Global EV penetration reaches 14% in April with promising uptick in May

Barclays' April report card shows that global electric vehicle penetration reached 14% in April, slightly outpacing last year’s EV penetration of 13%; however, it fell short of the heightened levels observed in the fourth quarter of 2022. Shifting focus to May, the industry is demonstrating promising signs of a substantial m/m increase in EV penetration, indicating a positive trajectory.

Additionally, while Tesla's (NASDAQ:TSLA) market share remains stable, the actual strength might not be as robust as the price reductions would have you expect. Lastly, the U.S. electric vehicle market continues to make progress, but the cautious approach taken by GM (NYSE:GM) and Ford (NYSE:F) in scaling up production could impede any rapid acceleration.

China maintained its position as the global leader in EV penetration, with a rate of 30.9% in April, marking an increase of approximately 50bps m/m. The United States also experienced a positive m/m growth in EV penetration, gaining around 40bps and reaching 8.2%. However, despite Europe's significant lead over the U.S. with a penetration rate of 16.5%, it hindered the overall global improvement in EV penetration in April with a decrease of about 240bps m/m.

China continues to dominate the global EV share, accounting for 55% of EV unit sales volume YTD in 2023, with Europe at 25%, and the U.S. at 12%.

Looking ahead to May, Barclays analysts see EV penetration rates tracking to a solid m/m uptick, likely bringing May's global EV penetration into the 14.5-15% range.

Early data from the U.S. indicates an 8.4% EV penetration rate in May, in line with April and the average result of 2023 to-date.

In a recent report by analysts specializing in China's technology sector, it was highlighted that the May deliveries for the covered EV companies (BYDDF, LI, NIO, XPEV) showed a generally positive trend. The report also noted that despite reports of slowing demand, the overall EV demand in China remains robust and healthy.

In April Tesla saw a global BEV market share of 17%, a considerable step back from the robust 25% share it posted in March. Regionally, Tesla saw a 61% April BEV share in the U.S., holding steady vs. recent months and effectively flat y/y. In Europe and China Tesla saw BEV market share of 10.5% and 10.1%, respectively. Although the April 2022 COVID shutdown-driven volume challenges for Tesla at Shanghai make y/y comps irrelevant.

Both GM and Ford have spoken of plans for significant boosts to BEV production in 2H23, with GM more sharply ramping its Ultium vehicles and Ford seeing increased output from its updated F-150 Lightning and Mustang Mach-E production lines. However, there is a sense that the ramp-up of legacy OEM BEV production is reminiscent of the chip shortage, with delays and slow progress. Consequently, some investors are starting to question whether OEMs will intentionally slow down their BEV ramps due to ongoing challenges in achieving profitable BEV operations.

Analysts wrote in a note, “Though we expect BEV uptake in the US to continue, we note it likely won’t occur as rapidly as some might have expected when the initial IRA credits were announced given a number of remaining headwinds such as consumer interest, charging infrastructure, and profitability challenges.”