The 3rd EV wave: Tesla and the Chinese are coming, and in a hurry!
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3rd wave EVs to become global bestselling cars: Enter the dragon, and in a hurry.
Tesla led the 1st EV wave with the Model S and changed the world and led the 2nd wave of EVs with the Model 3.
While Tesla is getting even stronger with the model Y which with the added appeal of being an SUV bridges to the 3rd wave, China is already moving to the third wave without waiting for the Tesla Model2/A.
Elon Musk has predicted the next generation Telsa will outsell all other Tesla models combined. Considering the Tesla Model Y is already a contender to take over from the Toyota Corolla as the bestselling car, an EV that could so convincingly outsell the Model Y, would surely become the world’s bestselling vehicle. This is Elon Musk prediction a 3rd wave EV can take the crown as world’s bestselling car, and I suggest a key question is whether the pattern of Tesla being late releasing products, could lead to another 3rd Wave VE getting there first.
This is an exploration of a 3rd wave of EVs, triggered largely by a quite sudden rush into exports by BYD, the world’s third highest valued carmaker and producer of more EVs right now than Tesla.
The third wave is mainstream vehicles, competitively priced against ICE vehicles, as opposed to vehicles from the first two waves, which have premium pricing compared to equivalent ICE vehicles.
Because there has been so little mixture between EVs in China and the rest of the world, it can come as quite a challenge to comprehend the size and diversity of the EV market in China.
As of June 2022, China had the largest stock of highway legal plug-in passenger cars with 10 million units, 46% of the global fleet in use.[12] China also dominates the plug-in light commercial vehicle and electric bus deployment, with its stock reaching over 500,000 buses in 2019, 98% of the global stock, and 247,500 electric light commercial vehicles, 65% of the global fleet.[1]
A short timeframe, but data is typical: Note ‘NEVs’ include PHEVs.
Tesla is, like in the rest of the world, a huge factor in EVs in China, but it is BYD that dominates. s many as 7 of the top 10 selling EVs in China are BYD, and 2 are often from Tesla. Other than Tesla, no EVs selling well in markets outside China, sell well inside China, and that even includes cars made in China like Polestar and MG.
In making EVs, China is a ‘dragon’, and BYD currently is the head of that dragon.
In 2022, BYD has gone from exporting almost zero vehicles, to establishing deals with dealer networks around the the globe. The pace has been beyond normal growth, with something like 14 major countries including Japan, Germany and the UK announced between launching one of the first markets, Australia, and the first cars from the deal in Australia arriving in the hands of consumers. It is not just BYD, but if trends inside China are an indicator, then BYD will is one of the brands to watch.
So “the Chinese” are coming, and in a hurry. The suggestion is that this will bring new vehicles in significant volumes to Western markets, forcing the established automotive industry to respond.
To be explored are:
The world EV market, where is it heading?
Why the urgent pace the 3rd wave from China?
The 3rd wave: What companies, brands and vehicles are coming?
The 1st and 2nd waves: what is the impact?
The World EV market: Can the Atto 3 and others really compete?
Outside of China.
The first wave EVs, could be described as quirky, expensive for the features offered, and are not mainstream vehicles, that appeal over ICE vehicles mostly only because they are ‘green’ or are ‘the future’. These first wave EV started as ‘city cars’, are now low cost EVs that are still expensive for the feature set, and will likely become extinct as 3rd wave cost effective EVs replace them.
The second wave of EVs are vehicles that although even more expensive than most first wave EVs, do provide value for their price and can compare well with similarly priced vehicles. The third wave was started by the Tesla Model 3 and Model Y. Still expensive vehicles, but this wave is all about EVs that car enthusiasts can compare with similar priced ICE vehicles, and feel the EV wins. These EVs can win against ICE vehicles without getting ‘extra points’ for being ‘a green alternative’.
Currently in 2022, around 12% of new car buyers choose an EV, and each year, new vehicles replace around 5% of the vehicles on the road globally. The factors that would logically discourage new vehicle buyers from buying EVs are:
purchase price: EVs in lower price segments costs more than ICEVs.
range: EVs have a lower range than ICEVs, limiting ‘road trip’ capability.
rapid charge times: while people overestimate how often they will need a rapid charge, it still remains that the fastest charging times are a restriction.
