The electric vehicle industry is facing a dilemma due to the uncertain market outlook in 2023. On the one hand, governments are pushing for an energy transition and are making plans to ban the sale of new conventional cars over the next decade, encouraging more consumers to switch to electric vehicles.
On the other hand, the current uncertain geopolitical outlook and the energy crisis have led much of the world into recession, with high inflation and concerns regarding energy security meaning that many consumers are reluctant to spend.
Although this should be the peak time for electric vehicle expansion, continued economic and political uncertainty has made the outlook for electric vehicles for 2023 less clear.
Despite the previous positive expectations, the shares of electric vehicle companies declined in 2022 due to several challenges facing manufacturing and consumer absorption.
With interest rates soaring and consumers fearing a possible recession – with inflation soaring around the world – the electric vehicle market began to falter early last year.
In addition, automakers have continued to see supply chain disruptions, in the wake of the COVID-19 pandemic, as well as higher lithium prices, and greater competition from new manufacturers entering this market.
Shares of electric vehicle companies face another difficult year due to the continuing Ukrainian crisis and general economic uncertainty in most countries of the world.
Tesla was one of the companies that suffered from many external challenges, which witnessed a decline in its shares in 2022. By December, Tesla shares had fallen by more than 60 percent since the beginning of the year, equivalent to regarding $ 626 billion of their value. vulgarity. This was largely due to increased competition from established automakers launching new models of their own, with more manufacturers expected to enter this market in 2023.
To entice consumers to new electric cars from well-known brands, many automakers have drastically lowered the prices of their cars below Tesla’s.
The narrative of Tesla being a pioneer in this field seems to be dwindling.
This led Tesla to cut its prices last month due to fears that its sales would stagnate.
Until recently, Tesla looked like it was going to take the lead, as the leader in the electric car market that everyone was shifting away from traditional cars.
However, things are becoming less clear, as the world is facing major political and economic turmoil, which may impede the significant expansion of electric vehicles in 2023.
The prospect of a recession in the electric car industry has been compared to the internet recession in the early 2000s.
In China, one of Tesla’s biggest markets, its sales fell 44 per cent in December from November levels.
Tesla is now quickly looking for new ways to fight a potential slump and get back on top.
Last month, Tesla cut its prices once more in the US and European markets to encourage more demand for it.
In the US, this might make the company eligible for EV tax credits and help boost sales to consumers reluctant to switch to EVs.
In Germany, Tesla’s popular Model 3 is now priced regarding the same as Volkswagen’s ID.3 electric car.
But newer electric vehicle companies may not be able to adapt to market demands as quickly as major players in the face of a recession.
Companies such as Lordstown Motors, Faraday Future and Canoo are struggling to preserve cash flow during the global economic crisis and are looking to investors for more funding as well as to cut costs.
Although sales of electric cars will inevitably rise, especially in Europe, where some European countries will ban the sale of conventional cars in the next decade, many electric car makers will have to weather the current economic and geopolitical storm and escape to safety to secure their position in this market in the future.
Despite the uncertainty, electric vehicle production is expected to continue to rise throughout 2023, mainly due to the deployment of existing electric vehicle strategies by several major automakers.
All companies, including: Mercedes, Ford, and General Motors, have plans to start producing new electric models in 2023 and 2024, as they compete with the likes of Tesla and other major companies.
About 74 different models of electric vehicles are expected to be available in the North American market by 2025, and starting production now is the only way to ensure that these companies consolidate their position in the electric vehicle market with increased demand for them.
As automakers start to speed up production of their electric cars and launch new models, 2023 might be the year of cheap electric cars, as automakers encourage buying by stimulating growing demand.
This will be supported by subsidies and tax breaks for electric vehicles in some countries and clean energy policies in others, such as the US Inflation Act.
After a year of ups and downs, more volatility is expected in the share prices of electric vehicle companies throughout 2023.
But with long-term strategies being rolled out by several major automakers, EV production is expected to accelerate this year.
Moreover, increased competition is likely to push electric car companies to lower their prices in an effort to boost consumer demand for their vehicles, even in a global recession.
However, auto companies will still face supply chain disruptions, chip shortages, and high lithium prices.
* Quoted from Al-Eqtisadiah newspaper.
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