It might sound like investing 101, but what Tesla ends up looking like as a company is key to its value
The 12 EV predictions for 2024 of Christmas
The EV inFocus team makes some serious, and some not-so-serious, calls for the year ahead
2023 was another massive year in EVs for two reasons.
Firstly, continued strong adoption across all Western markets has — despite some naysaying by definitely-not-incentivised elements in the anti-climate lobby — kept electrification firmly on track.
Secondly, EV inFocus was launched. Not first to the party perhaps, but fully committed to serving the best EV news and analysis for strategic industry professionals.
So after 300+ EV news stories in 2023, we asked our writers and friends for their top predictions for e-mobility in 2024. Don't agree? Let us know in the comments.
1/ A jump in US EV adoption (in some places)
Reading the mainstream media (please do so only through a very sceptical lens), you'd be inclined to think that EV purchasing has stalled in the US, growing a 'mere' 50pc year-on-year over the first three quarters. Of course, in reality, that's massive growth from an ever-increasing base, but don't let that stand in the way of clickbait and fossil fuel agendas.
Nonetheless, we at EV inFocus believe that this momentum will continue next year, but only in places where certain conditions come together. Why and what are those? In short, three Ps: price, power and politics.
The availability of IRA incentives up front as a purchase price discount is going to be big (albeit potentially undercut by some models now falling fall of stricter rules on Chinese involvement in their battery supply chain). And we are finally seeing the first Nevi charging station arriving to offer greater options for powering EVs — states and firms that really want to push electrification are going to step up their game in 2024 and finally start eating in the US' charging problems.
But that won't be everywhere. Unfortunately, front runner for the Republican presidential nomination (for as long as he can keep himself out of jail) Donald Trump has already made it clear that being anti-EV is part of his populist agenda to try to get back into the White House.
So we expect, in a bitter electoral year, that the US Right's appetite to consider EVs will dwindle further; and for Republican politicians, where they can, to oppose infrastructure and legislative progress to further the e-mobility revolution. Make no mistake, buying an ICE vehicle (a premium one, at least) is already a middle finger to the environment. In culture war America, expect hardening hearts on both sides: good for EV adoption in liberal areas, really not in more conservative parts.
2/ Tesla to feel more Cybertruck pain (but it'll be OK)
Everyone is aware of the Tesla Cybertruck for some pretty obvious reasons:
- It's either damn ugly or the shape of the future... depending on who you ask
- It's an e-pickup, perhaps the strangest battleground of the US auto market
- Elon Musk has talked about it —A LOT — for 3+ years, but perhaps now less bullishly than before it arrived
Well 2024 is the moment of truth. Can Tesla deliver? How many? At what margin? It won't be the firm's best selling vehicle, but as its biggest launch in some time, it will be a bellwether for Tesla innovation and the question-du-jour... does Tesla still 'have it', or is it tumbling into an abyss as its leader gets distracted by his myriad of other business interests and a possible Messiah complex?
We predict the Cybertruck will be a millstone for Tesla, as does Deutsche Bank, tbf, in 2024 for three reasons:
a) It's likely to be pretty expensive for what it offers — in a crowded segment with a fairly low potential customer pool (not enough pickup buyers are interested in e-pickups; not enough EV buyers are interested in pickups full stop)
b) The pre-order book sounded great, but with just a $150 refundable deposit, there could be as many purchase-option speculators as nailed-down buyers
c) It feels like production forecasts that have already slipped could slide further. Demand may be moot if Tesla cannot get enough out of the factory gates.
Not that any of that takes away from what a great company Tesla is. Regardless of your opinion on Musk's latest faux pas, the Twitter advertising crisis, or the trendiest disruptive EV start-ups, Tesla produces damn good cars, at a very decent price. The Model Y and 3 will continue to sell, and underneath it all, Tesla is now a long-term sustainably profitable company; in contrast to certain OEMs posting solid-seeming EBIT numbers atop an eroding ICE cliff.
3/ Someone will smash it on vehicle software
We don't mean AD above L2+ quite yet, given the regulatory hurdles and Cruise travails, but with the AI stampede driving insane spending for the past 18 months now, surely it's time for the car-driver interface to make a step change. Back in the early '10s Tesla smashed it with the Model S mega screen, but really that's just a big screen with some tidy software behind it.
We are not thinking about jazzy parking graphics here, more a fundamental improvement in the ability to be productive in your car. As AI starts eating into 'traditional' tech behaviour like search and productivity applications, the potential to use these on-the-go will improve. A car that lets its driver stay busy while behind the wheel, complemented by driver assistance at the limits of what's currently legal. That would mean a lot, and be worth a lot.
Should this actually happen, there are a bunch of big questions beyond the scope of this article, like:
- will this develop out of existing OEM/software provider relationships, or could a new entrant disrupt?
- if the latter, would automakers actually license it? on what model? how quickly?
- how would L2+-applicable solutions synch with full AD in the future?