There are no products in some market segments.
Supply is limited in segments where there are products.
All factors work together. Paying more for a vehicle is a greater deterrent when there are still restrictions. with restrictions. Longer range vehicles with faster charging times tend to cost the most. There are no vehicles in some segments often because the range limitations are most problematic.
What is different in China?
Despite the incomes being lower than in the west, the uptake of EVs has been far higher than in the west. The success of EVs in China has been aided by subsidies, and the goal of the subsidies has been in part to build a world class automotive industry that can compete on the world stage.
The Wuling Mini EV which has been a huge success in China, would be more expensive then US$5,000 without subsidies, and while it will soon be launched in Indonesia it is not really a ‘global’ car.
However unlike in the west where Chinese brands are not in the market, all western brands are in the market in China with VW (though local joint ventures) is the market leader in ICEVs, but EVs from western brands are uncompetitive in the Chinese market.
The main restriction for EVs that has really changed in China is the #1: purchase price. There are EVs at lower price points in China, and more segments have EVs more competitively priced EVs compared to ICEVs. Still even in China, with there more price competitive EVs, most new car buyers are not choosing EVs. From this recent typical data, 110,407 NEVs (PHEVs and BEVs) sold compared to 281,205 combustion engine vehicles, which 28% market share for plug in vehicles, and while over twice the global average, China is still not Norway are even Sweden in EV sales percentages.
The Potential Impact of China.
For the global automotive industry, if introducing EVs from China could bring the global market share up to the level of China, or even if adding ‘another Tesla’ in the form of BYD to the global sales mix could add an equivalent number so sales as an extra Tesla, the result would significantly disruption. A rapid acceleration in the adoption of EVs would force a rethink in terms of the release upcoming new ICEV releases.
This 3rd wave is not just that addition of another EV goliath the size of Tesla, it is about the arrival of new technologies and cost effectiveness and the entire global automotive industry is pushed to either keep up, or fade into the background.
For consumers, it really only directly affects people considering buying a new vehicles in the next few years. Only around 5% of people buy a new car each year. An acceleration int he ramp up of EVs, but only ‘earth shattering’ within the automotive industry.
BYD: Another Tesla, but this time from China.
Consider that currently, most of the World’s EVs are made in China, and almost half of all EVs in the world are in China.
July 2022, but Every 3rd month, Tesla is also big.
BYD dominates the EV market in China.
Worldwide, BYD makes more plug in vehicles than anyone, including Tesla. However, the market outside China has so far remained insulated from what has happened inside China. As of 2022, it has been two independent, similar sized markets existing indepenant. With the exception of Tesla, EVs from outside China do not succeed inside China, and EVs from China have not reached other markets in any numbers.
Now consider that state of EVs outside China.
China however, already has cars that overcome the limitations of these first two waves. The first wave was limited by value, the second by price point. The market in China already has EVs competitive with internal combustion vehicles across all price points.
In China, EVs from those like the Wuling Mini EV, selling for US$5,000 bring cars that compete on price and features to all price points. A limitation has been, that many vehicles in China would not necessarily be acceptable in western markets, but things have changed. In just the last few years, quality of the best Chinese vehicles has moved from a much lower level to now being ranked at the level of the Germans.
This is the third wave: The two previously separate markets mixing. The result will be competitively priced EVs as mainstream vehicles. The market will no longer be either EVs that have are overpriced, or high end and enthusiast high priced vehicles.
Market statistics can be confusing, they don’t even agree on what is an electric car.
There is an entire page devoted to vehicle types here, but all of these vehicle types can be called ‘electric’:
Pure battery electric vehicles like the Tesla Model 3 where all power comes from charging.
Plugin hybrids like the Mitsubishi Outlander PHEV that get some power from charging.
Hybrids, like the original Toyota Prius, where all power ultimately is from petrol/gasoline.
Some statistics regard only category 1 as ‘electric’, others also include category 2, and still others go as far as including traditional hybrids like the original Toyota Prius as ‘electric vehicles’.
