The automotive industry is undergoing a rapid transformation, and electric vehicles (EVs) are at the forefront of this change. As governments around the world are mandating cleaner emissions, automakers are responding by investing heavily in electric vehicle technology. This trend is evident in the growing number of premium brand EVs hitting the market. But the trillion-dollar question is, will the growth of premium brand EV sales outstrip the loss of sales of their internal combustion engine (ICE) vehicles?
First, let's examine the growth of premium brand EV sales. The premium segment of the EV market has seen remarkable growth in recent years. In 2020, Tesla, the undisputed leader in the premium EV space, sold over 499,000 electric vehicles, a 35% increase from the previous year. Other premium brands such as Audi, Porsche, and Mercedes-Benz have also seen significant growth in their EV sales. In fact, the International Energy Agency predicts that the premium segment of the EV market will grow by over 20% annually over the next decade.
However, the growth of premium brand EV sales may not be enough to outstrip the loss of sales of their ICE vehicles. Despite the growth in EV sales, the global market for ICE vehicles is still vast. In 2020, over 64 million ICE vehicles were sold worldwide, compared to just over 3 million EVs. While it is true that many governments are pushing to ban ICE vehicles in the coming decades, this is unlikely to happen overnight. In the meantime, automakers will continue to sell ICE vehicles, and the majority of consumers will continue to buy them.
Another factor to consider is the cost of EVs. While premium brands have been able to introduce high-end EVs that appeal to early adopters, the cost of these vehicles remains a barrier for many consumers. The average price of a premium brand EV is around $80,000, while the average price of an ICE vehicle is around $36,000. While EV prices are expected to drop in the coming years as battery technology improves, it will take time for EVs to become cost-competitive with ICE vehicles.
So, will the growth of premium brand EV sales outstrip the loss of sales of their ICE vehicles and generate less overall comapny revenue in the future? And if so, WHAT was the point of destroying their businesses and allowing that to happen?