TrendForce’s latest research finds that global sales of new energy vehicles (NEVs), which encompass battery-electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs), and fuel-cell vehicles (FCVs), rose by 70% YoY to 2.87 million units for 3Q22. Of the quarterly total, BEV sales accounted for 2.147 million units and registered a YoY growth of 75%, whereas PHEV sales accounted for 714,000 units and registered a YoY growth of 57%.

Tesla placed at the first place in 3Q22 BEV market, BYD is the biggest threat

In the global ranking of BEV brands by vehicle sales for 3Q22, Tesla took first place with 344,000 units. While Tesla managed to maintain its market share at 16%, its lead over second-placed BYD in sales figure had narrowed further. BYD sold 259,000 BEVs in 3Q22, posting a massive YoY growth of 182%. It is also worth noting that the gap between Tesla and BYD in BEV sales has been smaller than 100,000 units for two quarters straight. SGMW and Volkswagen respectively stayed at third and fourth in the ranking, showing no change from the previous quarter. As for fifth to 10th, TrendForce especially points out that these places were all taken by Chinese brands. Looking at the global top 10 BEV brands for 3Q22, MG Motor (that has been acquired by SAIC Motor) and Geometry entered this group for the first time mainly thanks to the robust demand from China. Conversely, Hyundai, Kia, and XPeng Motors were pushed out of the top 10. XPeng stated that the deliveries of its new electric SUV G9 would ramp up this October. Whether XPeng will remain in the group of top 10 for 2022 depends on its performance in the fourth quarter.

Huawei’s big plan in the automotive market: the rise of Chinese brand “AITO”

Turning to the global ranking of PHEV brands by vehicle sales for 3Q22, BYD was at the top with 279,000 units and held a market share of 39.1%. As for other PHEV brands, they still were unable to raise their market shares above 10% even though they posted a QoQ increase in vehicle sales. Looking at the two German luxury car brands that are involved in the PHEV segment, Mercedes-Benz rose to second place in the ranking because of a QoQ gain for vehicle sales in both the home market and China. BMW saw falling sales for its PHEVs in Europe, so it posted a decline in units and slipped down in the the ranking. Chinese brand AITO entered the group of the global top 10 PHEV brands for the first time in 3Q22 and was immediately placed fifth. AITO is a brand under Seres and is in close cooperation with Huawei, and its vehicle models feature many technologies from Huawei as well. Going forward, the market performances of AITO’s vehicles will actually be an important indicator of Huawei’s progress in the development of an automotive business.

Moving into 4Q22, TrendForce believes that autumn releases of new vehicle models and year-end promotional activities will be the main drivers of car sales worldwide. Consumers have been waiting for new vehicle models or new generations of the existing vehicle models. This is one of the reasons why some carmakers saw declining vehicle sales in 3Q22. Therefore, these same carmakers could still get a boost in annual vehicle sales from their performances in the fourth quarter. As for the Chinese NEV market, it will stay fairly hot in 4Q22 as car brands operating there continue to provide incentives for vehicle purchases. Furthermore, Chinese consumers still want to take advantage of their government’s NEV subsidy program before its termination.

Due to the implementation of lockdowns and dynamic zero-COVID in Shanghai and other locations in China, a large number of automotive supply chain manufacturers have been idle since March and the implementation of passive measures in many locales has led to a decline in both production and sales. A large number of automotive companies are clustered in Shanghai and it is the hub of the entire Chinese automotive industry. Many foreign automotive companies, Tier 1 suppliers, important parts and components headquarters, production bases, and distribution centers are located here, such as Tesla’s Shanghai plant.

This also includes an important state-owned automotive company, SAIC Motor and all its subsidiary automotive factories and wide network of suppliers. The total production capacity of Shanghai and Jilin accounts for approximately 20% of the whole of China. The production volume of major automakers in Shanghai in April 2022 will drop by 75% compared with March, while the production volume of major joint venture automakers in Changchun (Jilin Province) will drop by 54%. The drops in these two regions were sharper than the 38% decline in China as a whole. Recently, several districts in Beijing have been locked down. The impact of this on sales depends on the duration of lockdown. BAIC Motor, Beijing Benz, and Beijing Hyundai are located in Beijing and these companies will bear the brunt of these lockdowns if they are required to suspend operations.

Further discussing the three major effects of this wave of lockdowns, first, the lockdowns will disrupt the pace of new car launches in spring. Second, the export plans of automotive companies will be impeded, which will slow the expansion of Chinese car companies into overseas markets. Third, there is a risk of stagnant demand. The stagnation of demand can be viewed from several perspectives.

