Just when the electric vehicle (EV) sector was expected to come into its own, it has instead been reeling from the economic impact of the coronavirus pandemic. The question now is how long will the downturn last?
Researchers at Woods Mackenzie are predicting that the sales of EVs are likely to fall by 43% this year. According to the UK-based firm, that translates to projected sales in 2020 of just 1.3 million vehicles, down from 2.2 million in 2019, and some EV manufacturers are already feeling the pain.
The biggest loser thus far is Nissan, with its LEAF line of hatchbacks selling significantly less during the first quarter, down by 27.1% from 2019.
The Porsche Taycan sedan is expected to meet sales projections this year, but just barely. Barrons reports that the luxury car manufacturer sold around 221 Turbo and Turbo S variants of the model. The demand is strong for the vehicle, but if the sluggish sales in the first quarter are any indication, then Porsche is up for a tough year ahead.
What’s Affecting the Market?
The primary reason for this dreary turnout ties in with COVID-19 in that fewer people are visiting manufacturer showrooms in key markets. But that’s not the only factor.
The global oil devaluation brought about by the pandemic also put a dent into the sales projections of EV manufacturers. Mike Vousden of analyst firm GlobalData said it best when he asked, “Why buy electric vehicles if petrol prices are so low?”
There’s also the disruption of the supply chain to consider. EVs require plenty of the same metals used by most computer hardware, and since there is much less of those metals being produced right now, raw materials are becoming scarce.
This means that the production of batteries and computers essential to the operation of EVs is slowing down, while the cost of production is going up.
The fact that many manufacturers are coming out with multiple offerings throughout the year isn’t helping either. Tesla has a full portfolio of Model 3 sedans and the new Model Y crossover leading the charge, and Chevrolet, Ford, and BMW are all coming out with their offerings.
It is easy to see how the wide array of choices can paralyze the average consumer; after all, shifting from internal combustion engines to EVs is a big step. What’s the harm in waiting for the newest model?
The news isn’t all bad, though. China, the epicenter of the virus, is the biggest EV market to date. Ever since the pandemic peaked in late March, market interest has slowly been going up, which could be the start of a post-coronavirus trend. The market may be working hard to recoup from the 75% less year-on-year sales, and Tesla is out riding that wave.
The Elon Musk-led manufacturer is set to have one of its best years yet, bolstered mostly by the resurgence of EV interest in China. It is so good that analysts are projecting a 40% growth in sales for the company this year, and Musk is projecting a quota of 500,000 EVs sold throughout 2020.
BMW is hot on Tesla’s heels, with a 13.9% increase in sales last quarter. The luxury carmaker is set to meet the emissions targets of the European Union, hence its drive to improve sales of its EVs. And a nifty marketing gimmick in the form of incentives helped Chevrolet bring its Bolt model’s sales up by 36.1%.
It is also good to note that the majority of EV buyers are young and well-salaried. This means that they’re a market that’s set to weather out the COVID-19 storm and emerge from it with the purchasing power. Which can be a good thing for EV models coming out later this year and early next year. And if China’s resurgence is any indication, these future sales could be just what the industry needs to reinvigorate the market.
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