Tesla is Pwning Markets Traditionally Dominated by ICEs as Manufacturers Desperately Call for More Battery Production

Last year, the world produced more than 1.2 million electrical vehicles. This was nearly 60 percent growth from the previous year when just shy of 800,000 EVs hit the world stage. During 2018, the world is expected to achieve anywhere between 1.6 and 2 million electrical vehicle sales. And by 2020, the number is likely to exceed 3 million. In other words, clean transportation that transitions away from climate change producing fossil fuel burning is a major emerging and rapidly growing global market.

(Tesla is surging ahead in the race to produce clean energy vehicles. But Volkswagen has promised to spend 48 billion on batteries in a bid to catch up. Image source: Inside EVs.)

Today, Tesla presently dominates global clean transport sales. Producing just three models — the S, the X, and the 3 — this new automaker is seriously disrupting a number of traditional segments. During most weeks, Tesla now produces more than 4,000 all electrical vehicles in total. This makes it the largest global EV producer by a long shot at a present pace of more than 200,000 vehicles per year. In the key U.S. market, Tesla appears to have sold between 5,000 and 8,500 vehicles during April alone. And the mass-produced Model 3 is presently making up more than half those sales at between 3,875 and 4,777 according to estimates by InsideEVs and CleanTechnica.

For Tesla, it’s just another milestone on the road to mass vehicle electrification. By summer, the clean energy company expects to be producing around 7,000 electrical vehicles per week in total — with fully 5,000 of that number coming from the Model 3 alone.

What this means is that Tesla is both racing ahead of other automakers in the EV field and that it will also start to dominate markets traditionally ruled by carbon-belching ICE makers. As one example of this trend, the Model 3 is presently the #21 best-selling car in the U.S. — out of all cars sold. By summer, it is likely to be #6. In its segment — small to medium sized premium cars — it is presently crushing the likes of Acura, Infiniti, and Jaguar to take the #5 spot. But with 5,000 per week production on the way, in just a few months it will assuredly take the crown from Mercedes and BMW.

(According to CleanTechnica analysis, Tesla appears likely to dominate the small to mid-size luxury vehicle segment in the U.S. come May to June. Image source: CleanTechnica.)

This from a type of vehicle — electric — that was once thought to be humble and non-competitive. One can practically hear the crack of the world-spanning shot running through the global auto industry at this time. An industry that has been mostly caught flat-footed by a trend that us clean energy advocates have long been predicting.

The reaction by traditional industry has been predictably varied and chaotic. Ford appears to be in full retreat from segments that are now increasingly dominated by high-quality EVs — recently announcing that it will no longer build sedans, but will instead focus on trucks and SUVs. On the other side of the spectrum, a Volkswagen still reeling from the PR disaster that was dieselgate appears to have seen the electric light. That OEM has now pledged to spend 48 billion in battery orders in an effort to beat or at least confront Tesla in the market that it created.

Batteries are the key enabler to mass EV production. Hyundai had a hard lesson in this over past days as the all-electric Ioniq — celebrated for its efficient design — ran into a supply wall. The reason? Hyundai had only planned for 1,200 battery packs per month. But demand for the clean energy vehicle quickly outstripped supply. Hyundai subsequently stretched Ioniq production to 1,800 per month. But, at that point, the automaker was dead in the water on further expansions due to a 2 year lead time for battery contracts. In other words — if you don’t have battery production or suppliers, then you’re out of luck if you want to produce EVs in higher volumes.

(Global lithium battery supply and demand keep running ahead of expectations. By 2021, racing global battery producers are likely to supply 344 GWh of battery production or more. Image source: Bloomberg New Energy Finance.)

Battery manufacturers are thus scrambling to meet a rapidly rising demand. In 2017, global battery production capacity stood at about 100 gigawatt-hours (GWh). And global expansion plans appear to be aiming for around 300 to 350 GWh by 2021. But even this estimate could be low. For Volkwagen’s own recent 48 billion dollar call for EV batteries is likely to generate even more supply chain expansions even as other automakers call for more production.

Returning to Tesla, we would be remiss if we didn’t highlight one of its many key advantages — it owns its battery supply chain. Tesla’s Gigafactory in Reno, through its partner Panasonic, is expected to be able to produce 35 GWh of batteries all by itself over the next year or two. This is enough to support annual Tesla EV production in the range of 400,000 to 500,000. Gigafactory battery capacity is expected to expand to 150 GWh by the early to mid 2020s — which would support two million or more EVs each year.

(Without the Tesla Gigafactory in Reno, U.S. battery production would be dead in the water due to myopic and harmful policies produced by the republican-dominated federal government and various similar state legislatures. Europe, China and Tesla have realized that large scale battery production is necessary for a clean energy future and a related strong response to climate change.)