Statistics, and the term ‘EV’, in Australia usually include only category 1. Statistics from China and their term “New Energy Vehicle” (NEV) normally also include category 2, and discussion in Japan sometimes will also include category 3, partly because Toyota is very influential.
Stats from China, and globally, can be ambiguous on the inclusion or not of plugin hybrid electric vehicles (PHEVs), but generally “plugin vehicles” includes category 2, and new energy vehicles also includes the insignificant number of hydrogen vehicles.
The main point is, comparing data can become difficult or misleading depending on what is counted by what statistics.
Why the urgent pace the 3rd wave from China?
BYD: The Chinese Tesla, but potentially bigger?
Geely (Volvo, Polestar) and SAIC (MG) are from China and are already significant EV suppliers in the west, but will also accelerate their offerings to the world as the they are joined by the giant of Chinese EVs makers: BYD.
BYD is the third highest valued car maker in the world, valued behind only Tesla and Toyota, and above all other automobile makers including VW and Mercedes. Plus, BYD has the largest EV production capacity of any company worldwide. While BYD has sold electric Buses and supplied batteries to the world, until 2022, BYD focused almost entirely on the Chinese market for consumer automobiles.
However, throughout 2022, things have completely changed. Announcing new distribution agreements for at least 15 new markets between June and August, BYD will launch between 3 and 5 models in each market, with competitors in not just each segment Tesla has entered, but also higher volume models that bring price parity EVs to new markets and price points.
Just a few years ago, Chinese vehicles were not only low cost, but also low quality. Now at least some are low quality no more:
I have a background in mechanical engineering and so I am somewhat obsessed with build quality of cars. The first thing I generally try out is the way the doors open and close. The thunk of the door says a lot about the general build quality and feel of the car. European cars are known for their premium-sounding thunk so closing the BYD Atto 3 door took me by surprise. It sounded very much like a VW Golf or a Tiguan. It’s on-par and in some cases better than many new Japanese and Korean cars I’ve driven in recent years. ….
As a quick comparison, my red Fremont-built Tesla Model 3 has a few spots under panels where Tesla has used “thinner” paint which are visible from the outside when you open the boot or the frunk. I didn’t noticed this in the BYD at all.
The third wave will heavily feature Chinese made cars that match western expectations for quality of build, features and finish, at price points and with variety that bring EVs with second wave equivalence, to every market niche, and will push car makers outside China to raise their level.
The pace of the third wave.
BYD is suddenly moving into every major market other than the USA, where there is the barrier of a China specific import duty. I am not the only one who has noticed this push:
So why are BYD, who exported so few cars in the past, suddenly on a huge export push, despite still having back orders for over 700,000 vehicles in China?
Reasons for the dragon to wake in fright.
What BYD, as well as other Chinese car makers, must consider is the risk of what could happen:
Search for “China economic collapse” and you will find even more factors, and that there are a lot of people who believe there are many risks for the Chinese economy.
Importantly, none of these factors mean the Chinese economy will collapse, or is even likely to collapse. Even for events that are unlikely we take out insurance because the consequences, if the event did happen, are significant. A person taking out insurance that covers the risk of their house burning down, does not need to expect the house will burn down. BYD does not need to expect the Chinese car market to contract, they only need to see there is some even small risk, and that the potential consequences justify covering the risk.
While it is possible, maybe even probable, that the Chinese economy will continue to enable a market for EVs larger than the rest of the world combined, if you were leading the 3rd most valued car company in the world, would you really in the face of all that is happening, completely ignore the risk?
I am reminded of the elevators in the “Hitchhikers Guide to the Galaxy”, which were able to predict the future. When all suddenly started going down as fast as possible, it could be deduced they knew something really bad was about to happen. BYD management should be extremely well placed to predict the future in China. The hurried approach to exports, at this time when the order backlog to be fulfilled in China has grown to over 700,000? Perhaps BYD see that backlog as insignificant, but it could also be that BYD management, see risk in the future of the Chinese economy.
