The title might make you think we are talking about the dilemma of choosing the right cocktail, but we are actually talking about mobility.
On May 5, in our In-Depth Analysis, we tried to outline the scenario of applying tariffs to the electric car sector, while on August 22, we expressed some considerations on the beating heart of an EV: the battery, a component that heralds amazing innovative solutions, and not only in the field of cars, of course. Batteries have now become fundamental components of virtually all portable electronic devices and, on a large scale, will also become “electricity storage facilities,” a sector in which we are still in the starting blocks.
In this in-depth analysis, we try to understand what the future of four-wheeled mobility might look like. Consumers faced with the choice of whether to buy or lease a car for the long term face a rather complex dilemma due to the coexistence of different powertrains in a scenario of rising prices, which is causing them to postpone this decision.
The term BEV refers to battery electric vehicles; MHEV refers to mild hybrid electric vehicles. ICE refers to cars with internal combustion engines.
Although the global market for electric cars continues to grow, there are some phenomena worth highlighting. We are discussing this because the automotive sector is very capital intensive and involves a vast production chain with a significant impact on a country’s GDP.
Post-COVID, electric cars had begun to become increasingly popular, and some brands had become true icons. Over the years, a number of events have occurred, including:
● slower than expected growth: in some regions, although sales are increasing, they are growing at a slower pace than in previous years;
● very different regional or local preferences in terms of both brand and type of vehicle;
● the end of purchase incentives in some markets: if these are not renewed, they will probably cause a slowdown in demand;
● high costs and inadequate infrastructure: electric vehicles often start at a higher price than traditional internal combustion engines, and in many countries the charging network is not yet sufficiently widespread.
Remaining in the markets closest to us, in Switzerland, for example, the share of fully electric cars in total new registrations fell from 20.9% in 2023 to around 19.3% in 2024: effectively a stable market. Meanwhile, in Europe as a whole, BEV sales increased, but with uneven growth dynamics.
Are there any implications arising from the current slowdown? We believe that car manufacturers will have to adapt by reducing costs, improving range, and differentiating models to reach broader market segments. On the other hand, governments will have to assess whether to maintain or enhance incentives, infrastructure, and regulations to support the transition. In addition, the battery supply sector remains critical, and a slowdown in demand could curb investment and delay product improvement and economies of scale.
The electric car market is therefore growing, but at increasingly slower rates. Changes will therefore be needed in the production and procurement strategies of car manufacturers and, above all, a clear regulatory framework that allows investment within a defined framework. The product has now passed the initial phase and, in order to develop further, it needs to attract an ever-increasing number of consumers.
Disclaimer
This post expresses the personal opinions of the Custodia Wealth Management staff who wrote it. It does not constitute investment advice or recommendations, personalized advice, and should not be considered an invitation to carry out transactions on financial instruments.
