Is the global craze for EVs thawing out? Demand for electric cars a concern

Electric cars are a rather common sight on global roads and promise to take over the world completely in a few years from now. With almost every major auto manufacturer focused on an electric vehicle (EV) strategy, many have even predicted the extinction of vehicles with internal combustion engines entirely. But while there has been a strong craze for battery-powered models in many countries, recent data reveals that demand may be slowing down.

The increasing demand for EVs has been coming from major vehicle markets like China, the US and European countries. This has prompted manufacturers to announce major investments to establish and widen their respective EV strategy. But a growing concern among industry analysts is that the scale of investments may over arch vis-a-vis trajectory of rise in demand. This essentially means that the investments may be higher than required.

Several manufacturers have already - and officially - revealed plans to lower down gears. Take Tesla for instance. The world's largest EV manufacturer has had to issue price cuts in China and US in a bid to bolster demand. It has also said it will go easy on plans of a factory in Mexico. “I am worried about the high interest rate environment that we’re in," Tesla CEO Elon Musk said recently. "As I just can’t emphasise this enough that the vast majority of people buying a car is about the monthly payment. If interest rates remain high or if they go even higher, it’s that much harder for people to buy the car."

Ford has also informed it will bring down the pace of production for its F-150 Lightning and that it will turn some of the investments away from EVs and put it towards hybrids and commercial vehicles.

Ford F-150 Lightning electric pickup truck has received more than 1,60,000 reservations. (Ford)

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Ford F-150 Lightning electric pickup truck has received more than 1,60,000 reservations. (Ford)

Across the Atlantic, it may be more of the same as Volkswagen has slashes its profit margin outlook. Manufacturers here have been facing the heat due to more affordable EV models being shipped from China by Chinese brands. Auto tariffs in Europe is at around 10 per cent vis-a-vis around 25 per cent for imported vehicles in the US.

But even in China, there have been concerns that the previously predicted rise in demand for EVs - called new-energy vehicles or NEVs - may not hold. The trajectory is flattening although sales numbers still remain rather impressive compared to other markets, prompting the Chinese government to reconsider decision to remove subsidies on EVs up to a certain price as well as ramp up infrastructure work in rural areas, required to support EVs.

The general consensus, however, is that the rise and spread of EVs is inevitable but the pace of this spread may be under some degree of pressure and may not warrant the kind of investments that have been announced by most manufacturers. The long-term forecast, however, is still firmly in the green.

(With inputs from Carscoops)

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