Players in the global electric vehicle sector have to boost their investments in the world's most valuable markets in order to keep pace in the highly competitive industry, a report has said.
Premium brands such as Tesla should diversify product lines and offer cheaper alternatives to retain market share.
The most valuable markets include China, Europe and North America, regions where the industry worth about half-a-trillion dollars enjoys proactive support from governments and wide acceptance from consumers, the International Data Corporation said.
"In these markets, the competition will become more intense and products will become more segmented," Adela Guo, a consulting and research director at the IDC, wrote in the report.
Developing countries including India, Indonesia, the Philippines and Thailand, are also showing potential, the IDC said.
Strong investments would also enable EV makers to position themselves better in these markets, especially if their pitch is as being energy or technology companies, it said.
These are a bigger deal than being an automotive organisation and maximise the capabilities between different business portfolios, the report said.
EV manufacturers should also consider how to maximise their technology strategy by, for example, quickly bringing a high-quality but low-cost service to the market, the IDC said.
They can also benefit from a "high-tenacity" supply chain, supported by a more digital and intelligent management system to increase resilience and agility, and focus more on their employees, addressing skills shortages and building attractive systems to attract top talent and maintain their satisfaction.
"Overall, high-end brands are beginning to penetrate the low-end, and low-end brands are trying to break through to the high-end. Segmented markets and high-quality EV products have become competitive hotspots," Ms Guo said.
The global EV market continues to grow amid a government and societal shift towards energy conservation, with car makers' consumer and commercial divisions tapping into the technology's potential.
Several governments have offered incentives including subsidies and tax credits to convince people to buy EVs, but potential customers had to meet certain criteria to avail those benefits.
The global EV market is projected to grow more than threefold to about $1.6 trillion by 2030, from an estimated $500 billion in 2023, at a compound annual rate of nearly 18 per cent throughout the decade, latest data from Fortune Business Insights shows.
Unit sales, meanwhile, are expected to surge about 60 per cent and surpass 17 million in 2028, from an estimated 10.25 million in 2023, data from Statista shows. Of the projected 17 million vehicles, more than three quarters, or 10.64 million would be battery EVs, with the rest to be hybrids, it added.
The IDC has a more optimistic call, forecasting 14 million units in 2023, with a penetration rate of 18 per cent in the overall automobile market.
Electrification, connectivity, autonomous driving and ride sharing are the four key trends that are expected to drive the world's transition to EVs, it said.
That would result in the rapid growth of the global EV market. From a supply perspective, governments take EV as a country strategy, providing subsidies to promote players developing their business, it said.
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"The automotive industry is facing the most important transition period in its history – the replacement of the traditional internal combustion engine with more sustainable, energy-saving and environmentally-friendly technologies. The traditional engine has dominated powertrains for more than a century," Ms Guo said.
"More investments in R&D and innovation have resulted in breakthroughs in core technologies ... as such, traditional OEMs [original equipment manufacturers], technology giants and emerging players are trying to seize the opportunities from the electric vehicle market.
In 2022, the EV industry's top three players globally were BYD, Tesla and Saic-GM-Wuling, with Tesla, the world's biggest EV manufacturer, falling behind China's BYD, data from the IDC shows.
This was the result of the emergence of more EVs from other companies, dragging Texas-based Tesla's market share down to 13 per cent in 2022 from 17 per cent in 2019, with expectations of stabilising to 10 per cent in the future, it said.
Tesla, which is led by the world's wealthiest person, Elon Musk, should diversify its product line and offer cheaper alternatives if it wants to regain the top spot, the IDC said.
"The industry transition will be fast, both opportunities and challenges exist. Only by establishing advantage in advance, can the players get ahead of their competitors and win the final victory," Ms Guo said.