First, is the closure of traditional distribution channel car dealerships due to the decrease in orders. According to China Automobile Dealers Association statistics, more than 20% of automobile dealers in China have closed down, which hinders the car purchase process. In addition, since automobile pricing continues to rise due to a number of environmental factors, if delivery is continuously delayed or the acceptance of car orders is suspended, there is a risk of consumption shrinking as time goes on. Third, the negative impact of lockdowns on economic activities, employment, and salary income, coupled with global inflation, will bring uncertainty to demand in China’s automotive market in the second half of 2022.

The global auto market is experiencing a very unstable period. The lingering impact of the COVID-19 pandemic, the persisting shortage of semiconductor chips, and the Ukrainian-Russian war has caused chaos in the supply chain in Europe and other regions and it seems the war will last longer than expected. Many automotive plants are still unable to operate smoothly.  Facing sustained production reduction or the transfer of production capacity, coupled with China’s lockdown and zero-COVID policies which began in March, global car sales in 1Q22 amounted to only 19.6 million units, down 7% from the same period in 2021.

Although the auto industry accounts for the majority of the work resumption whitelist announced by Shanghai in April, restoring production capacity is expected to take some time as manpower and transportation capacity are still limited and sales may still decline or remain low. Therefore, after taking into account the regional consideration of the Chinese market in 2Q22, sales volume is expected to be 17.7 million units and annual sales volume is revised downward to 80 million units, an annual decline of 1.3%. This forecast is based on the assumption of a supply turnaround leading to rebounding sales in the second half of 2022, so changes in various environmental factors will strongly affect the revision of future expectations.

（Image credit: Pixabay）

According to TrendForce data, total sales of new energy vehicles (NEVs including battery electric vehicles, plug-in hybrid electric vehicles, and fuel cell vehicles) in 1Q22 was 2.004 million units, an annual growth rate of 80%. Battery electric vehicles (BEV) demonstrated the strongest growth with sales reaching 1.508 million units. Plug-in hybrid electric vehicles (PHEVs) sold 493,000 units. Growth in NEV sales did not come easy, as global auto market sales (regardless of powertrain type) fell by 7% YoY in 1Q22 due to factors such as the chip shortage, Russian-Ukrainian war, and China’s pandemic lockdown and prevention measures.

In terms of BEV brands, Tesla’s sales in 1Q22 exceeded 310,000 units, ranking first with a market share of 20.5%. Chinese automaker BYD ranked second with 143,000 units and a market share of 9.5%. BYD announced in April that it would stop producing fossil-fueled vehicles and transform fully into a NEV manufacturer. Its BEV sales rose sharply by 271% in 1Q22 compared to the same period last year. Wuling, a subsidiary of SAIC-GM, has been ranked second since the launch of the Wuling Hongguang MINI in 2020 but dropped to third place in 1Q22. The main contributor to this was the multitude of models positioned as miniature and low-priced launched in the past year such as the Chery Ant and Changan Benben. As similar products arrived on the market, sales competition hindered growth.

In terms of PHEVs, BYD once again broke its quarterly sales record. Sales volume in 1Q22 reached 142,000 units, with a market share of 28.8%. As more PHEV models gradually appear in the market, it has become increasingly more difficult to capture a large market share. It is worth noting that the sales volume of PHEVs in the European market was lower in 1Q22 both when compared with the same period last year and when compared to 4Q21, affected the performance of some European brands.

TrendForce expects that most automakers will adopt a strategy of prioritizing the production of EVs. Therefore, continued growth in the sale of NEVs is expected in 2022. However, automakers will be under greater cost pressure this year. In particular, the Russian-Ukrainian war has greatly increased the cost of power batteries. This has caused automakers to increase their prices. Some countries including China will withdraw car purchase subsidies which dampens the market for low-priced mini-cars that previously supported the rapid growth of NEVs. Factors such as global inflation will become variables in the future growth momentum of NEVs.

As a consequence of rising power battery raw material prices, a number of global new energy vehicle (NEV) brands including Tesla, BYD, NIO, Li Auto, and Volkswagen, have successively raised the sales prices of electric vehicles (EV) in 1Q22. TrendForce believes that power batteries are the core component that account for the greatest portion of an EV’s overall cost and reducing the cost of power batteries will be an important strategy for companies to remain competitive in the future. As technology continues to innovate, lithium iron phosphate batteries are expected to account for more than 60% of installed capacity in the global power battery market by 2024.

TrendForce indicates, from the perspective of the world’s largest EV market, China, the power battery market reversed in 2021 and lithium iron phosphate batteries officially surpassed ternary batteries with 52% of installed capacity. Lithium iron phosphate installed capacity continued to grow in 1Q22, rising to 58%, and demonstrating a growth rate far beyond that of ternary batteries. However, from the perspective of the global EV market, thanks to the increase in the penetration rate of NEVs in Europe and the United States, ternary batteries still accounted for a market share of more than 60% in 2021, far exceeding that of lithium iron phosphate batteries, which captured a market share of approximately 32~ 36%.

