What To Expect From The Electric Car Market In 2023
It’s set to be yet another banner year for the electric vehicle (EV) and battery-powered electric vehicle (BEV) industry, with global automakers and EV startups all competing to take their place at the top, as electric vehicles enter the mainstream consumer marketplace.
In the United States, new EV registrations rose to more than 640,638 in the first half of the year according to figures by Experian. This number represented a 60% increase from the same period in 2021.
Both Europe and the United Kingdom also experienced an increase in EV registrations throughout 2022. In Europe, almost 211,000 new passenger plug-in cars were registered in October 2022, a 14% year-over-year increase. Over in the UK, the country currently has more than 660,000 battery-operated cars on their roads, with another 445,000 plug-in hybrids.
Growing consumer demand against the backdrop of increasing car availability options and ongoing government support for greener vehicles have seen the market grow at a stratospheric rate.
While some well-known electric car makers such as Tesla have taken a backseat, but still hold a majority of the global EV market share, other brands are now stepping in to provide consumers with more affordable and luxury options, despite prices for electric cars being 42% higher than the market average in January 2022.
Ongoing talks of a possible recession and wider market turndown on the back of macroeconomic problems such as red-hot inflation and soaring interest rates have prompted some consumers to hold off on their purchases for now until market conditions improve.
With so much uncertainty looming, and consumer interest driven by an increasing number of new EV models coming to the market, how will the global industry unfold in the coming months?
Prices Will Continue To Fluctuate
Sticker prices on new and pre-owned EVs will remain one of the biggest deciding factors for buyers in 2023. Although some experts have predicted that the national average is set to slightly increase over the coming months, many consumers are feeling the knock-on effects of higher inflation and the cost of living eating away at their disposable income.
The price for any electric car demands on the model and the manufacturer, and typically an entry-level vehicle can cost consumers between $30,000 and $40,000. Although, this might not be the case this year, as ongoing price increases, combined with supply chain constraints, deteriorating labor conditions in major manufacturing regions, and component shortages can drive up prices.
Other estimates predict that EV prices can jump by another 37% this year, reaching an average of more than $69,000 by the second half of the year. Stratospheric price hikes will price out more motorists who are willing to make the switch, but this could prompt bigger brands with a favorable opportunity to provide consumers with more affordable models.
There is some good news though. By the end of last year, Recurrent, an analyst company released a report – Used Electric Car Prices & Market Report – Q4 2022 – which indicated that prices for EVs and BECs have stabilized in the US.
The price stabilization means that according to Recurrent’s predictions, around 12% of used EVs on US roads will be able to qualify for tax credits that started this month. The tax credits are part of the Biden Administration’s Inflation Reduction Act (IRA), which seeks avenues to domesticate the production of electric vehicles and incentivize EV motorists.
Whether we’ll see prices make massive jumps this year or not, prices will remain for the greater part in limbo, and motorists should be ready to enter the market when there is a sudden drop in prices.
Newer, Better, And More Models
As the market expands, and consumer demand increases, ongoing competition in the global marketplace has prompted a growing number of top-tier automakers now all competing to bring their EV models to the consumer marketplace.
This year, nearly every major manufacturer, from Ford, Mercedes, and BMW, to Kia, Hyundai, Cheverly, and Alfa Romeo, among many others, is looking to introduce newer, better, and more affordable EV models.
In a report by McKinsey, analysts predict that automakers will release more than 400 different EV models this year, aside from existing brands such as Tesla, Rivian, and Nio already taking up a slice of the global market share.
Bulging demand has also meant that automakers are now planning to bring more production facilities and plants online in the coming year, as existing facilities are not equipped with the high-tech gear and machinery needed to produce and assemble EV models.
Brands will not only seek out opportunities in existing markets with the introduction of newer models but developing regions in Asia and the Middle East and some parts of Africa and Europe will give automakers a bigger market share to control in the coming months.
More High-Tech Cars On The Road
On the back of a wider variety of models, automakers are also trailing the “software-defined vehicle,” a concept that is linked to the development and progress of electric cars.
The software-defined vehicle will come with an increasing number of bells and whistles, most of them hidden underneath the car.
On the back of this development, some companies such as General Motors have endlessly been working to launch its Ultifi software, an end-to-end vehicle software platform that comes with a staggering amount of advanced technology.
GM’s end-to-end software will boast cloud connectivity and vehicle-to-everything connectivity. The GM software will be the smartphone technology for the car of the future, allowing motorists to download apps, services, and other features that aim to create a more personalized driving experience.
Personalization and apps aren’t the only developments that are on the board for the year. Further developments by Tesla, Rivian, and Xpeng are all looking to add more updates to their Autonomous Driver Assistance Systems (ADAS).
These systems allow EVs to autonomously drive, park or move without the need for driver assistance. Companies, especially Tesla after enduring a slew of negative ADAS remarks in 2022, are looking to put more investment into the launch of Level 2+ and Level 3 ADAS systems.
Sweeping Regulatory Changes
Several regulators and policymakers have been throwing their weight behind greener and more carbon-neutral vehicles in recent years, introducing a sweeping array of regulatory changes that will help to promote the EV industry in the coming decade.
In August 2022, the state of California, one of America’s most populous states and the heart of the American auto vehicle culture introduced new laws that will ban the sale of new gasoline cars by 2035.
This historic step towards a greener and more environmentally conscious future comes at a crucial time, as global climate change is edging the world closer toward disaster.
The introduction, which was made official by the California Air Resources Boards, will see automakers improve their production of electric cars at the start of 2026, aiming to have zero–emission cars, trucks, and SUVs on all California roads by the end of the decade.
The Biden Administration introduced the Inflation Reduction Act (IRA) which aims to lighten the burden on local EV manufacturers as global supply chain worries continue. The act will oversee that EV motorists be eligible for a $7,500 tax credit if they meet the requirements.
Additionally, the IRA will help boost the production of American EVs and help to incentivize U.S. EV automakers to source critical materials and components locally or undergo trade agreements with free trade agreement countries.
While these rules were set to go into effect by January 1, 2023, the Treasury Department has since given an extension until March 2023, allowing manufacturers and motorists more time to accompany themselves with the right cars, materials, and components to comply.
Moving Forward
Going forward this year will see several changes and enhancements being introduced to the electric car and battery-powered vehicle industry. Although there are still some worrisome factors, a looming recession, and supply chain worries, automakers are racing to take the top spot in a rapidly expanding industry.
The hype around electric vehicles will continue for the coming years, as policymakers and regulators support the advancements these companies are making to help introduce cleaner, more efficient, and more affordable electric cars.
Hopes are high for all companies, especially those that have been leading the market for the last decade or so. There’s a lot of potential for the EV market, and it’s not just ordinary vehicles that are getting global recognition, fleet operators are adopting electric trucks, and luxury EVs are becoming a growing trend in developed markets. With so much up for grabs, we can expect nothing but excitement in the EV market this year.
This post originally appeared at ValueWalk.com.
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