The warning signs are significant. The point is not that the Chinese economy is necessarily going to crash, and I leave those odds to the numerous people making such forecasts, the pint is that there is risk. That risk is very likely to see a focus shift of the Chinese EC industry to at least a balance between exports and the market in China, which in turn is going to mean a lot of EVs previously only available in China hitting international markets. Who know, perhaps the surge in EV export will act against a potential collapse.
Of course, it is not only the Chinese market with many people projecting a potential collapse. It is very likely that if there are problems, they will not be confined to China. What would be required in the event of a downturn is to offset lack of potential growth in China, with international growth, and even if there is a global downturn, selling globally even into a depressed market, would still be a lift over current sales numbers.
It will not be BYD alone, but BYD will likely have the most impact.
It may seem that there is a lot of focus on BYD. The reason for this is because in the immediate future, between now and the Tesla Model 2/A, it will be what BYD does that will have the most significant impact.
But in the China EV market, BYD is the leader and the next 2 largest EV makers, Tesla, and SAIC-GM-Wuling, are either already exporting, or less their vehicles are less likely to be exported. There will be new exports from China other than BYD, but over the next 12 months, it is BYD that is position with the vehicles and the manufacturing capability to have the most significant impact.
The BYD vehicles being pushed internationally (and Tesla equivalent Tesla) are:
Han (model S), Tang (model X), not offered in all markets.
Seal (model 3 competitor) and Sea Lion (model Y competitor)
Atto 3 (model 2 rival?)
Dolphin – smaller hatch back
Seagull – entry model
Note: Tesla has a practice of delivering almost all vehicles for a quarter in the last month of that quarter, distorting statistics, but is consistently in the top 3 in EV sales in China.
Strategy change mid-stream: Dealer networks.
Tracking how arrangements to import BYD vehicles into Australia, may give insight into the changes in BYD thinking over time. BYD moved from a Tesla style ‘direct online sales’ approach in a few smaller test markets, to a model of partnering with the largest established dealer networks in the world’s largest markets in just 12 months, before even waiting to for the first deliveries in the test markets.
In 2021, an Australian importer who had worked with BYD previously set up the business ‘EVDirect’ and announced a partnership with BYD, and a plan bring ‘Right hand drive’ vehicles to Australia. As 2021 moved into 2022, everything about that arrangement changed, although it did still result in the first BYD vehicle of the third wave’ curiously arriving in many ‘left traffic’ or RHD markets before reaching Europe.
Manufacturing.
There are reports of BYD and others looking to set up factories in Europe and the USA, but this will take time. So far the only confirmed BYD factories outside China are in to be built in Thailand.
Risks of products from China?
There is a lot of uncertainty in the world right now, and some of it has a link to China.
The risk of a falling economy in China, has already been covered, but that is a risk for any economy.
There is even some risk of military conflict, which could result in .
BYD, that largest company most people have ever heard of, has risen from around 12th in the
Then there is the situation with Taiwan, the expansion of China in the Pacific, questions about the belt and road and the role of China in places like Pakistan. The unlimited partnership with Russia announced just before Russia’s invasion of Ukraine isn’t exactly calming either. People who in theory should about such things, feel the risk of war risen significantly.
Retired Air Chief Marshal Sir Angus Houston and former Labor defence minister Stephen Smith will head the review and undertake the most comprehensive reassessment of the military in 35 years in the face of potential “state-on-state conflict”.
“It’s absolutely imperative that we review the current strategic circumstances, which I rate the worst I have ever seen in my career and lifetime,” Sir Angus told reporters in Canberra on Wednesday.
Against this backdrop of a risk of relations between China and other markets, products that have network connections to software updates from China adds an element of risk.u
The 3rd Wave Vehicles.
The criteria.
Guidelines?
The third wave is about a significant market shift. To be significant, a vehicle has to be available in volume, and address a vehicle category segment where consumers already buy significant numbers of vehicles. EV versions of the vehicles in any nations “top 10 best-selling vehicles” are candidates to be 3rd wave EV vehicles, and if they manage significant sales within their vehicle category, then they can be considered successful 3rd wave EV products.
There are many products that bring new features, and sometimes price reductions, to market segments. But few are from manufacturers that can produce high volumes, and fewer introduce EVs on mass to high volume vehicle segments.
