After the pandemic, the automotive industry experienced years of mixed fortunes. But government subsidies and low interest rates led to robust demand for cars, and margins eventually recovered after a short-lived pandemic slump and even rose above pre-pandemic levels.
Looking ahead to 2024, the global automotive market is expected to approach a balance between supply and demand, with production stagnating and sales rising slightly as interest rates stabilise and begin to fall in the second half of the year, the global economy remaining on its growth path, consumers seeing real wage gains and car prices easing slightly.
This CIO Special examines the dynamics and trends in the global electric vehicle market, while also taking a close look at developments in the global battery value chain.
Key takeaways:
Global car sales are expected to approach production at roughly 90m units in 2024 as vehicle prices retreat slightly. Electric vehicle (EV) sales growth may decelerate in the short term due to a lack of affordable models, elevated interest rates, and saturated first-mover demand. Prefer stocks from European Original equipment manufacturers (OEMs) on strong balance sheets and cashflow generation as well as exposure to the premium segment.
The favourable long-term EV market trends remain intact, with strong policy support and OEM ambitions likely to push the EV share of sales above 50% in China, Europe, and the U.S. by 2030. The respective growth trajectories are nearly fully aligned with national climate and electrification targets.
The battery value chain has underperformed as the sector struggles with overcapacities. A correction has created an attractive entry point for long-term exposure to battery producer stocks, but we are more cautious on battery metal miners due to ongoing strong lithium supply growth and unfavourable cobalt demand trends.
