Gradual EV adoption in 2024 favors Tesla, GM: Analyst
Demand drivers in the electric vehicle market are slowing significantly, prompting Citi US Autos & Auto Parts Analyst Itay Michaeli to trim EV forecasts. Joining Yahoo Finance Live, Michaeli believes Tesla (TSLA) and General Motors (GM) still stand to gain share in 2024 despite "adoption challenges."
Michaeli explains that American households average two cars, so the goal for automakers isn't wholly electrifying every vehicle yet. Rather, it's initially "converting households" to one EV and one gas-powered car.
Even with "revised plans by the EV makers" amid pullback, Michaeli states electric vehicles stand to have "a pretty good year."
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Editor's note: This article was written by Angel Smith
Video Transcript
- For more on what is happening in the EV space, joining us now is Itay Michaeli, Citi US autos and auto parts analyst. Itay, it is good to see you. And I want to get to a note, Itay, you recently wrote here. You're now trimming your estimates for EV sales, both for this year and next. Itay, why did you make that call there? What are you seeing in the market?
ITAY MICHAELI: Well, thank for you for having me. Yeah, we did trim our estimates recently by a modest amount. We still see EV sales actually reaching about 9.5% penetration in 2024 and close to 15% by 2025. That said, given the slowdown and some of the revised plans by the automakers that we've seen announced, plus I would say a tough start to January-- December, we think, was actually a very good month. But just given the slower start in January, we did trim our numbers a little bit.
I would say our views are probably still above the current consensus thinking, which has been very bearish on EVs the last few months. We don't completely agree with that. There are some adoption challenges out there. That's reflected into our numbers. But we still think we'll have a pretty good year for EV growth this year on the back of some new product.
- And who do you think is going to be the big winner in EVs? And is that going to then determine who's the big winner overall in sales this year?
ITAY MICHAELI: Yeah. So overall, EVs just a small part of the market, but close to 10% we think this year. We do believe, of course, Tesla will remain by far the market leader. Our forecast for market share this year is just under 50%. We think a new product, including the refresh of the Model 3, is going to be key for them this year. Of course, Cybertruck ramping as well.
And then General Motors as they ramp their Ultium platform, we think it could be in about 11% market share. So sort of the first sort of non-Tesla automaker with a double digit market share this year as they ramp that platform. We think we need more product in the EV market. If you look at just some of the market coverage to date, it's pretty uneven in certain segments, and certainly in certain price points.
And one thing to keep in mind in the whole EV debate that's very important is in the US, we have on average about two vehicles per household. So the burden of EV adoption isn't about changing one's entire lifestyle to go all in on EV initially. It's really about converting households largely to one combustion or ICE and maybe a second one with EV.
And if that starts to happen, you could see in theory a pretty rapid uptake of EV adoption over the next few years. But you need additional product. Of course, you do need better EV charging infrastructure, lower pricing, which IRA should help to some extent this year as well. So we think structurally the market is probably in better shape than what consensus currently bakes in.
