Tesla is likely to retain its annual global battery electric vehicle (BEV) sales crown in 2024 and throughout the decade despite China’s BYD overtaking briefly in Q4 of 2023.

Legacy automakers will likely gradually ramp up production of next-generation BEV platforms with proprietary software and enhanced battery technology towards the end of the decade

According to Bloomberg Intelligence’s (BI) latest Global BEV sector study, Tesla’s new capacity, competitive pricing and new models should enable it to retain its annual sales crown. Its success, however, will rely on the ramp-up of Cybertruck volume and the rollout of a cheaper Model 2. In contrast, BYD has more limited opportunities for growth outside of China.

Volkswagen is no longer a medium-term contender, according to BI. While the brand has a leading 22% BEV market share in Europe, such dominance needs to be replicated in other regions, particularly China, where its BEV share in year-to-November was only 3.6% vs. 14% for the overall market. It’s expected to lose market share until next-gen BEV platforms are launched in 2026-27.

Increased BEV rivalry is likely to spur intense price competition, pressuring margins. Internal combustion engines (ICE) look set to dominate industry profit into 2030 as BEV markets remain fragmented and dominated by local brands, with Tesla the only real global player until legacy automakers launch next-gen, more scalable platforms in 2026-2027.

In the shorter term, BI forecasts BEV growth expectations may take a reality check in 2024 given consumer apathy over a lack of fast public chargers and high prices, though China, where BEVs have a similar price to ICE and infrastructure is more developed, is an exception.

Michael Dean, senior industry analyst – autos at Bloomberg Intelligence, said: “Our last industry report predicted that Tesla BEV sales would be overtaken in 2023-24, which happened in Q4 by BYD rather than Volkswagen, though we don’t expect BYD to lead on an annual basis.

“Our profit analysis indicates that even by 2030, ICE-based powertrains, which includes hybrids, will continue to dominate industry earnings given legacy automakers will likely gradually ramp up production of next-generation BEV platforms with proprietary software and enhanced battery technology towards the end of the decade.

“Tesla and BYD will run neck-and-neck for BEV supremacy in 2024 though we anticipate consumer appetite for BEVs, bar China, will cool amid high prices, range anxiety and a lack of public fast chargers. In contrast, ICE profitability, including hybrids will remain dominant throughout the decade. Overall, this market dynamic doesn’t bode well for smaller BEV pure-plays.”

The BI analysis indicates the global BEV sales mix will only reach 15% by 2025, rising to about 33% in 2030, with China remaining the dominant region.

Europe will continue as the second-biggest market, reinforced by emission legislation. BI forecasts growth slowing in 2024 with a flattish 16% market share rising to 19% market share in 2025 (or about 2.6 million units) vs. about 15.5% in 2023. However, BEV share is already at 30% or above in the Netherlands, Sweden and Norway and about 17% in the three largest European auto markets.

Michael Dean finished: “The US and Japan will continue to lag, with the former’s BEV share expected to hit about 15% in 2025 vs. about 8% in 2023, though its trajectory is likely dependent on the result of the 2024 election. Japan will continue to leverage hybrid technology with a BEV market share only expected to hit 10% by 2030 vs. 2% in 2023.”