Elon Musk’s Tesla may lose its dominance as the world’s top battery electric vehicle (BEV) seller to German giant Volkswagen by 2024, according to Bloomberg Intelligence’s ‘Battery Electric Vehicles Report – Automakers Race to the Top.’
According to the report, most competitors, particularly Ford and General Motors, lacked the incentive to catch up as rapidly as Volkswagen due to rising battery costs and restricted production capacity. As a result, Tesla is anticipated to be the country’s largest electric vehicle maker for some time.
Despite increased competition, Tesla’s Model Y SUV and Model 3 sedan were the most popular vehicles in the first quarter of this year in the United States.
Volkswagen’s manufacturing and sales are concentrated in Europe, and the study anticipates that the Chinese market would grow at a quicker rate than the American market.
According to VW’s annual report, US sales accounted for less than 10% of total sales last year. According to the source, Tesla’s sales in China, where it now produces two models, are expected to suffer as a result.
According to Kelly Blue Book, Tesla was an early adopter of the electric vehicle revolution, accounting for 75 percent of all EVs sold in the United States in the first quarter of 2022. According to analysts, competitors, on the other hand, are steadily losing a piece of that market share by leveraging their scale.
Michael Dean, the Senior European Automotive Industry Analyst at Bloomberg Intelligence, said: “Looking ahead, automakers in Europe, China, and elsewhere will continue to challenge Tesla via an impending wave of new models, though profit incentives are limited amid rising battery costs and a lack of scale.”
“That may change in 2025-26 as more brands achieve critical mass on new-generation models with proprietary software. There are some challenging external factors to consider and bold BEV ambitions have done little to prevent crisis-level valuation multiples, stoked by recession fears, rising interest rates, supply-chain constraints, and inflation,” he added.
Battery pricing is critical to BEV cost competitiveness, and Volkswagen plans to invest up to EUR30 billion in the supply chain by 2030, including the construction of six new battery-cell facilities in Europe
Northvolt, a Swedish battery manufacturer, will begin producing premium cells for it in 2023, while Audi’s midsize Q4 BEV SUV already outperforms its internal-combustion-engine equivalent, the Q3.
Steve Man, Senior China Automotive Industry Analyst at Bloomberg Intelligence, noted: “China’s carrot-and-stick approach to stoking EV sales could push battery-electrics to account for 25% of all passenger vehicle purchases by 2025. Sales in China have surged since the launch of the country’s new energy vehicle credit program despite erratic component supply.”
According to the report, Volkswagen, BMW, and other Western brands’ sales in China may suffer as a result of lower pricing and profitability after giving up the first-mover advantage to Tesla and local manufacturers.
Tesla, on the other hand, has increased production while benefiting from early adopter economies of scale. It started exporting automobiles from its gigafactory in Berlin in March, with plans to produce 500,000 vehicles per year.
After fixing its global supply chain challenges, Volkswagen CEO Herbert Diess told reporters at the World Economic Forum in Davos, Switzerland, that the business would overtake Tesla as the world’s top electric vehicle manufacturer within the next three years.