Although the current gap between these two materials remains substantial, according to production capacity planning of global new energy battery cathode material manufacturers in the past two years, the scale and speed of lithium iron phosphate materials expansion will far exceed that of ternary materials. According to TrendForce investigations, planned expansion projects announced by global cathode material manufacturers are currently concentrated in China and South Korea, with a nominal total planned production capacity of over 11 million tons, of which planned production capacity of lithium iron phosphate cathodes accounts for approximately 64%. However, since planned production capacity exceeds market demand, there will be a certain shortfall between the industry’s total planned production capacity and actual future production capacity. It remains to be seen to what level actual effective production capacity can rise in the future.

It is worth noting, as the price of core battery raw materials such as lithium, cobalt, and nickel has moved up clearly since 2H21 and the global power battery supply chain is plagued by uncertainty including the Russian-Ukrainian war and the global pandemic, there will be a short-term disparity between the growth rate of supply and demand and companies will focus more on reducing the cost of battery materials and supply chain security, two major issues related to future competitiveness. As a result of this trend, TrendForce expects the cost-effective advantage of lithium iron phosphate batteries to become more prominent and this type of battery has an opportunity to become the mainstream of the terminal market in the next 2-3 years. The global installed capacity ratio of lithium iron phosphate batteries to ternary batteries will also move from 3:7 to 6:4 in 2024

In 2021, total sales of new energy vehicles (NEVs including battery electric vehicles, plug-in hybrid electric vehicles, and fuel cell vehicles) reached 6.473 million units, with annual growth rate reaching 122%, the highest growth rate since the development of vehicle electrification, according to TrendForce’s research. Battery electric vehicles (BEV) accounted for approximately 71.6% of total sales and plug-in hybrid electric vehicles (PHEV) accounted for approximately 28.1%, while the scale of fuel cell vehicles remained small.

Tesla ranked first among BEV brands with total global sales exceeding 930,000 vehicles and a 20.2% market share. SAIC-GM-Wuling ranked second, posting strong sales numbers for their low-priced mini electric vehicles in 2021. Other BEV brands such as Ora and Chery have also greatly increased sales performance on the backs of mini-vehicle products. The significance of this segment in the NEV market is considerable. On the whole, a reinvigorated BEV market has birthed a number of new brands that have further fractured market share. The concentration of market share among the top ten BEV brands dropped from 64.4% in 2020 to 57% in 2022, indicating an escalation of market competition.

BYD ranked first in PHEV sales with 273,000 vehicles sold in 2021, accounting for 15% of the market. Both BYD and seventh ranked Li Auto posted multifold growth, suggesting China’s reduced PHEV subsidy policy exerted minimum impact on the market. In addition to a number of luxury European brands holding their spots on the sales ranking, TOYOTA moved swiftly into fifth place while Jeep, a part of the Stellantis group and known for its performance cars, ranked 10th with the lion’s share of sales coming from the United States and Europe.

From a regional perspective, NEV sales in China once again exceeded half of the global total in 2021 while NEVs accounted for 19.3% of China’s overall auto market. TrendForce states, in addition to fierce competition, the Chinese market also includes numerous new brands, accelerated mass production, joint venture brands adjusting strategies, and overseas deployment of domestic brands targeting Europe, the Middle East, and Southeast Asia.

In addition, with the European Union strongly promoting electrification, the penetration rate of NEVs in several leading countries such as Germany and France is expected to reach 20~25% in 2022. In terms of the currently trailing US market, the Biden administration’s many policy incentives have focused the actions of brands and supply chains which include the introduction of ever-popular (in the U.S. market) battery electric pickups by a number of automakers. In addition, many new brands such as Rivian, Lucid Motors, Fisker, and Lordstown Motors have successively entered the mass production and assembly stage of vehicle manufacturing or plan to enter mass production in 2022, making the future of the U.S. electric vehicle market worth observing in terms of quantity and competition.

As the global trend of energy conservation and carbon reduction remains unchanged and automakers shift greater proportions of their product lines to electric vehicles, the total number of NEVs is forecast to exceed 10 million in 2022. However, the international situation is turbulent, and the Russia-Ukraine conflict has caused the price of crude oil to rise. In addition, Ukraine supplies neon gas for the semiconductor process and Russia is a producer of nickel ore. Nickel is a key material for electric vehicle batteries. Once the war heats up, the automotive industry will bear the brunt of rising costs and unstable supply chains, which are variables for the development of NEVs in 2022.