19 pandemic from 2020 to 2023 slowed down market growth and disrupted supply chains, influencing the availability of new cars and parts, OEMs pivoted to prioritise EVs.
Macro economic trends impacting the automotive industry in the coming years:
Post-pandemic economic adjustments, characterised by high inflation and interest rates, reshaping consumer behaviour and purchasing power.
Rising significance of environmental, social, and governance (ESG) considerations, reshaping industry priorities amidst conflicting agendas of fossil fuel interests.
OEMs grappling with the need to innovate and adapt to changing market dynamics amidst these challenges.
Improved battery technology and offerings from OEMs providing better and cheaper batteries and a wider range of electrified vehicles at different price points.
Average CO2 target milestones OEMs need to meet for passenger cars in Europe
In the coming 10 years, vehicle emissions in the EU will need to reduce significantly with a few key milestones along the way. These milestones are gradual decreases to the CO2 limits of new vehicles sold, eventually ending in 2035 with all newly sold vehicles needing to emit zero carbon emissions. It’s important to note that plug-in hybrid calculations will change in 2025 to better reflect real world emissions, which will increase average CO2 emissions for PHEVs. We predict this will lead to a decrease in PHEVs in fleet.
- 2021-2024 – 109 g/CO2
- 2025 (-15% compared to 2021): 93 g/CO2
- 2030 (-55% compared to 2021): 49 g/CO2
- 2035 (-100% compared to 2021): 0 g/CO2
There is no indication that the EU will change these targets.
OEM plans for the coming years
In response to strict EU CO2 regulations and shifting consumer preferences, major OEMs have sped up their electrification strategies. Volvo, Ford, Stellates’ (including Alfa Romeo, Citroen, Opel), and Cupra are among the OEMs targeting 100% EV sales by 2030. With the looming regulatory landscape, OEMs are accelerating their electrification efforts, aiming for a 100% EV offering by 2035 to be in line with EU regulations on new vehicle sales. Notably, OEMs are expanding their EV portfolios, particularly in key segments (B & C), to cater to diverse consumer needs. In addition to providing more EV choices, several OEMs have publicly committed to net-zero ambitions, aligning with global sustainability goals. Volvo, Tesla, and Toyota (EU only) aim for net-zero by 2040, with Stellantis targeting 2038.
The automotive industry stands at a critical stage. OEMs face unparalleled pressure to accelerate their transition to electric vehicles in response to stringent regulations and shifting consumer preferences. As the industry marches towards a greener future, OEMs can't take their foot off the BEV gas pedal.
*EVs can refer to battery electric vehicles and plug in hybrids.
