One Finite Planet

2022: Year Of The EV take over, and beginning of the end for the ‘Legacy’ Industry.

Table of Contents

By the end of 2022, Electric Vehicles (EVs) will be the choice for the majority of all new car buyers worldwide. In practice, while Asia and Europe will see EVs at over 50% market share, delivery in some key markets where EVs currently have around 5% market share to around 20% by year end, but the end of the internal combustion engine will clearly be looming. The motor vehicle industry, sales and servicing, will see upheaval with the majority of current players headed forced close or sell out.

The Numbers: What Is The Prediction?

Predicted Mindset: By End of 2022, Most Will Prefer EVs.

The cars of the year in the USA for this 2022 has been awarded to the year was the Lucid Air EV, and “Truck of the Year” was awarded to the Rivian R1T electric pickup truck. Mainstream motoring journals awarding their most prestigious awards to electric vehicles. Kia, sponsor of the Australian open tennis tournament, features their EV6 electric car as the centrepiece of their advertising, despite a four year waiting list in Australia. We have reached the time when testers now marvel at cars that can still be fast without being electric cars.

The problem is these ‘best’ cars are all expensive. If you want:

Then the best vehicle for your $ is very likely already an EV.

A limited selection even if you are in one of the above groups, and a lot of people are not in one of the above groups. Fortunately, while not always such clear best choice, EVs are also available for those looking for a medium-large size sedan or SUV. The current situation where at the start of 2022,the higher the price bracket, the more certain it is that the best vehicle would be an EV.

That still leaves a lot of people with either no EV option they are aware of, or very limited choice or availability of an EV for the vehicle they desire. This is a problem that will not be completely solved in 2022, but awareness of EVs, availability in key segments, and the number of choices will all climb sufficiently for the global market to be transformed.

But what about vehicles further down the price scale? It will require many years of strong EV sales in before EVs are common as used cars, but it is not only used cars that are left out right now. This prediction is about new cars, and there are also gaps in what is available in new cars:

  • Most markets offer a significantly reduced range of EVs, leaving some market segments without suitable EV products.
  • Lower priced market segments are have zero products available in most markets.

It is not that all EVs are more expensive, it is that low cost EVs are missing from the market.

In China, the outright best selling car is a budget EV, the Wuling Hongguang Mini EV, sells for under US$5,000. This vehicle has neither the range nor practicality form most people, but by US$10,000 or US$12,000, China does have cars that would the mainstream market in most countries.

So when will these more cost competitive lower cost cars reach Western markets? Answer: 2022.

EVs are progressively becoming more competitive at lower and lower price points. Currently “green” credentials play a role in markets where EVs are already 50% or move or new vehicle sales, but the pace of sales growth reflects the rapid improvement in the vehicle desirability, ensuring vehicles that appeal to all, not just “greenies”.

By the end of 2022, if you want a pickup, a high performance car, luxury car, SUV, or mid range car, the best answer will be an EV. The lower end of the market will probably still be gasoline/petrol vehicles, and people needing a car in a hurry may have little option, but that will be the role of conventional vehicles by the end of 2022.

Real New Car Sales Numbers.

Part 1: A 50% share of car sales in Europe.

Looking as the market share in December 2021, Norway is already at 90% electric new car sales, and Sweden at already over 50%. Germany, the UK and France are already around 20%.

The leaders in EV adoption, Norway and Sweden, are quite small car markets, with a combined market of and combined have a population of 10+5.4= 15.4 million. Germany the UK and France have a combined population of 83.7+67.9+65.3= 216.9 million, so a significantly larger number of EVs is required to be made to lift the market share in these countries.

https://cleantechnica.com/2022/01/20/26-of-new-vehicle-sales-plugin-vehicle-sales-in-germany-in-2021/

Part 2: A 50% share of car sales in China.

1 million BYD EVs celebrated

It has been difficult to find clear market share statistics by month in China, but:

China’s monthly NEV sales broke through the 20 per cent market share for the first time in November, when deliveries jumped 122.3 per cent from a year earlier to 378,000 units. December deliveries jumped 138.9 per cent to 505,000 NEVs, or 22.6 per cent of total sales for the month.

South China Moring Post.

