According to TrendForce’s estimates, the global automotive market will sell 88.6 million vehicles in 2022, growing 10.1% YoY. This estimate includes deferred demand due to automakers’ production cuts in 2021. However, numerous uncertainties still bedevil the overall automobile market in terms of production while supply chain issues and the COVID-19 pandemic are expected to continue impeding automobile sales. In addition to supply chain issues, global inflation caused by rising energy and upstream raw material costs has also become a hidden economic burden in various countries. When the overall cost of living increases, the automotive market will experience the ensuing negative impact.

NEVs expected to exceed 8 million units in 2022 as competition intensifies

The penetration of electric vehicles into the automotive market is accelerating. The estimated combined sales of BEV and PHEV in 2022 will be in excess of 8 million units. Regulations also remain an important driving force for the market. There is fierce competition among automakers and automakers of disparate types and backgrounds have distinct future development priorities. However, accelerating capacity expansion is the primary developmental focus for all types of automakers. The years 2022-2024 will be the target for many emerging automakers to achieve mass production. This will further promote heightened competition in the electric vehicle market including in price, performance, technical specifications, etc.

In addition, after the rapid growth in sales of electric vehicles, TrendForce has articulated that retired batteries have become another business opportunity. Both China and Europe have new regulations pending which place requirements on electric vehicle battery performance, recycled materials, utilization rate of recycled materials, battery second-life (echelon utilization), disposal, etc. In addition, specific battery information and traceability is also commonly promoted as part of these regulations, which entail additional time pressure on automotive companies and the supply chain due to various management measures required in the battery life cycle. A multitude of demands spur car manufacturers and supply chains to seek external partnerships and increased investment to meet regulatory requirements.

（Image credit: Pixabay）

With the explosion of new energy vehicle (NEV) production and sales, the installed capacity of power batteries has also seen rapid growth, in turn promoting the rising demand for battery materials, according to TrendForce’s investigations. Among battery materials, cathode materials are most in demand for power batteries and their shipments have benefited from the rapid growth of the NEV market. It is estimated that the global demand for power battery cathode materials in 2021 will reach 600,000 tons and this number is expected to exceed 2.15 million tons by 2025.

As the largest downstream application market for lithium batteries, electric vehicles account for more than 60% of total lithium battery consumption. With estimated total consumption of lithium batteries for electric vehicles worldwide reaching 310GWh this year, corresponding demand for cathode materials will reach approximately 604,000 tons.

According to statistics from the China Association of Automobile Manufacturers, China’s NEV sales reached 2.99 million vehicles between January and November of this year, accounting for approximately 50% of total global sales of NEVs, and becoming the key to boosting global demand for power battery installations. During this period (January to November), the installed capacity of power batteries in the Chinese market reached 128.3GWh, a YoY growth rate of 153.1%. The cumulative installed capacity of lithium iron phosphate batteries reached 64.8GWh, surpassing the 63.3GWh installed capacity of ternary batteries for the first time.

TrendForce believes, benefiting from strong market demand for electric vehicles, lithium battery material manufacturers (representative of cathode materials) have started a new round of large-scale production expansion this year and are expected to gradually release new production capacity in the next 2 to 3 years, relieving tight market demand. At present, the overall capacity utilization rate of China’s cathode material industry is not high. Taking lithium iron phosphate materials as an example, the capacity utilization rate of China’s lithium iron phosphate cathode materials in 2020 is approximately 44% and expected to rise to 56% this year. Whether or not future global market demand of more than 2 million tons can be met will depend on whether new production capacity of cathode materials can come online according to schedule and whether the supply of key raw material lithium carbonate is sufficient.

For more information on reports and market data from TrendForce’s Department of Green Energy Research, please click here, or email Ms. Grace Li from the Sales Department at graceli@trendforce.com

Total global sales of NEVs (new energy vehicles) for the first three quarters of 2021 (January-September) reached 4.2 million units, with BEVs in particular accounting for 2.92 million units, a 153% YoY growth, according to TrendForce’s latest investigations. Total sales of PHEVs, on the other hand, reached 1.28 million units, a 135% YoY growth. Compared to the overall automotive market, whose growth has been constrained by the ongoing semiconductor shortage and effects of the COVID-19 pandemic, sales of NEVs still remained relatively strong.