Companies In the third wave?
Third wave: BYD, SAIC .
Still Under consideration: Ford, Geely, GM, Great Wall Motors, Tesla.
Considered but not in so far: Nio, VW, XPeng.
To be in, you need to make at least one EVs that opens a new segment of for price equivalent EVs, , at or below the price point of the Tesla Model 3, or otherwise bring EVs into new significant niches.
BYD is in by virtue of the Atto 3, Dolphin and Seagull, SAIC because of the MG4.
While these companies make other EVs, only these so far qualify.
The long rumoured more affordable Tesla does not even have an official name yet, and certainly not a release schedule. I will add more information here if and when it emerges.
Cybertruck.
There are over 1 million orders for the Tesla Cybertruck, and even in the USA pickup truck market which is around 2 million trucks per year, that is a significant order book. While the Cybertruck may seem too expensive to qualify as a 3rd wave vehicle, it could bring a real revolution to a very significant market segment.
BYD: Atto 3, Dolphin
Imagine the impact of a company producing more EVs than even Tesla, who even Tesla use as battery supplier, on the global EV market. This will drive the third wave. Just as Tesla traditional brands to respond, them being joined by BYD will push everyone to lift their response again.
Atto 3.
The BYD Atto 3 has the potential to a have profound impact. It has already had a huge impact in its first western market New Zealand, as 4th bestselling vehicle nationally in its first month on sale.
The Atto 3 is at the same price point as the already available MG ZS EV, but has far wider appeal, as can be seen already from first month sales figures from New Zealand where in the first month of the Atto 3, the one BYD model outsold the entire MG brand. Note that MG sells mostly ICE vehicles.
The MG ZS EV is a more expensive EV version of a much lower priced ICE vehicle.
The Atto 3 is a better equipped, better built vehicle, which made it the 4th best selling car in New Zealand in its first month on sale, while no MG model made the list.
An ICE alternatives to the BYD Atto 3 would be the Mazda CX5.
BYD Dolphin.
Review of budget ‘Atto 2’ model.
The Dolphin (or EA1 / Atto 2) is an EV that can could compete with the Toyota Corolla. Expect prices to be in line with similarly equipped Toyota Corollas.
Originally, BYD was going to start with the Dolphin model first in Australia rather than the Atto 3, but currently the Dolphin is exported to the Philippines and Thailand, but will not arrive to countries on the ‘big BYD export push’ until early 2023.
Other BYD Vehicles.
The Seagull and Seal could both also play a role in the third wave, or they could simply bring more competition to the Tesla models 3 and Y. The key factor will be price point, and if either of these vehicles is substantially lower cost than there Tesla counterparts,
The BYD Seagull would bring EVs to an even lower price point, but whether the Seagull is on price parity in the west with equivalent ICE vehicles is not yet clear.
The BYD Seal has only recently launched in China with first deliveries in August 2022, and will not arrive in other markets until late 2022 or early 2023. While priced below the Tesla Model 3 in China , it may not be priced sufficiently below the model 3 in other markets to be considered having brought EVs to a new segment. The technology is the most impressive in any BYD vehicle so far, BYD has high sales hopes as the Seal follows on the market segment proven by the Tesla model 3. But was the model 3 so successful because it is the type of vehicle people want, or because it is the only EV at the price point that offers value when compared to ICE vehicles?
The BYD Sea Lion promises even more then the Seal, with even rumours of yet another step forward in architecture beyond the CTB (cell to body) e-platform 3.0 debuting in the Seal. However, too little is certain at this time, despite China launch envisaged this year, but deliveries could be later.
While the BYD Han and Tang are already exported to several countries, and will become widely distributed in Europe, these vehicles are too expensive to open new market segments. The will sell, but they will not change the market.
SAIC: MG4.
MG4.
Still to be Released in China on Sept 9, the MG4 already had rave reviews in the UK prior to release in China, and will probably arrive in the UK before the Atto 3 does.
MG is a brand that had closed down in 2005, with the assets purchased by state owned Chinese car maker SAIC in 2006. All MG cars since 2016 have been produced by SAIC in China since that date.