The article quoted above also reveals, annual sales were at 14% market share, which, given market share reached 22.6% by December, shows just how fast the numbers are rising. While incentives to buy EVs are winding back in China, this is because the market has taken off. China is the worlds biggest car market, but every Western car company was required to form a joint venture partnership with a local company to manufacture and sell into the Chinese market. Part of the deal was to transfer expertise into China. This means the brands in China were familiar, and exports from China were rare as 50% of profit from, for example a BMW made in China, stays with the Chinese joint venture partner. But everything changes with electric vehicles and Chinese electric vehicles are about the change the world car market. With EVs, Chinese are now proudly buying Chinese brand cars, and proud of them.

Part 3: The New World: 20% USA, Canada, Australia, New Zealand, South Africa.

There are already pages with theories as to why countries including the USA have been slow in adopting EVs, but some miss one key point:

  • The new world markets all have a “pick up” truck as the number 1 seller.

Until Rivian launched the R1T in September 2021, no company offered any electric pick up truck. EVs excluded pick up trucks. Despite Telsa, EVs already had a reputation in the minds of many there were not “real” cars. In fact even the Hyundai CEO called them toy cars at one time. This resulted in the impression that EVs were incapable of delivering the “superpowers” a pickup truck delivers, namely:

  • being capable off road
  • towing (As stated by Australian Prime Minister Scotty Morrison)
  • carrying things for work or play

The Rivian R1T is new, but it has already demonstrated that:

  • An EV can be more capable off road than any internal combustion engine vehicle
  • The Rivian can tow 5,000kgs (11,000lbs), and although there are coming EVs that can tow even more, existing heavy duty pickups, such as the Toyota Landcruiser, F150 Raptor and Dodge Ram 1500 are rated to tow less than 4,000kgs.
  • Not only is the Rivian a Pickup truck, it also has an enclosed ‘frunk’ like a sedan, and an additional storage tunnel, and is far more fun to drive than any legacy pick up.

The Rivian demonstrates the superiority of EVs , what is required now is for the message to sink in, and to fulfil a backlog of at least 70,000 pre orders.

There are huge pre-order bookings for other electric pickups:

  • Telsa CyberTruck, announced years ago with over 1.2 million pre-orders (globally).
  • Ford F150 lighting announced in May 2021 with over 200,000 orders by year end (order books full).
  • GM Silverado, over 110,000 pre-orders in the first two weeks following announcement.

Most of these vehicles only accept orders from North American customers at this time. The US market is just over 11 million vehicles year, and as a staggering 20% of the market is pick ups (equal to sedans), for around 2.2 million units per year, it seems possible that the US market is ready to move to 10% of new pickup being eclectic. This is just 4 months after the first sample units of the Rivian R1T reached customers. As technology improves, it seems the pickup market could possibly reach 20% in just under one year from now in terms of what they want to buy, not what is being delivered. If that previously resistive market is unlocked, it means a change of attitude that will impact the entire market.

Perspective: It’s Happening, And Faster Than The Change On The Roads.

Cars Last A Long Time: Only New Cars Will Be Different.

The change to EVs is happening far faster than most of us realise. Driving around, we wont see many EVs. In fact even if all new cars being purchases were EVs, it would still take a decade for the change to be reflected on what is out there being driven around.

The reason cars in use on the roads will not change that fast is because the average car remains on the road for over 10 years. How long cars last varies from country to country, but for example in the US it is 12 years.

If the global average life of a car is 12 years, then it would take around 6 years of 100% market share of new cars being EVs, before 50% of the cars on the road would be electric.

Note also that ‘EVs’ as presented in available statistics typically include:

  • BEVs, or Battery Electric Vehicles
  • PHEVs, or Plugin Hybrid Electric Vehicles
  • FCEVs or Fuel Cell Electric Vehicles using hydrogen.

So not all ‘EVs’ are the classic fully electric, although plugin hybrid are becoming less significant in numbers and FCEVs are just a tiny fraction. So although the statistics are not all what BEV, which I consider true EVs, as EV market share rises, then trend is the BEVs completely dominate, so the statistics will come to reflect almost entirely BEVs or ‘true EVs’.

