The electric vehicle (EV) market continues to show promise, despite a slight deceleration in growth. According to data from Rho Motion, as cited by Reuters, global sales of fully electric and plug-in hybrid vehicles (PHEVs) rose by 31% in 2023. This growth rate, albeit slower than the 60% surge in 2022, still aligns with Rho Motion’s projected 30% growth rate. Looking ahead, Rho Motion anticipates a growth range of 25% to 30% in global EV sales for 2024.
In December 2023, a record was set for monthly EV sales, with 1.5 million units sold worldwide. The total number of EVs sold in 2023 was 13.6 million, with battery electric vehicles (BEVs) accounting for 9.5 million of these sales, and PHEVs making up the remainder.
Regional performance varied, with BEV sales surging by 50% in the U.S. and Canada. Europe and China saw growth rates of 27% and 15% respectively. However, concerns have been raised about potential sales stagnation in Europe due to Germany’s sudden discontinuation of EV subsidies last year.
“Goldman Sachs also discussed the declining prices of electric vehicle batteries, a trend that is driving the growth of the EV market.” The investment bank’s analysts noted that battery prices have significantly decreased over the past decade, largely due to advancements in technology, economies of scale, and increased competition among battery manufacturers.
The falling cost of EV batteries is a key factor in making EVs more affordable and competitive with traditional gasoline-powered cars. As battery prices continue to fall, the cost of EVs is expected to decrease further, leading to increased adoption and market penetration. This, in turn, will benefit EV stocks as demand for electric cars rises amid falling prices.
Li Auto (NASDAQ:LI), a Chinese EV manufacturer specializing in hybrid electric vehicles, is one such stock. Despite a weaker-than-expected forecast for the current quarter, optimism remains high regarding Chinese EV demand, a bright spot amidst global declines.
“Li Auto stock surged more than 30% on two consecutive days in late February in the aftermath of the strong fourth-quarter earnings.” The company’s robust performance, with EPS of 4.23 yuan and revenue reaching 41.73 billion yuan, highlighted a three-fold increase in quarterly deliveries, reaching 131,805 units.
Another Chinese EV producer, XPeng (NYSE:XPEV), is also gaining attention. Deutsche Bank (NYSE:DB) analyst Edison Yu recently delved into XPeng’s current predicament within a fiercely competitive market landscape. Despite immediate challenges, Yu holds optimism for future prospects as the company prepares to introduce new products.
“Deutsche Bank has a Buy rating on XPeng shares, believing that this EV stock has retreated way too much and has the potential for substantial returns.”
Lastly, BYD Co Ltd (OTCMKTS:BYDDF), backed by Warren Buffett, recently overtook Tesla (NASDAQ:TSLA) to become the world’s top-selling electric carmaker. “In the final quarter of 2023, BYD outsold Tesla in battery-only cars for the first time, selling 526,000 compared to Tesla’s 484,000.”
Most of BYD’s vehicles are priced lower than Tesla’s, with the latter generating about 20% of its sales from the Chinese market. BYD, along with other Chinese electric carmakers like Nio (NYSE:NIO), aims to expand internationally, particularly in Europe. This is another reason why BYD remains one of the top EV stocks to own for long-term investors.
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