Although not a direct competitor to the Atto 3, with a more sedan like body than the SUV format of the Atto 3, the MG4 provides a similar level of breakthrough in terms of setting new value benchmarks for EVs. The table below will be updated from better price comparisons with the BYD Atto 3 once the two vehicles both available in the same markets beyond China. Note prices in China are subsidised, so direct conversion is misleading.
battery
kw
0-100
range(CLTC)
price (China inc Sub)
MG4
51 (LFP)
125
425
129,800
MG4 Luxury
51 (LFP)
125
425
139,800
MG4 LR
64 (NMC)
150
7.7
520
163,800
MG4 ‘Triumph’
64 (NMC)
150+150
3.8
460
186,800
Atto 3 LR
60 (LFP)
150
7.3
510
154,274 – 164,000
SAIC is a state owned Chinese car maker, and is either smaller than BYD in car making capacity, or larger if joint venture facilities are included for the GM-SAIC-Wuling Mini EV, or SAIC Volkswagen are included. It is yet to be seen how much global impact the MG4 can have, as SAIC only does not produce as many vehicles in total as BYD does plug in vehicles, and most SAIC vehicles produced are still ICE vehicles. The MG4 is a breakthrough vehicle for SAIC, and may yet reach new levels production, especially if repurposing of existing factories can occur quickly.
SAIC already exports a number of MG models, including the MG ZS (EV CNY. 153,753) and MG 5 (based on the Roewe i5) vehicles as both electric and ICE vehicles. Like most vehicles offered as both electric and ICE, prior to the MG4, MG electric vehicles fit the ‘first wave’ criteria, as despite well priced, are far more expensive than gasoline/petrol equivalents.
1st and 2nd waves: What are the gaps for the 3rd wave?
The first wave: It played a role, but the contribution is now dated.
The characteristics: subjectively no price ‘parity’.
If either the following two tests apply to an EV, then it can be considered a ‘first wave’ vehicle:
Are there are clearly lower priced, otherwise equivalent ICE vehicles?
Does this vehicle only appeal to a small customer niche?
Such tests are subjective. Different people have different criteria, otherwise no one would have ever purchased these vehicles, but for most buyers, the vehicle just being electric justified a price premium. First wave vehicles are those that only appeal to buyers who will pay price premium to because the car has zero emissions and is electric.
After the EV1, the next EVs were the Leaf, i-MiEV and Zoe, and the much more expensive Tesla roadster and later Model S. All in their own way appealed only to a niche.
Buyers of these vehicles are either placing a very high value on the car being ‘green’ or otherwise different or benefiting from subsidies to boost the value for money. When there is a comparison between equivalent ICE vehicles and a first wave car, the first wave EV is significantly more expensive.
EVs do have features such as low running costs, and the impact varies depending driving distance, the question of price equivalence is quite complex. It has even been argued that a Tesla Model 3 has a lower ownership cost than a Toyota Camry.
The problem is, even if this is valid, people shopping for a Toyota Camry do not all have the budget for the initial purchase of a Tesla Model 3.
My first wave list: Vehicles that for many people appear too expensive.
I have vehicles on this list that many will argue are price competitive with ICE vehicles. I do agree that there are people for whom some of these EVs are price competitive, but my point is that for too many other people, these vehicles are not price competitive.
My test is, if grouped with ICE vehicles a motoring journalists normally regard as equivalent, would the vehicle have a similar price?
Example Vehicles:
The originals: Nissan Leaf, Mitsubishi IMiEV, Renault Zoe.
Hyundai Kona EV, Kia Niro EV
VW ID.4
Almost all PHEVs
As a guide, Volkswagen advertises an entry-level ID.4 in the UK for around the same price as the most affordable Volkswagen Tiguan eHybrid PHEV (circa £37,000 or $64,340). While direct conversions may not be the best indicator of local pricing, it gives you an idea of how these vehicles are positioned internationally.
Carexpert.com.au: Note the Tiguan eHybrid is the most expensive Tiguan, and thus also ‘first wave’
The second wave: The Tesla Model 3 changed the world, but not for everyone.
Why is a vehicle ‘second wave’?