Also note my predictions on the market share, are what the market share will be on trend by December 2022, not the average for the entire year. The entire year average would be easier as we know already the starting value, but that is about getting to the end of the year and looking back. The rate in December 2022 is what the annual rate will be at that time.

While two huge markets will be 50% electric under this projection, and most others at 20%, this is still far form 100% of sales being EVs. It will take several more years before almost all new cars are electric, and then another delay before many cars get replaced. Even with the high new car sales I envisage, only by around 2030, will around half of the cars on the road could be electric cars. Even a faster climb in market share would not make things happen much faster, simply because cars can last so many years.

Not Everyone is ready to charge at home: So We Are Not All Ready.

All that is needed to be able to charge at home, is access to a wall socket each evening. Lots of web sites will say you need special home charging, and despite the sponsorship available from companies selling home chargers, only high mileage drivers in 110v counties, and car reviewers or professional drivers need special home charging. Wireless charging is coming and is desirable, but for almost everyone, a wall socket is sufficient. Many people in apartments, or who use parking on street, do not have access to even a wall socket each night, and that makes owning an electric car more expensive and far less convenient for these people.

If buyers are logical, then those with no wall socket access at home would be hesitant to go EV. Some will be logical, and others will find illogical reasons to stay with internal combustion engines. The result is that while the shift to new car sales being almost all electric could happen quickly, there could be still be a group out not yet ready to move, and keeping ICE cars on the road. Getting from around 50% electric on the road, to almost all cars on the road being electric, could take decades.

The Will be Backlash: ‘Big Oil’ and ‘Big Auto’ Will Sponsor Resistance.

I have an entire page pending on the various claims of why electric cars are bad idea, inlcuding:

  • EVs are a fire hazard.
  • EVs are worse for the environment than internal combustion vehicles.
    • Fully proven to be wrong in practice.
  • The power grid will never be able to cope.
    • If not just every new car purchased from today was electric, which would take over 10 years for all cars to be electric, but everyone purchased a new car this year, then sure the grid would be overloaded. Manufacturers would be overloaded as that would be over 10x more cars than ever before.
    • Reality is, the grid could become ready faster than cars can be swapped for electric cars.
  • There is not enough Lithium, or production capacity , to make the batteries.
    • Current mining and manufacturing is not ready to produce enough electric cars and batteries for every new car purchase to be electric, and it will take years to be ready, but reserves of raw materials is not the problem, it is that supply chains take time to ramp up.

With all of these claims, the reporting does not match reality, which of itself is very revealing.

Although none of these claims are real, I do not think the idea of the ‘stolen election’ in the US makes sense either, but a large number of people support that claim. It is possible that EV ownership could become political, and could for a time slow uptake, but it is hard see too much outrage over “oh, no, my neighbour bought an EV!”.

The Industry: A Huge Shock.

History.

Many articles quote a Mercedes as the first modern car, such as the 1901 Mercedes 35HP.

But Porsche designed the electric Egger-Lohner C.2 Phaeton in 1898, and presented Lohner-Porsche Electromobile with electric hub motors in 1900. Early electric vehicles came to be regarded as just experiments as internal combustion engine cars took over, elevating the first internal combustion cars to the status of being the first cars, but if internal combustion cars go the way of the horse and buggy are consigned a niche of nostalgia and recreation, perhaps we need to rethink our view of history of the automobile.

Legacy Automakers: The News Is Bad, and Few Will Continue.

I will add a more complete exploration of why I feel it unlikely not more then 2 ‘legacy’ existing mainstream car makers will continue without being taken over massive downscaling, but here are the key points.

The Chinese Companies Will Likely Take 25% to 50% Of the Market.

Forbes warned “Chinese Electric Cars Will Take Over The World“, and apart from perhaps the Volkswagen group, it seems like Tesla, Rivian and Lucid that have been providing resistance to a take over. Considering how Chinses manufacturing dominates other segments, even 50% could be conservative. With white goods, the Chinese were just outsource manufacturing for the wet. With Smartphones, it is started to change, and while China provides outsource manufacture for Apple, for Samsung, it is Vietnam that does the outsource manufacturing, and most phones made in China reach world markets wearing a Chinese brand such as Oppo or Xiaomi.

New Electric Car Companies Will Take Much Of What Remains.