But, even without this headline breakthrough, EV inFocus has a more concrete prediction. Western OEMs with strong Chinese partnerships will find ways to bring in-car solutions that have been developed for the Chinese market — tweaked to the needs and tastes of European and US drivers and passengers — to the West. And those that succeed best in that will be big winners.
4/ A major OEM will hit the skids
No, we don't mean a legacy manufacturer will go bankrupt. Not yet anyway. So maybe this is a bit click-baity! 2023 has been noisy, but none of the big automakers have done 'that' badly.
This is because the pure BEV market (where they are most at risk) is still at an early-ish stage on actual sales, and hasn't eaten into a couple of key market segments quite yet. We mean small passenger vehicles (B/C segment) in Europe — although the options are rapidly growing — and light trucks in the US where GM and Ford are kings.
That may change in 2024, particularly in the European market. Not to mention that the EV sales base is higher now, so a continuation of the growth rate will take a bigger chunk out of the wider market.
Basically, our call is that many OEMs that sell big in Europe still have pretty poorly-aligned portfolios in terms of reliance on certain heavy-selling ICE models that are going to get increasingly squeezed by changes in the market — not just BEV adoption but increasing HEV popularity too. And once those cracks in their business model start emerging more clearly, share prices will tumble, and questions will be asked...
5/ There will be a landmark US-EU deal on e-mobility
With due apologies to 'Glorious Britannia'/told-you-sos to 'Broken Brexit Britain' (depending on your political point of view), there are two power blocs in the western hemisphere, and they really should get their act together on political and economic matters of joint benefit.
In the economic sphere, the lack of co-operation and joined-up thinking between the IRA and the various EU policy packages (guys and girls — please come up with a catchy name for this, ideally not an acronym shared with notorious terrorists!) is a bit ridiculous.
Now the timing may be hard with the US election likely to suspend decision-making (and perhaps common decency too) stateside. But the need to secure limited sources of readily available battery minerals — and even more importantly develop in the most efficient way localised processing of them — in the face of a much further advanced Chinese strategic agenda surely means that a coming together must happen. Either in late 2024, or in 2025 — in which case you can make up your own mind if this is actually a prediction we should be making in 12 months' time!
6/ There will be a breakthrough EV model that is not a Tesla
Take a look at the BEV top sellers in any country you like. And it's impossible not to conclude that i) Tesla's doing a great job and ii) there's no killer model from a traditional OEM.
Whether that's because they are all making bang-average BEVs; because they lack the fanboys that have made Tesla an iconic brand for the 2020s; or because they have a damned tricky job balancing complex model line-ups, group profitability, legacy commitments like pensions and unionised workforces etc for dividend-demanding shareholders is a fair question.
But at some point, someone is going to get it right. The e-mobility transition desperately needs a Prius-style flag bearer from an established OEM. An EV for everyone, that isn't made by Tesla (who will not be delivering its contender until 2026 at the earliest).
It may not top the charts in 2024 itself, but EV inFocus predicts that a sub-30,000, in dollars or euros, model will be launched in 2024 that goes down in the pantheon as a breakthrough in the technology and affordability of EVs.
7/ China won't hit its targets in Europe...
We don't exactly know what constitutes success on Chinese EV exports to Europe, either for specific companies or for 'China plc' as whole. But the astonishing recent Chinese investment in the EV future is hard to explain at best, and foolish at worst, if it doesn't have eyes beyond its increasingly saturated domestic market.
But there are a couple of catches to any ambitions to conquer Europe. On the consumer side, brands matter (it's no coincidence that MG in the UK is doing OK, albeit not entirely on BEVs). As does the ability for would-be buyers to experience the car, either through a dealership or agency model. And these Chinese brands and their customer touchpoints are not big in Europe.
Back in the '70s the Japanese car invasion happened over time, and — let's be honest — the domestic competition was mediocre and mired in an industrial relations nightmare. Now these Chinese cars are good, but they're not that good; and conservative (in car purchase terms anyway) European consumers will largely stick with brands they know, and that now firmly includes Tesla of course.
In addition, China might well be spared the results of the European Commission's anti-trust investigation until 2025, given the glacial pace at which EU institutions move. But expect to see more national drawbridges, such as the one in France, potentially go up as OEMs that sell a lot of cars in Europe really up their lobbying game against Chinese imports in 2024.
8/...but will reshape Asia-Pacific markets
An interesting recent headline is that Tesla's share of the Australian BEV market has dipped below 50pc. This is because China is finding markets for its BEV exports much closer to home (shipping from its automaking heartlands to Oz isn't exactly a pleasure cruise, but it's a lot shorter than taking them to Europe).
Chinese BEV exports are already making a mark on southeast Asia — even Toyota has spotted it — and southern Asia's appetite for cheap e-mobility solutions also makes it fertile ground. Again, politics is a potential hurdle: many of the largest potential national markets like India, Australia, Vietnam, the Philippines etc have, at best, prickly relationships with Beijing. But access to their automotive markets for surplus Chinese EV production could be a good bargaining chip.
