BEV global market penetration forecast around 15% this year

The EV transformation will continue in 2024 with battery electric vehicle (BEV) penetration to reach nearly 15% and hit a third of global sales by 2030 and nearly half five years later.

So says a new Moody’s report Auto Manufacturing – Global: Vehicle volume growth to be muted after last year’s strong finish.

The report picks global light vehicle sales to climb less than 2% this year, following 10.8% growth in 2023.

Global sales reached 89.8 million units in 2023, almost matching pre-COVID pandemic numbers, it says.

“EV transformation will continue, but recently lost some momentum,” the report says, adding global BEV sales rose by a third to 11 million last year.

It suggests light vehicle sales growth will slow in Western Europe (2.6% this year), China, and the US.

“For the next 12-18 months, we expect a continuation of the recovery of the global light vehicle sales, though at a much slower pace.

“Sales of heavy commercial vehicles, excluding China, will contract in 2024, after climbing 8.8% last year to 2.1 million units sales, topping pre-pandemic levels.

“Sales in China, the largest auto market, should also edge up slightly this year after last year’s export-driven record.”

 The report notes some internal combustion engine (ICE) vehicles, including hybrids, helped fuel stronger than expected global sales growth in H2 2023.

“We project BEV penetration to increase towards 15% in 2024, slightly below the 16% we previously expected.

“The penetration rate will be driven by improved product availability and attractive discounts,” says the report which doesn’t expect the recent slowdown in BEV adoption will hurt global vehicle sales volumes, with consumers instead opting for ICE and hybrid versions.

“BEV sales growth is stalling as government incentive schemes in some regions are ended and become more difficult to attain on other.

Limited availability of affordable BEVs outside China and insufficient charging infrastructure are further drags to the EV adoption.

“As a result of weaker than expected demand, many BEV makers cut prices or are providing their own sales incentives, which is a drag on the companies’ profit margins It also suggests profit margins will come down from the 2023 peak, saying automakers had another very strong year in 2023 with adjusted EBITA margins likely reaching near 9%, well above the 10-year average of around 7%.

“For the next 12-18 months, we expect margins to come down towards 8%, which is still a healthy level.

“The margin decline will be driven by labour cost inflation, negative mix effects and price pressure in the BEV and ICE segments tied to improving supply and tougher competition among automakers.”

 The report predicts global light vehicle sales will increase 1.6% this year and 2.1% next year.