Is the global EV bubble bursting? As global demand starts to slow, share prices ... trends now
Elon Musk's announcement that Tesla will lay off ten percent of its workforce shocked many but it may be inline with figures that suggest the global demand for electronic vehicles is slumping across the world.
In the first quarter of 2024, the two biggest manufacturers of electronic vehicles, Tesla and its Chinese rival BYD reported dramatic sales drops compared against the same time last year.
BYD cut prices on its vehicles across China accompanied with a catchy slogan: 'Electricity is cheaper than oil,' in order to help stem the tide.
Since last year, Tesla has also been slashing prices, as much as $20,000 on some models. The price cuts caused used electric vehicle values to drop and clipped Tesla's profit margins.
According to a Financial Times report on the slump, legacy car industry leaders have maintained for years that the average consumer isn't ready for electronic cars.
Of the major electric vehicle manufacturers, only BMW saw a jump in sales in the first quarter compared against the same time last year, but the German auto giant's share price still fell
CEO Elon Musk, pictured in Los Angeles on Saturday, sent a company-wide email over the weekend announcing the layoffs, tech publication Electrek reported on Monday. Musk said the 'difficult decision' to reduce staff will 'enable us to be lean, innovative and hungry for the next growth phase cycle'
Tesla will lay off 'more than 10 per cent' of its global workforce as demands for its electric vehicles starts to falter in a highly competitive market. Pictured is a file photo of a Tesla EV at a supercharger station in California last year
Rivian R1T Pickup truck is an all electric vehicle shown at the New York International Auto Show 2019
In October, General Motors abandoned plans to have 400,000 hybrid vehicles ready for sale by mid 2024 even though EV sales were up on quarter-on-quarter throughout last year. Ford also announced a slow down in production.
Tesla's sales were down eight percent in the first quarter of 2024 compared against 2023 and 20 percent lower than what was delivered in Q4 in 2023. In addition, its market share in the US was down to 42 percent during Q3 in 2023.
The company anticipated to sell more despite founder and CEO Elon Musk already saying that growth would be 'notably slower' this year. The company plans to reveal an autonomous robotaxi at an event in August.
BYD meanwhile saw its sales fall a massive 42 percent compared against the fourth quarter to 300,000, allowing Tesla to usurp the crown of biggest electric vehicle maker in the world, for a time anyway.
In China, one in three new cars sold are electric, in the rest of the world it's one in five.
At the height of the Covid-19 pandemic, Tesla was valued on the stock exchange at around $1 trillion. It's now worth about half that.
'While we were anticipating a bad quarter, this was an unmitigated disaster that is hard to explain away,' analyst Dan Ives told the FT in the wake of Musk's announcement this week.
Another analyst, Tom Narayan, told the website that the company's most popular cars, the Y and 3, are 'saturated products.'
BYD electric cars waiting to be loaded on a ship are stacked at the international container terminal of Taicang Port at Suzhou Port, in China's eastern Jiangsu Province.
Potential market saturation is not deterring GM, who despite slowing down production, still plans to build one million electric vehicles per year by 2025. Ford is targeting 600,000 per year from 2024.
GM was one of the automakers impacted by the 2023 United Auto Workers strike which cost the company a total of $9 million in the second half of last year.
European car giant Volkswagen saw a decline of 3.3 percent in its electric department compared against 2023's first quarter. The 136,400 sales accounted for 6.5 of the company's total sales.
Volkswagen says that it is expected to sell at least 160,000 in the second quarter. In 2023, the German company sold 771,000 electric vehicles, up 35 percent from 2022.
Unlike Tesla, which sells the majority of its cars in the US and BYD which does likewise in China, Volkswagen is dependent on the western European market where sales in general were down for electric vehicles in the first quarter.
Between January and March, Volkswagen sold nearly 75,000 electric cars in Europe and just 13,000 in the US.
In October, Volkswagen joined a chorus warning that demand for electric vehicles
The market not developing as expected, with the German group's own order intake for EVs down to 150,000 in Europe from 300,000 last year.
Of the major electric vehicle manufacturers, only BMW saw a jump in sales in the first quarter, but the German auto giant's share price still fell.
Sales of electric vehicles were at 82,700 during the first three months of the year.
Tesla shares were down 2 per cent in premarket trading on Monday