The only other major hurdle is infrastructure. Can these countries produce enough electricity and install enough charging capacity to accelerate a demand that Chinese exports can meet? We think many Asia-Pacific countries could surprise on the upside on this in 2024.
9/ An unusual EV champion country will emerge
So we think the geography of EV adoption will be relatively predictable in 2024. China will continue to lead. Northern Europe will be next, with the continent's south and east much more laggard. In the US, liberal states will push forward; conservatives will drag their feet even more.
South and Southeast Asia will accelerate, driven by a combination of domestic innovation and cheap Chinese imports. East Asia will stick closer to the hybrids its leading OEMs love so much.
The Middle East will continue to favour the fossil fuels on which most of its prosperity rests. And Africa and Latin America will be carefully curated by legacy OEMs to provide the life support for ICE vehicles once the West's love affair with gasoline ends.
But we think at least one country in these two latter regions will break from this overly neat pattern and become an early e-mobility champion. Probably somewhere with access to cheap renewable electricity, a socially-minded populace and visionary political leadership. Where might tick those boxes?
10/ Hybrids will prove annoyingly sticky
A confession here: EV inFocus doesn't really like hybrids in 2024. Nor does Elon Musk. Honestly, nor do many smart and objective assessors of vehicle technology. The reason is obvious to us. Why would you put two different propulsion systems into a vehicle? Twice (not literally) the cost, twice the complexity, twice the weight, twice the space.
Have you sat in the front of a Prius? It's cramped. And where are the start-ups that want to be the 'Tesla' of HEVs? That they don't exist tells you all you need to know about the long-term stickability of hybrids.
But car buyers don't choose purely on the logic of vehicle technology. To many of them, two power units is safer, avoids range anxiety, and retains the comfort blanket of an ICE to fall back on. Toyota realises this, it remains a pretty smart OEM in this respect (and we hope that the HEV bluster is to some extent a smokescreen while it works out how to unleash a bevy of BEV winners on an unsuspecting market in the second half of the decade!).
But the firm is correct that hybrids have a lot of room to run in the market in the short term, which definitely includes 2024... even if they shouldn't.
So folks, don't buy a hybrid yourself. But don't underestimate the risk aversion surrounding big-ticket household purchases, don't underestimate the value to OEMs in pushing a segment where they have better comparative technology and stronger profit margins. Hybrids will grow in 2024 as well as BEVs, even if we find that slightly infuriating.
11/ There will be consolidation in charging
As it relates to the US, this one came from an exclusive EV inFocus source (you know who you are — thanks!), specifically a potential upcoming collaboration or even M&A between a leading charging tech company and a consortium with currently vague ambitions in the space.
But it makes perfect sense more widely on both sides of the Atlantic. Public charging is ridiculously fragmented, with CPO start-ups, traditional fuel station operators, utilities and OEMs (not just Tesla) all getting involved. Not to mention different charging techs, different business models, different assumptions on consumer behaviour.
This adds up to a lot of recent growth, and a lot of complexity for not just consumers and suppliers, but also strategy consultants and investment bankers.
Couple this with a shall we say 'future-oriented' discounted cashflow (DCF) models for many of these companies and the tightest credit and venture funding markets we've had in quite some time, and this is only going one way.
Expect a wave of consolidation in the charging space as the reality of uncertain ramp-ups hit businesses that were darlings just a couple of years ago.
12/ We'll get a new word for the EV lexicon
As EV grow and more people start owning them, the name incubator that is social media must surely come up with at least one neologism that catches on. So sooner or later the EV dictionary will be augmented, but with what?
Gas/petrol station flows nicely and brings together two ubiquitous early twentieth century words, which kind of makes sense given their genesis. But charging station just sounds really lame. More like a toll booth than a marvel of modern electrical engineering. Supercharger is a decent effort, but that's a Tesla thing and maybe a bit non-specific too. So what can we call these?
Range anxiety also sounds rubbish, if you ask us. Like my mother-in-law clutching frantically her handbag in the passenger seat as the dash says 10 miles left. Everyone knows driving an EV is about optimising your charge cycles. It's like prime George Clooney coasting through the airport in Up in the Air. Mastering charging is part of an EV owner's identity . Managing range should be a positive thing and we need a good word for it.
Finally, and this one goes beyond EVs to automakers more generally. We're constantly referring to firms as 'legacy OEMs', 'incumbent OEMs', 'EV pure plays', 'EV start-ups' etc... But what happens when a start-up crosses over into established brand or an established OEM reaches the end of its ICE road?
We're, for example, thinking about you, Rivian or Polestar, it's hard to call you start-ups given multi-year histories, stock market listings, and large-ish balance sheets, but you're also miles behind the big boys on actual volumes. So what do you call an established EV start-up that's no longer a start-up? Maybe you tell us?
So if you've read this far, we're going to assume you enjoyed the article and are ready to sign up for EV inFocus' weekly newsletter where you can find out first how all our predictions fare over the coming 12 months and beyond!