Regarding BEV sales, Tesla comfortably took the leadership position with a 21.5% market share. The automaker’s sales volume for the first three quarters of this year already surpassed its sales volume for 2020. Taking second place on the top 10 list, Wuling Hongguang was able to maintain its high volume of sales due to not only low retail prices, but also a gradual expansion of its target markets from tier-three and tier-four cities to tier-one and tier-two cities in China. This shift would seem to indicate a corresponding expansion of and shift in Wuling Hongguang’s customer base. BYD and Volkswagen took third and fourth places, respectively, with the latter aggressively consolidating its BEV offerings into the ID. Family this year. Vehicles in the ID. Family have accounted for nearly all of Volkswagen’s BEV sales since 3Q21. Despite the rapid growth of the BEV market, competition has been intensifying after traditional automakers began releasing their own BEV models at a faster pace while emerging automakers also began delivering vehicles.

It should be noted that, although the global semiconductor shortage has not damaged the NEV market to the same degree as it did the traditional ICE vehicle market, the NEV market is not entirely immune to the resultant supply-side issues. In addition, China’s power rationing and pandemic-generated transportation/logistics disruptions likewise affected automakers’ manufacturing operations to various degrees. Taken together, these aforementioned factors became some of the underlying causes responsible for the shifts in NEV automakers’ market shares.

Regarding PHEV sales, BYD put up a remarkable performance by leapfrogging to second place in the rankings, and this can primarily be attributed to the release of BYD’s DM-i vehicles, which feature a super hybrid technology aimed at reducing fuel consumption. Thanks to the DM-i vehicles, BYD’s PHEV sales began skyrocketing in 2Q21, and the automaker was able to overtake several European automakers with respect to total PHEV sales for the first nine months of 2021. Much like the BEV market, despite the growths in most automakers’ sales volumes, companies will find it increasingly difficult to raise their PHEV market share.

Looking ahead to the NEV market’s future, TrendForce believes that, as traditional global automakers gradually kick off mass production of vehicles based on the battery electric platform, more and more new BEV models will be released to market at an accelerated pace. Furthermore, the next one to three years will serve as the key timeframe for emerging automakers as well as new entrants that crossed from other industries to achieve mass production. Therefore, there remains much potential for changes to occur within the rankings of NEV automakers’ sales and market shares.

For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insider.trendforce.com/

As the pace of electrification accelerates in the global automotive market, and various governments worldwide implement subsidy policies that encourage consumer EV purchases, sales of new energy vehicles（NEV, which includes BEV/PHEV/FCV）are continuing to rise as well. NEV sales for 2021 are projected to reach 4.35 million units, a 49% increase YoY.

Due to the vast scale of the Chinese market, as well as domestic policies favorable for the growth of BEV/PHEV/FCV, various NEV brands have quickly emerged in China in recent years, such as BYD Auto, Aion（formerly GAC NE）, and BAIC BJEV. At the market’s peak, NEV manufacturers in China once numbered in the hundreds, although that number has since dwindled somewhat, as the intense competition resulted in declining sales and market shares for many automakers, including BAIC and JAC.

Four rising stars among emerging NEV manufacturers in China include NIO, XPeng, Lixian（or Li Auto）, and Weltmeister, all of which have been shipping tens of thousands of mass production vehicles each year. In particular, while NIO, XPeng, and Lixiang registered significant growths in the past few years, Weltmeister also ranked number two in terms of sales in 2019, though it fell to fourth place in 2020 as it delivered fewer vehicles compared to the top three competitors last year.

In light of the aforementioned four automakers’ current expansions, TrendForce has summarized several key aspects of their growths, including the following:

1. Autonomous Driving Technologies: Autonomous driving is not only part and parcel of these automakers’ core competencies but also a reflection of what consumers and investors expect of the automotive industry. In pursuing advanced autonomous driving technologies, the four automakers have been adopting increasingly powerful processors and computing platforms, with Nvidia being the most common partner among emerging NEV manufacturers. Remarkably, XPeng stands out as the only player making a noticeable effort to develop in-house chips.

