Electric Vehicles Are Now Mainstream, But No Silver Bullet

Electric vehicles are finally going mainstream. After decades of waiting for the EV revolution, more and more people worldwide are finally driving them. Driven by strong growth in China and Europe, EV sales crossed a critical milestone in 2022 with 10 percent of the global vehicle market share. As more governments, large and small, look to promote electric vehicle usage to combat climate change, the sector should continue to take market share in the short term. The US state of California has even mandated that all new cars sold must be electric or hybrid by 2035. The explosion in electric vehicle usage comes down to simple economics, but that could also end up being the sector’s undoing.

One of the world’s most recognizable electric vehicle companies, Tesla, started 2023 with deep price cuts to its most popular cars. The company cut prices of its flagship offerings by up to a fifth across the US and Europe in response to cooling market demand spurred by the global economic slowdown and more competition from other brands, especially in China. The price cuts were also in response to falling supply chain costs from the COVID-19 pandemic era. China, one of the world’s fastest growing markets for EVs accounts for nearly two-thirds of global sales. As a result there has been a boom in domestic Chinese EV manufacturing that could soon result in…