Asian e-cars are overtaking while accelerating
Growing Asian countries are racing to take the lead, and in the transition they seem to be overtaking the West at an even faster pace. Technology change is reshuffling the positions.
Asian e-cars are overtaking while accelerating
New Age – New Road

Asian e-cars are overtaking while accelerating

Hyundai Ioniq 5 (AFP/Serhat Cagdas)
Sándor Pető 15/02/2023 05:00

The cornerstone of the climate pledges is the “greening” of the car market, and this is expected to come largely from the proliferation of electric cars. For a long time, this huge market has been all about Tesla’s huge development advantage, but things are changing very quickly. Growing Asian countries are racing to take the lead, and in the transition they seem to be overtaking the West at an even faster pace. Technology change is reshuffling the positions. Countries and manufacturers are being pushed back and new players are coming forward, even from seemingly unlikely places: in the luxury category, for example, Saudi Arabia could become a major player.

In 2005, China, the world’s most populous country, did not even produce half as many cars as the United States. But in five years, the situation has fundamentally reversed, and while there has been a 2-3 million decline in both countries since 2017, when 29 million units rolled off the production lines in China, Chinese production is now almost three times that of the US.

Huge Opportunities Have Opened Up

The question now is whether the tensions between China and the West will cause a rupture in this realignment which means emergence for Asia. This is not fundamentally predictable, but it is clear that growth will certainly be driven by the growing purchasing power of the Asian countries with their huge populations. Moreover, there is no sign that Asians are lagging behind in the technological transition, quite the contrary.

The green transition is creating huge new opportunities in the international car market. The fossil-fuel fleet will be replaced, and eventually banned from the roads, while the number of people using vehicles may increase. Forecasts are complicated by the recent disruption caused by a number of factors: the pandemic in demand, shortages of raw materials, transport difficulties and epidemic restrictions.

The share of electric vehicles in global new car sales has more than tripled since 2017, to 8.3 per cent in 2021, including hybrid vehicles. The 6.75 million electric vehicles sold in 2021 represent an annual increase of 108 per cent.

In terms of geographic breakdown, half of all electric vehicles were sold in China in 2021, a 155 per cent year-on-year increase compared to 96 per cent in North America. Europe only grew by 66 per cent, but the “old continent” already produced more cars, so the statistical benchmark is higher.

Asian Brands: on the Road to Dominance

In China, some predictions suggest that 5-6 million electric vehicles could be sold in 2022. The giant country’s advance is even more striking when you look at the share of new cars sold that are electric. This rate doubled in China between 2020 and 2021, from 5.5 to 13.3 per cent, while in North America it rose from 2.3 to just 4.3 per cent, reaching 5 per cent for the first time in the first quarter of 2022.

Europe is better off than North America, but not as well off as China. In our continent, 2.33 million electric vehicles were sold in 2021 (compared to 735,000 in North America), which means that the share of electrically powered vehicles rose from 10 to 17 per cent. (December 2021, however, saw a peak of 26 per cent.) And among other countries that have seen strong sales growth, cites South Korea as the top performer, with 114,500 units in 2021, up from 64,200 in 2020.

The strength of Asia is also striking when looking at which manufacturers in the region produce the most electric vehicles. In this respect, the data for March 2022 are worth taking into account. Let’s not forget that the Russian-Ukrainian war was already underway, and the cost of energy and raw materials shortages continued to drive up manufacturers’ costs, while global logistical problems remained unchanged. Tesla’s dominance was unchallenged in March. This month, the top-ranked multi alone sold more electric vehicles than the next two manufacturers, BYD of Shenzhen, and SAIC-GM-Wuling, also in China and part of the US General Motors group. They are followed by three European companies, and then again by two Asian companies from Seoul: Hyundai and Kia, both belonging to the same group of companies. Nine of the world’s top 15 sellers of electric vehicles are Asian. The order is not set in stone, of course, and everyone is preparing for the transition. Moreover, the picture would be more flattering for Europeans and Americans if we looked at the revenue of each manufacturer rather than the number of units, as Westerners are concentrating on higher value vehicles, and thus Tesla would have an even bigger advantage, while Asians turned to the mass market from the beginning.
Wuling Hongguang Mini EV (Photo: AFP/Hector Retamal)

Can Tesla Be Beaten?

