The Pre-Pandemic Combustion Car Sales Are Over

Hatem Dhiab 7:40Up nextIf you want to be in the EV space, Tesla must be your core play.

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Tesla must be your main play if you want to be in the EV business.

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Global vehicle sales are showing signs of continuing their recovery from the pandemic, the chip shortage, and other supply chain snarls. The likelihood that sales of gasoline-powered cars will never reach their pre-pandemic levels is growing more evident as the recovery takes shape.

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Peak calling is typically a losing proposition. The decision will either be right, but later seem apparent, or wrong, leading to years of ridicule. The global market for gasoline-powered cars peaked in 2017 and is currently structurally declining, according to statistics from 2022, according to BNEF.

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This may come as no surprise to those who carefully monitor the market, but it probably still shocks some people. Just a few years ago, predictions for oil consumption still included continuous rise in these vehicle sales until the 2030s.

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86 million combustion engine passenger cars, including conventional hybrids like the Toyota Prius, were sold at their peak in 2017. In that year, battery-electric and plug-in hybrid models made up less than 1 million automobiles, a miniscule fraction of the market.

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In 2022, the situation was very different. Sales of combustion vehicles fell by about 20% from their high to 69 million, while those of plug-in vehicles increased to 10.4 million.

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The picture doesn't significantly change even if we include plug-in hybrids in the internal combustion column. Market growth would still have peaked in 2017, and worldwide sales in 2022 would be 72 million, which would be 16% below the five-year high.

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Much more obvious is the tendency in China. In 2022, 26% of automobiles were sold that were plug-ins, compared to 28% for combustion models at their peak in 2017. An estimated third of all passenger vehicle sales there this year, according to BNEF, will be plug-in variants.

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In Europe, the situation is similar, with sales of internal combustion vehicles much lower than they were at their height. With the help of the Inflation Reduction Act, EV sales in the US are anticipated to have a record-breaking year.

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If anything could stop this trend, it would be worth looking into. For instance, there is a significant difference in EV adoption between developed and developing economies. Although it may be alluring to believe that this may counteract what is occurring in China, Europe, and North America, it is difficult to see how combustion vehicle sales could increase.

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Even though the auto industry in Southeast Asia is expanding, EVs are expected to account for a large portion of that growth rather than gasoline-powered vehicles. Thailand and Indonesia are among the nations vying to become production centers for EVs and batteries.

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In India, where EV sales are on the rise and the government has lofty goals to develop the indigenous industry, the situation is similar. Sales increased significantly from 15,000 in 2021 to approximately 50,000 in 2022, and BNEF anticipates that the rapid expansion will continue this year.

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Sales of new vehicles are virtually unchanged in Brazil and Mexico, while they remain quite low in Africa. Although global deliveries of combustion vehicles may barely increase from 2022 levels this year, they won't even approach the 2017 peak.

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The fleet is what matters in terms of the effects on the energy market, and the transition will take time. It can be difficult to estimate the exact number of vehicles on the planet, but BNEF anticipates that as the EV fleet grows, the global combustion vehicle fleet will begin to fall in earnest after the next three years.

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After the fleet has turned, it will be nearly impossible to turn it back, which will have an impact on the amount of oil used and greenhouse gas emissions. According to BNEF's forecasts, the total demand for oil for transportation will reach its peak in 2027, which is only four years away. The next front in the conflict will be trucks, but even there, things are changing swiftly. In China, electric vehicles made about 7% of total commercial vehicle sales in 2017. Even the traditionally toughest to electrify heavy vehicle sales in that country crossed the 5% EV mark in December.

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In the event that sales of combustion-powered vehicles did peak in 2017, more peaks won't be far behind.