The US electric car market has just reached an extremely important milestone – That’s how VinFast ‘smartly’ chose to join at the ‘golden time’

Once 5% of new vehicles sold on the market are electric, things will change very quickly – according to an analysis tracking 19 global electric vehicle markets by Bloomberg.

Many people probably still remember the first time they held a smartphone in their hands. It can be a device with a strange design, red clay and enough “light” to attract the whole crowd at parties. More than a decade later, it would be odd for someone not to own a smartphone.

A similar social shift is happening with electric vehicles, according to a Bloomberg analysis of electric vehicle adoption rates around the world.

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The US is the latest country to pass a major EV market milestone: 5% of new car sales are electric vehicles. This threshold signals the beginning of mass adoption of electric vehicles, a period in which technological preferences rapidly change.

In the past 6 months, the US along with Europe and China – the world’s three largest auto markets – surpassed the 5% milestone. If the US follows the trend that has appeared in 18 other countries before, the target of 25% of new car sales being electric vehicles is completely feasible by the end of 2025. This comes 1-2 years earlier than most previous forecasts.

Why is the 5% milestone important?

Most successful new technologies—electricity, TV, cell phones, the Internet, even LED light bulbs—follow what is known as the S-curve. Sales increase rapidly during this period. first, then became surprisingly popular quickly.

In the case of electric cars, 5% appears to be the point where mainstream demand begins to arise. Before that, sales tended to be slow and unpredictable. After that, demand increased rapidly.

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This number is considered even more accurate when most countries that have popularized electric vehicles follow a similar model. Most markets face the same problems: not enough public charging stations, high prices, limited supply, and buyers don’t know much about electric vehicles. When the “first road is paved” by 5% of sales, the market will quickly adapt.

South Korea’s electric vehicle penetration chart in 2021 is very similar to China’s in 2018, similar to Norway’s in 2013. The next major car markets to approach the tipping point this year will be Canada , Australia and Spain.

What about hybrid cars?

The above analysis is only for battery electric vehicles. In some countries, mainly Europe, plug-in hybrid cars (using small capacity batteries, powered by gasoline engines) are already very popular. If plug-in hybrid cars are included, the world has surpassed 20 million vehicles and this number will double by the end of next year.

Because plug-in hybrid vehicle adoption does not require the same level of infrastructure or user awareness, early adoption will be different. The cut-off point for this type of vehicle will be about 10% of the market.

The US and China have largely bypassed plug-in hybrids and switched straight to battery electric vehicles. Therefore, the US market has not yet surpassed the 10% threshold, if plug-in hybrid cars are included.

Unknown car manufacturers

Whether the market continues to grow or not also depends heavily on the capabilities of automakers and their suppliers.

Volkswagen, Ford and BMW all target more than 50% of global sales to be pure electric vehicles by the end of the decade.

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However, they also have many limitations. Factories must be retooled while supply chains also need to change. To achieve the lowest production costs, the entire vehicle had to be redesigned with an emphasis on electrification.

In Europe, when 10% of an automaker’s quarterly sales are electric vehicles, this number will triple in less than 2 years.

Only Toyota is the largest car manufacturer that has not yet reached the 10% electric vehicle threshold in Europe. Its goal is to reach 3.5 million annual EV sales by 2030 – the least aggressive target among major manufacturers.

Is this an inevitable shift?

To date, 90% of global electric vehicle sales come from the US, China and Europe. No country in Latin America, Africa or Southeast Asia has made the leap. However, if they achieve it, it is unlikely that global miners will be able to keep up in terms of metal or battery demand.

It is a fact that global electric car sales have increased 3 times in the past 2 years, according to the IEA. All net growth in global auto sales in 2021 came from electric cars. Bloomberg predicts this will be a long-term trend. 2022 could be the year that marks a breakthrough in electric vehicle sales.

Applying a global tipping point analysis, the global share of electric vehicles surpassed the 5% threshold for the first time last year. If plug-in-hybrid vehicles are included, the 10% limit will be surpassed this year. Therefore, if the calculations are correct, this is the period when electric vehicle models will explode.

With the launch of sales of key electric vehicles from the end of 2022, it can be seen that VinFast has entered the market right at the “golden time” when electric vehicle sales begin to explode. The markets that VinFast chooses to enter, besides Vietnam, are also places where the penetration rate of electric vehicles has exceeded the 5% threshold such as the US, France, Germany, the Netherlands, and soon Canada.

According to Economic Life

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