Innovation is now moving from East to West, and has begun to influence the design of mobility, commerce, and customer engagement, says Mr. Tu Le, Founder and Managing Director of Sino Auto Insights, an advisory firm playing at the intersection of technology and transportation. The idea that China or Asia is not an innovative center needs to be rejected, said Mr. Le, who grew up in Detroit, the seat of the traditional auto industry in the US, worked there and in Silicon Valley, and moved 12 years ago to China, now the largest market for electric vehicles (EVs) and the biggest manufacturer of battery cells.
He was a guest at Nomura Investment Forum Asia 2022, where he spoke about the global EV landscape, autonomous vehicles, opportunities and challenges ahead for these sectors, and how he thinks all companies are becoming software companies.
In 2021, 67 million cars were sold worldwide compared with 80 million in the 2016-17 period. The lower numbers are a reflection of the chip and battery supply challenges now, along with the lingering pandemic. China, the US and Europe made up over 70% of global passenger vehicles sales in 2021. While China has been the largest vehicle market in the world since 2009, the US and Europe are mature markets, which are unlikely to drive volumes in the next few years, he said
Against this backdrop, new energy vehicle (NEV) sales are exhibiting “hockey stick” growth globally, according to Mr. Le, referring to 6.7 million electric vehicles sold in 2021, an over 80% increase from 2020. The market in China and Europe are taking off as more products across multiple price and cost segments are being rolled out, he said.
China dominated, with over 50 percent share of global EV sales last year. Europe, which accounted for about 35 percent of the market last year, is expected to continue doing well, as the European Union has pledged to ban the sale of new petrol and diesel cars by 2035. That creates an aggressive timeline for automakers to transition to EVs.
The number of EV models available for sale globally will also grow from about 140 in 2020 to nearly 450 in 2025, estimates Mr. Le. If anything, Covid-19 has accelerated the world’s move to connected, autonomous, shared, and electric vehicles, he said. EV adoption is expected to grow dramatically through 2035, and he expects it to account for 50 percent of global car sales by then.
“This will not happen without governments’ support, and it can take the form of policies, laws, subsidies, tax incentives and penalties,” said Mr. Le. China, for example, invested over $80 billion since 2009 to build out its EV sector and charging infrastructure. It is now the largest EV market and has two of the five largest battery cell manufacturers.
Looking forward, there will be huge disruption in the sector, says Mr. Le. By 2030, he thinks the top 10 transportation and mobility companies will not be automotive companies any more. They will be companies that run technology platforms and applications. “The biggest automotive companies in the world will have platforms, and the biggest tech companies in the world will have EVs,” he said.
To watch the full presentation, visit the Nomura Forum website (requires guest login).
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