Hey Lykkers! Let's dive into a conversation about a major shift that's happening in the car world right now. We all know the brands that have been at the top of the auto industry for decades: Toyota, Porsche, Mercedes-Benz, and BMW.
But in the last few years, we've seen a dramatic rise in new players, especially electric car companies like Tesla, BYD, and VinFast. The automotive industry is changing at a fast pace, and it's shaking up the rankings in ways we didn't expect.
In the past decade, electric cars have gone from niche products to mainstream options. Tesla, which was almost unknown 20 years ago, is now one of the biggest players on the global stage, and other new electric car companies like BYD and VinFast are quickly making their mark. It's clear that electric vehicles (EVs) aren't just popular—they're profitable, as Tesla has shown.
The rise of electric cars has forced traditional car companies to rethink their strategies. Can they keep up with the pace of change? It's unclear which established brands will thrive in this new world of EVs and which might fall behind. It's possible that, in just a few years, we could see a total shift in the auto industry, with new players at the top and old giants struggling to catch up.
Governments around the world are stepping up their efforts to combat climate change with stricter emission regulations. As a result, EV sales are surging. In 2022, electric and plug-in hybrid vehicles made up nearly 8% of car sales in the U.S. and 31% and 23% in Germany and the UK, respectively. Norway, which has been particularly aggressive in promoting EVs, aims to stop the sale of gas-powered cars by 2025. In fact, 88% of the cars sold in Norway in 2022 were electric!
Interestingly, in Norway, the best-selling EV wasn't Volkswagen, BMW, or Volvo—it was Tesla's Model Y. This trend is also evident in Australia, where Tesla holds more than 58% of the EV market share, while Hyundai, its closest competitor, only has 7%.
Even though EV sales are booming, some traditional brands are lagging behind. Take Toyota, for example. Despite being a leader in the Australian market and being one of the largest car manufacturers globally, Toyota still hasn't released its first electric car. They've pushed back the release of their electric vehicle, originally planned for late 2022, to early 2024.
Meanwhile, brands like Tesla, BYD, and Polestar are charging ahead, entering international markets like Australia. Polestar, a Swedish-Chinese joint venture, is an all-electric brand that's making waves globally. This shift in the market is creating new opportunities for the Chinese auto industry, with brands like BYD, Polestar, and MG already making strides in Australia and many other markets.
UBS recently predicted that by 2030, Chinese car manufacturers will hold a 33% share of the global market, while traditional carmakers' share will drop from 81% to 48%. Brands like BYD are pushing the envelope with advanced battery tech and vertical integration to produce affordable, high-quality electric vehicles.
For example, BYD's Dolphin, which will be one of the most affordable EVs in Australia, is priced at just $24,513. Compare that to Kia's cheapest electric vehicle, which costs $41,973. While these two models aren't direct competitors, the price gap highlights a key difference in the approach of new players versus established brands.
Damien Meredith, CEO of Kia Australia, believes that Tesla's strong position in the market is due to the brand becoming synonymous with electric vehicles. As he puts it, Tesla has become as iconic in the EV world as Hoover is to vacuum cleaners. But he also believes traditional carmakers will rise to the challenge and adapt to this new landscape.
Despite the growing competition, Meredith is confident that traditional brands, like Ford and Toyota, will continue to evolve and remain competitive. He believes in the next 5 to 10 years, another car manufacturer might overtake Tesla's lead, but it's still unclear how that will play out.
Ford is an excellent example of how traditional brands are making strategic moves to keep up. To compete with the new wave of electric carmakers, Ford has reorganized its business into three independent units: Ford Model E, Ford Blue, and Ford Pro. Ford Model E focuses on developing electric vehicles, while Ford Blue sticks to traditional gas-powered cars, and Ford Pro concentrates on commercial vehicles.
While the three units operate separately, they are all part of the same company, and Ford is betting big on EV development. The company has committed $50 billion to electric vehicle R&D and production from 2022 to 2026. CEO Jim Farley has made it clear that Ford won't simply stand by and let new brands take over the industry. They're determined to remain competitive, using iconic models like the Mustang and F-150 to create new electric vehicles that can challenge Tesla and others.
Traditional carmakers might be willing to shift gears and play by new rules, but is it too late for them to keep their dominant positions? In the next decade, brands like Toyota, Ford, and Kia will still be around, but they'll have to go head-to-head with electric car manufacturers like Tesla, BYD, and Polestar. The next few years will determine whether these giants can evolve fast enough to stay relevant in the electric revolution. What do you think, Lykkers? Will traditional car brands manage to keep up with the electric surge, or is the future all about new players?