Milestone event! Global Electric Vehicle Sales Reach 10% for the First Time

Global electric vehicle sales surged in 2022, reaching a key milestone and reaching a 10 percent market share for the first time, statistics show.

Preliminary research by LMC Automotive, a research firm that tracks vehicle sales, and the website EV-Volumes shows global sales of pure electric vehicles totaling about 7.8 million units in 2022, up 68 percent from a year earlier.

Ralf Brandsttter, head of Volkswagen's China business, said on Friday that electric vehicles will continue to expand rapidly and that the Chinese market will soon reach the tipping point where conventional car sales start to decline steadily as plug-in hybrids take a bigger share of the market.

"Last year, one out of every four vehicles we sold in China was a plug-in hybrid, and this year we expect to reach a third. We haven't reached the tipping point yet, but we expect to reach that tipping point between 2025 and 2030."

Strong growth in electric vehicle sales

According to LMC Automotive, pure electric vehicles accounted for 11 percent of total vehicle sales in Europe and 19 percent in China in 2022. Adding plug-in hybrids, the share of electric vehicles sold in Europe rose to 20.3 percent of total sales last year.

In Germany, Europe's largest car market, electric vehicles accounted for 25 percent of new vehicle production for the year last year, according to the Association of German Automobile Manufacturers. In December last year, sales of electric vehicles surpassed those of conventional fuel vehicles.

Total global new vehicle sales fell about 1 percent to 80.6 million units in 2022, with sales in China up nearly 4 percent, partially offsetting an 8 percent and 7 percent drop in sales in the U.S. and Europe, respectively. The U.S. and Europe are negatively impacted by the weak global economy, soaring energy costs, supply chain disruptions and the Russia-Ukraine conflict, respectively.

Europe's top-selling automaker, Volkswagen Group, said last Thursday that total new vehicle sales fell 7 percent last year to 8.3 million units, but electric vehicle sales rose 26 percent to 572,100 units, sales figures that cover many of VW's brands, including Volkswagen, Porsche and Audi.

The group said the majority of VW's electric vehicle sales were in Europe, but sales growth was strongest in China and the United States.

A number of other automakers reported a similar picture, partly due to an increase in the number of electric car models coming to market, while sales of conventional vehicles were weak or declining. Ford Motor and Mercedes-Benz Group both said their electric vehicle sales more than doubled in 2022, while total vehicle sales declined.

This year will be a challenge

However, analysts warn that the new year may make it difficult for electric vehicles to repeat last year's strong performance, as recession fears have put heavy pressure on consumers and some countries have reduced or completely eliminated subsidies for electric vehicles.

In addition, the energy crisis that erupted in Europe following the Russia-Ukraine conflict and rising electricity prices have also reduced the attractiveness of electric vehicles relative to fuel vehicles.

Last December, Germany saw a surge in the number of people buying electric cars in the last January as consumers rushed to take advantage of government incentives.

From Jan. 1, 2023, European subsidies for electric cars with a sticker price of up to 40,000 euros will be reduced to 4,500 euros from the previous 6,000 euros.

Peter Fuss, an automotive analyst at Ernst & Young, said: "Demand for electric vehicles is likely to weaken in the coming year. A weaker economy will lead to more reluctant consumer spending. Supply will likely outstrip demand and we will see cars discounted again."

Indeed, these concerns have already emerged. To boost car sales, Tesla, which had claimed unlimited demand for its products, recently used a tried-and-true tactic of old-school automakers.

In the final weeks of 2022, Tesla offered a $7,500 discount in the U.S. to attract buyers, but still failed to meet the company's annual growth target.

Since recently, Tesla has significantly lowered the prices of the Model 3, Model Y SUV and various other models in Asia, Europe and elsewhere, with price cuts ranging from 1-20 percent.

Cui Dongshu, secretary general of the China Passenger Association, said last week that automakers may still face challenges this year due to the global economic downturn, rising U.S. interest rates and large inventories held by Chinese manufacturers and dealers.

He added that the Chinese auto market will likely grow at an annual rate of about 1 percent.