Even in America, Tesla’s dominant position is not considered set in stone, even though three quarters of all electric vehicles sold there come from them, but at increasingly high prices. Years behind is Lucid, another US company that only started in 2021 but has already outgrown everyone but Tesla in terms of capitalisation. However, they produce high quality luxury cars that may beat Tesla in this category. In fact, as Tesla and Lucid products are very expensive and will only get more expensive, an Asian incursion is not ruled out overseas. The specialist portal highlights Hyundai as one of the companies that could potentially threaten Tesla’s position in the US market.

According to, China registered 458,273 new EVs in March 2022, an annual increase of 118 per cent. Tesla has a strong presence here too, as China has also developed a wealthy consumer class. In March, the best-selling e-car in China was the Wuling Hong Guang MINI EV (47,563 units), but the second to third place was shared by two Tesla models, the Y (39,339) and the 3 (25,736).

 They were followed by BYD’s Song Pro/Plus PHEV and Qin Plus PHEV. These five models also share the top five places in first quarter sales. Although the Tesla Model 3 is only in fifth place, the Tesla Plugin EV had a market share of 9.6 per cent. No other foreign brand made it into the top ten.

Saudi Arabia Would Enter the Competition With Lucid

In the context of electric vehicle manufacturing in Asia, it is worth looking at Tesla’s direct, US-registered competitor. Lucid was founded only in 2021 and has only just started production, but is the 13th largest car manufacturer in the world in terms of market capitalisation, behind Hyundai and ahead of SAIC. In the production of electric vehicles, only Tesla is ahead of it, and significantly so: the Austin-based giant’s capitalisation of almost 0 billion around the time of the publication of their first quarterly flash reports in May was almost 30 times that of Lucid. The latter is still seen as a serious competitor to Tesla. Its models can travel longer distances without recharging, win prizes in a row and the manufacturer is helped through the start-up difficulties by generous Saudi support.

The fate of Lucid and the economy of the Middle East country are closely intertwined. The strategic goal for Saudi Arabia is to put the economy on a new footing, and the Vision 2030 programme has been launched to this end, said a researcher at the Eurasia Centre of the John von Neumann University, who pointed out the background of the expected market changes. According to Meszár Tárik, the joint plan with Lucid to build a huge factory in King Abdullah Economic City on the Red Sea coast of Saudi Arabia, further to the Saudi-funded US manufacturer’s plant in Arizona, to produce 150,000 cars a year, while the Arizona capacity would be increased from 34,000 to 365,000, fits perfectly into this idea. This may not seem like a terribly high figure, but Lucid cars are made for the wealthy, meaning they bring in high revenues per unit, and it is worth noting that so far the Middle East has been absent from the global car map.

Demand in the oil-producing region should not be much of a problem at this price level either, said Meszár Tárik. But to be even more certain, they announced at the end of April: Saudi Arabia’s Ministry of Finance will purchase 50,000 cars from Lucid over the next ten years, with an option to buy the same number in addition. The Lucid factory being built will create thousands of highly skilled jobs in Saudi Arabia, support the accumulation of technological know-how and is expected to generate .4 billion in benefits for the country over 15 years, the researcher said. Meszár Tárik added that the vehicles would initially be sold in Saudi Arabia, but would then also be exported.

Lucid plans to sell 12-14,000 cars in its first full year of production in 2022 after still operating at a loss in the first quarter when it only sold 360 vehicles. At the same time, the company has a cash reserve of .4 billion, thanks in large part to the Saudi sovereign wealth fund, which will ensure ample operational reserves until 2023. Preparations are already underway to expand production. Lucid has launched an apprenticeship programme for Saudis at its facilities in Arizona and California, and has also set up training centres in King Abdullah Economic City to prepare the workforce for manufacturing, said the researcher at the Eurasia Centre at John von Neumann University.

This article was originally published in our Hungarian-language magazine Eurázsia in 2022.

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