The global electric vehicle (EV) market has been surging forward, reaching an impressive over 10 million sales in 2022. However, recent studies suggest that this fast-paced growth might encounter a hurdle in 2024. The potential reason? A decrease in electric vehicle incentives.
Analysts have warned that the momentum behind EV sales may be losing steam. The growth rate, which soared between 25-50% in 2023, is anticipated to moderate, settling at a more conservative increase of 10-15% in 2024. This slowdown is attributed to several factors, including a lower incentive for electric vehicles.
The U.S., currently ranking third globally in EV sales after China and Europe, relies heavily on credits and incentives to boost EV sales. However, as incentives in electric vehicles decrease, it’s anticipated that EV sales could be impacted.
Though a record 1.2 million EVs were sold last year, experts predict that EV growth will slow in the forthcoming quarters, potentially reporting the first quarter-over-quarter sales decline in more than three years.
Despite the predicted slowdown, some industry insiders remain optimistic. Cox Automotive, for instance, expects 2024 to be the “Year of More” for EVs – more models, more incentives, more discounting, more advertising, and more sales.
Elon Musk, TESLA CEO, shared his opinion on this matter. He argued that the incentives gave his company a relative disadvantage. “Tesla has succeeded in spite of the incentives, not because of them” he mentioned. His company, Tesla, has been a trailblazer in the EV market and continues to push boundaries despite changes in governmental support.
Industry experts from Goldman Sachs Research predict that EVs will constitute about half of new car sales worldwide by 2035. This prediction stands strong despite the reduction in incentives, indicating the underlying strength and potential of the EV market.
In 2022, global spending on electric cars reached an astounding $425 billion, a 50% increase from 2021. Notably, only 10% of this spending can be attributed to government support, indicating that the EV market’s growth is increasingly driven by market forces rather than government incentives.
As incentives are reduced, we might see a slowdown in the adoption rate of EVs in some markets. It’s worth noting that government incentives are not the sole driver of EV sales. Factors such as falling battery costs, the development of charging infrastructure, and increased consumer awareness also play vital roles.
The electric vehicle incentives can be gradually reduced as the market grows as suggested by the International Council on Clean Transportation (ICCT). As automakers and governments meet their announced targets, the need for incentives may decrease, allowing the market to sustain itself through competition and innovation.
As the global EV market navigates this transition, the future of electric vehicles seems promising but uncertain. The reduction in incentives could slow down the adoption of EVs in the short term. However, the long-term prospects remain bright, given the market’s resilience and the increasing competitiveness of EVs.
Image Source: Saul Loeb / AFP/Getty Images