The Tesla Model 3 changed the world and began the 2nd wave by introducing a vehicle that could directly compete with ICE vehicles. The Model 3 was the first EV not only deserved consideration for ‘electric vehicle of the year’, ‘green car of the year‘ or ‘EV of the year‘ but vehicle of the year. Vehicles like the Model 3 that people could compare similarly priced vehicles, and choose the EV, not just because they specifically wanted an EV.
The limitation is the Model 3 is a sedan in the premium sports sedan vehicle segment. Premium sedans are a niche segment for any country in the world where prior to the model 3, no “premium sedan” was on the list of the top 10 best-selling vehicles.
The premium in this case is for features and performance without need for being electric alone to justify the premium price. But only buyers in the market for a premium sedan vehicle can see the Tesla Model 3 as being price equivalent. The second wave does not provide EV choices for people who want a vehicle and are not ready to pay the price of a premium vehicle.
Other equivalent-ICE-vehicle-price-matching vehicles have followed, but until the BYD Atto 3 reached international markets, all were premium vehicles, priced even higher than the Tesla Model 3.
While a first wave car could win, second wave cars are contenders for ‘car of the year’. But realistically, they are still for enthusiasts.
The ‘entry price’ for a second wave vehicle, is the price of
The Tesla model 3 is the benchmark 2nd wave vehicle and is the now the world’s bestselling premium sedan, with the Tesla Model Y the world’s best-selling premium midsize SUV. While the premium price points limit who has an EV option, these EVs are both the most popular vehicles in their segments and more popular than ICE vehicles. Many segments don’t even have second wave EVs available, but EVs are starting to take over.
There are now quite a number of ‘second wave cars’, including for example the Mercedes EQS, or the BMW i4 M50, both of which are in direct comparisons with their similarly priced Mercedes S Class or BMW M3 cousins, but all are even higher priced than the segment defining Model 3.
Second wave limitations: price point, and market segments.
While there are ardent fans of many of these vehicles, outside the fan base, many people feel they need something not offered by any of these vehicles.
Most ‘second wave’ vehicles achieve their price parity in market segments where the high torque of the electric motor gives them an advantage, and those segments tend to be vehicle types that are already expensive.
Tesla Model 3 and somewhat the Model Y.
The Tesla Model 3 changed the EV landscape. The model 3 created the second wave of EVs, by being the first EV that could be compared with similar priced vehicles, and depending on judges’ criteria, could win the comparison with any concessions for being a ‘green car’. The model Y and even to a lesser extent the model 3 are on the cusp between second and third wave. The model Y only needs to small drop in price to move into a mainstream segment, while the Model 3 needs a larger drop to be able to compete with more mainstream sedans.
Given their dramatic powertrain differences, you might think it’s difficult to compare the two. But the BMW 3 Series and Tesla Model 3 share more in common than you might think – size, performance, and safety features most notably. But in the end, while the BMW has four decades of history behind it, Tesla and the superb Model 3 are designed more with the modern buyer in mind. And that gives it the edge.
I believe there vehicles, despite coming from brands traditionally associated with more ‘value’ focused products, are examples of the second wave, as they are priced similarly to the Tesla Model 3. While comparison reviews in some countries quote the Tesla as less expensive, and others the Ioniq 5 as less expensive, it seems the difference comes down to equipment levels and differing government incentives and rebates. Over all these vehicles provide more options in a market that is short of products.
Why are these second wave vehicles?
I classify vehicles that can considered to match comparable ICE vehicles, as ‘2nd wave’, unless they bring EVs to a new, more significant market than that which was unlocked by the Tesla Model 3.
From BYD, I see the Han and Tang, as well as the upcoming Seal and Sea Lion as 2nd wave vehicles.
Nio and XPeng vehicles also target on the premium segments, and are similar in pricing, or higher priced, than the model 3 or Model Y. It can be argued that Nio and Xpeng raise the bar for EVs in their segments, but as I see it, they are not part of bringing EVs to the masses, or to areas not already provided for by the second wave.
Updates:
*2022 September 21: restructure and updated links
2022 September 7 : First version ‘exploratory paper’.
