The stalled EV market

Lei Jun first set his Chinese smartphone firm Xiaomi up as an "Apple copycat", said the Financial Times – and just over a decade later, he has stolen a crucial march on the US giant.  

Apple recently scrapped its "decade-long, multibillion-dollar project" to build an electric vehicle (EV); but "Lei Jobs" (as he is known to fans) has pulled off the feat in just three years.

Carmakers report drop in EV sales

 Xiaomi stock jumped in response to strong pre-order demand for its SU7 car, but the firm is one of few in the industry celebrating. The EV market appears to be stalling across the board, with most carmakers reporting "either a drop in EV sales or slowing growth". 

The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

Perhaps the most striking piece of evidence is that imported vehicles, mostly from China, are piling up and turning European ports into "car parks". Another is the cratering stock price of Tesla, the market leader.

"Tesla hit another big pothole" last week, when it reported it had delivered fewer than 390,000 cars in Q1, said The Economist. "That was 8.5% down from a year ago – and considerably worse than already cautious Wall Street analysts were expecting." The company has lost more than a third of its market value this year, and is now worth less than $550 billion  – a far cry from its $1.2 trillion valuation in 2021. Its boss, Elon Musk, has been demoted in the wealth rankings to "only the world’s third-richest man"

Industry in 'crisis mode'

 Still, if Tesla is in trouble, its wannabe rivals are faring even worse. And nowhere more so than in the US, where "the industry appears to be moving into something of a crisis mode", said David Blackmon in The Daily Telegraph. 

While "pure play" EV firms such as Fisker are "teetering on the financial brink", traditional carmakers are delaying new investments – doubtless influenced by pictures of "a big EV graveyard outside Detroit", where Ford has parked hundreds of unsold EV pick-ups. The Biden administration may have spent billions on subsidies, but "EVs have crashed into the hard reality that Americans just don’t want them".

In Britain, where demand has also "fallen sharply", carmakers face the additional burden of the "electric car mandate" – a measure stipulating that 22% of their sales this year must be EVs, said The Times. Lobby group the Society of Motor Manufacturers and Traders has called for more state support. "Manufacturers are providing compelling offers, but they can't single-handedly fund the transition indefinitely."

 The likeliest to survive this car crash are Chinese makers such as BYD, Nio and XPeng, said The Economist, because their models are "more innovative" and "a relative bargain" compared with Western rivals. Tesla, and "any other survivors of the current EV shakeout", won’t have much time to "catch a breath".