By contrast, Volkswagen is presently targeting 3 million EVs per year by 2025. In 2018, it is well behind Tesla — unlikely to see sales across all EV models exceeding 100,000 while Tesla is likely to at least double¬†that number. So VW will have to race to catch up. A 48 billion dollar battery buy will be key to achieving this goal. It’s a very aggressive move that will enable the manufacturer to produce millions of EVs in the future. But, at the present time, it is seriously lagging. A situation that doesn’t have much chance of changing until the early 2020s even as Tesla gains both credibility and market share.

At least Volkswagen appears to have seen the proverbial writing on the wall. Transition is, after all, the best option in the face of competition from far more healthy and desirable EVs. For the other laggards in the traditional auto industry — time’s a-wasting.


U.S. Electrical Vehicle Sales Rocket Higher — Breaking New Records in March

A proliferation of attractive electrical vehicle models produced by automakers combined with a surging Tesla to generate a significant new U.S. sales record in March.

The surge is indicative of a break-out ‘moment’ for EVs that will likely result in serious growth in this clean energy segment throughout 2018. The potential now exists that total U.S. EV sales will exceed 300,000 this year. As the global, regional and local impacts of continued high carbon emissions from fossil fuel industry worsens, this surge in clean energy technology couldn’t come on fast enough. However, as is true with all carbon emission reduction efforts, the pace needs to be quickened if we are to provide a navigable pathway through the rising crisis that is human-caused global warming.

44 Percent Growth YoY

In total, March saw 26,373 electrical vehicles sold in the U.S. This is about a 44 percent growth rate over March of 2017 at 18,542 EVs hitting the streets during that time. It was also a new all-time monthly record for the U.S.

(Due to better overall efficiency and zero tailpipe emissions, pure electrical vehicles presently cut annual carbon emissions by more than half. Plug-in hybrids also produce substantial emissions reductions. But the kicker is that when combined with an all renewable grid, pure EV production to roadways carbon emissions fall by 90 percent to up to 100 percent if materials and logistics are decoupled from carbon sources as well. Grids in the U.S. are becoming cleaner. As a result, EV emissions are making further progress over their dirty gas and diesel counterparts. Image source: Union of Concerned Scientists.)

Tesla Model 3, beginning a break out production surge, led the pack by hitting 3,820 sales. Tesla Model S trailed somewhat at 3,375. While Toyota Prius Prime’s plug in hybrid rounded out the top 3 at 2,922.

In the past, sales rates in excess of around 500 for individual models in any given month was seen as significant. And from the Chrysler Pacifica plug in hybrid (480) on upward to the Chevy Volt (1,782) and Tesla Model X (2,825), fully ten attractive models (outside of the top 3) fall within this range at present. These include both the Chevy Bolt (1,774) and the Nissan Leaf (1,500). Bolt, a long range all-electric vehicle rated at over 200 miles produced significant sales in the 2,000s to low 3,000s per month late last year. But as the Model 3 production ramp has increased, Bolt sales have lagged. A 151 mile range version of the Nissan Leaf (1,500) is one of the top selling EVs globally. However, the new Leaf’s production ramp in the U.S. has been a bit slower. That said, it’s expected that the Nissan sales effort for the Leaf in the U.S. will be substantial going forward.

Sales Surge Due to Multiple Factors

Meanwhile, the long tale of models selling between 100 and 400 is extending — with fully 16 models accounted for in that range.

(The U.S. saw a major surge in electrical vehicle sales during March. The start of a trend that will likely continue through the end of 2018. Image source: Inside EVs.)

The primary drivers of the major sales surge, therefore, are multiple. First, Tesla’s own production effort creates a lot of momentum for the surge — so far adding a net gain of around 3,000 vehicles all by itself. A second surge comes in the form of the advent of more attractive long range EV models like the Bolt and the Leaf — both of which are drawing intense interest from buyers. A proliferation of attractive plug in electric hybrid vehicles like the Toyota Prius Prime, The Chrysler Pacifica, The Honda Clarity (1070), and the Chevy Volt is leading a third wave in the surge. A final push comes simply due to model proliferation and increased general sales efforts.

Due to these combined trends, and due to the fact that additional attractive long range EV models are likely to become available during 2018, the 300,000 EV per year mark appears to be well within reach for the U.S. during 2018. Hitting so high would represent more than 50 percent growth over 2017. However, if major EV manufacturers like Tesla manage to step up their production game further, even the 300,000 mark could be substantially overcome.

Exciting if uncertain times.


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