Consider the USA where, not only are Telsa, Rivian and Lucid already valued higher than the only two remaining legacy US car makers, Ford and GM, but there are at least 10 more brands yet to emerge. Ok, most of those new brands will themselves fail or merge, but some will remain. Then there are the new imports from China, which will take a significant share of the market, just as the Japanese and Koreans did before them. Then, there is Apple launching an electric car, and they are a sizable company these days.

It is a similar picture in other countries that are home to manufacturers. In Japan, where EVs adoption has been fought by Toyota because of the job and revenue losses they have already predicted will result, and become Toyota: the anti EV company, will have not just foreign imports to fight, but also Sony. The Japanese can protect their own market, but most Japanese cars are exported.

There is already a Tesla factory in Germany. No car making country will escape new competition.

Countries that have no legacy as car making brands, even if foreign factories have been present for decades, such as Vinfast from Vietnam, Togg and potentially others from Turkey. It is like the colonial past of the car industry will be triggered by the change and rebel.

Significant Legacy Car Making Technology and Assets Must Be Written Down, Triggering Losses.

You may have noticed that both Apple and Sony are launching EVs. So is Foxconn, the Taiwanese company famous form manufacturing Apple iPhones for many years. Xiaomi, one of the leading Chinese smartphone maker, is also launching an EV. It seems that, some very clever companies believe that the manufacturing of smart phones and electric vehicles requires similar skills.

Many of the skills and developed by traditional car makers will lose all value. Many of their assets will need to be written down in value far sooner than anticipated, and this will generate losses. Existing car platforms designed to amortised over decades, are at best a compromise between ICE and electric vehicles. Engines, continually receiving design update, result in families that also are repay their initial investment over decades. Even car factories differ between electric and ICE vehicles, with the Volkswagen CEO famously pointing out that the 30 hours it takes Volkswagen to produce a vehicle, can be reduced to 10 hours for an electric vehicle. This also suggests redundancies will be needed, again creating bad PR.

Profits Per Car Will Decrease.

Consider a car. Take out the engine, the transmission, the cooling system, the crankshafts, the exhaust, the fuel system and consider how much less there is, and the lower price of what remains. While there is the new electric motors and quite expensive battery to replace those parts, even most electric vehicle companies do not make their own electric motor. The battery industry is a whole different industry, and while the current no 4 battery maker in the world, BYD, is an electric car maker, that is the only company making both batteries and cars. CATL, (the largest battery company) LG Chemical, and Panasonic (Tesla’s initial battery partner) do not make cars. Tesla does assemble batteries into battery packs, but no, it does not make batteries.

So what a carmaker builds, is less per electric vehicle than per ICE vehicle. Without a strong cartel to control prices, this means less revenue for the same number of cars.

Legacy Automakers Have Less Access to Capital.

To get capital, a new automakers approaches investors promising share valuations that will follow in the footsteps of Tesla, Rivian and Lucid etc, as sales grow from zero and the company grows from scratch.

Meanwhile a legacy automaker has to request capital to build new electric vehicle platforms to then compete with new competitors with brand new factories with the latest equipment, new skills and production techniques, and can only promise that profit will decrease less than if they do nothing. Not exactly an easy sell to investors, when you already have investors.

Mechanics And Servicing.

Often selling new cars is so competitive, that the real money is in the servicing. This means servicing revenue is important to not just indepenant mechanics, but car sales organisations as well. However, without all the heat and the parts that wear within an ICE vehicle, the maintenance is dramatically reduced. For every 10 hours of maintaining an ICE vehicle, expect not more than 2 to remain. Unlike manufacturing, which is affected immediately by what people are buying today, the service industry is impacted by what is out there on the road, so the impact will be far less

Politics: A More Powerful China, and A Europe With A Less Powerful Germany?

I will add details, but most is already in the heading.

Conclusion: It Looks Slow, But Its Happening At Lightning Speed.

At some point there will be discussion in history lesson about how humans dug up the remain of rotting plants, distilled the oil they found until it was potentially explosive, and then shipped that around the world so people could travel in vehicles powered by burning it.

The time when that story seems hard to believe is approaching, and the change to world politics, and the structure of our cities and lifestyles may be more significant that many of us realise,

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