Did you ever think that “too many” and “electric vehicles” (EVs) would be used in the same sentence? Surprisingly, there’s an oversupply of EVs, leading to constant price slashes and some companies putting the brakes on their EV ambitions. The question of blame isn’t straightforward, but let’s start with China.
In mid-2010s, the Chinese government offered subsidies (aka free money) to companies that make electric cars. This sparked a gold rush, and at its peak there were roughly 500 electric car companies in China. 500!
With supply far exceeding demand, some of these cars remained unsold, creating EV graveyards, while thousands found their way to Europe. Chinese automakers today make up more than 8% of Europe’s EV market, up from almost nothing in 2019.
On the one hand, this is a win for Europe, as the economic bloc has set an ambitious goal: all new cars sold must have zero CO2 emissions by 2035. However, Europe has its own automotive industry that employs millions of workers, and they’re not happy with someone else stealing their turf. The transition to EVs still has a ways to go, but a yearly check-in is needed, especially for our long-term investment themes.