2. LiDAR: LiDAR is integrated into an increasing number of vehicles in response to the growing demand for advanced self-driving functionalities. Although LiDAR remains out of reach for vehicles in certain price segments, autonomous driving sensors including LiDAR are no longer limited to flagship models since new NEV models’ E/E architectures are expected to be compatible with OTA updates.

LiDAR sensor demand from NEV manufacturers has significantly increased because only by pre-installing  hardware ahead of time in their vehicles can automakers enable autonomous driving functionalities as a paid subscription service through OTA updates later on.

3. Battery-swapping: Battery-swapping are relatively attractive for the Chinese NEV industry for several reasons: First, battery-swappable vehicles are excluded from China’s NEV subsidy limits*; second, automakers can now afford to lower the retail price of vehicles by turning batteries into a subscription service; finally, it’s much convenience for driver because battery swapping is faster than battery charging.

For instance, NIO’s entire NEV lineup is compatible with both battery charging and battery swapping. NIO has been pushing its BaaS（battery as a service）and  second-gen battery swap stations since 2020. On the other hand, Weltmeister and XPeng are also making their respective battery-swapping strategies.

4. Capacity Expansion and Overseas Strategies: The aforementioned four automakers all place a heavy emphasis on both expanding their production capacities and growing their overseas market shares. Their capacity expansion efforts include building in-house production lines, acquiring other facilities, or jointly funding automotive production with OEMs/ODMs. Regarding overseas expansion, their primary destination is the European market, which is relatively favorable to NEVs.

For instance, NIO and XPeng choose Norway as their first target market in Europe. However, while the European automotive market is conducive to the growth of NEVs in terms of both policies and cultures, competition among automakers is also correspondingly intense. In addition, most European countries prefer either domestic brands or other European brands. Therefore, Chinese automakers must prioritize gaining consumer trust via establishing a trustworthy brand image.

*China’s subsidies for NEV purchases are restricted to NEVs with a retail price of CN¥300,000 and under. However, NEVs with swappable batteries do not fall under this restriction.

（Cover image source: Unsplash）

As the pace of electrification accelerates in the global automotive market, and various governments worldwide implement subsidy policies that encourage consumer EV purchases, sales of new energy vehicles (NEV, which includes both BEV and PHEV) are continuing to rise as well, according to TrendForce’s latest investigations. NEV sales for 2021 are projected to reach 4.35 million units, a 49% increase YoY.

TrendForce indicates that electrification, smartization, and automation are the three key determinants of the ongoing transformation taking place in the automotive industry. Guided by these three determinants, not only are the strategies, business models, and competitions of automakers transforming, but the automotive supply chain is also changing and expanding. Upstream component suppliers and downstream manufacturers alike are now operating in accordance with new paradigms.

High potential for NEV growth entices emerging competitors to enter the market

Now that the competition between traditional and emerging automakers in the NEV market is gradually intensifying, traditional automakers have begun releasing BEVs that are based on purely electric platforms rather than preexisting ICE vehicles. However, for the vast majority of mainstream automakers, NEV sales account for less than 10% of their total car sales. These automakers are therefore placing a top priority on expanding the lineup and sales volume of their NEV models. Emerging automakers, on the other hand, are instead focusing on expanding their production capacities, and Tesla as well as Chinese brands (including NIO and XPeng) have made their respective capacity expansion plans.

NEV sales currently account for only 5% of total automotive sales. As such, not only does the NEV market still have high potential for growth, but this potential has also attracted new players, which are mostly consumer electronics and IoT vendors such as Xiaomi and OPPO, to enter the market. Given their lack of competencies in developing and manufacturing whole vehicles, these companies are instead acquiring existing automakers or utilizing ODM services. Therefore, automotive ODM services are likely to ramp up going forward, while automakers and ODMs will continue building factories via joint ventures, sharing their technologies, and jointly developing NEV models.