Battery Electric Vehicle supremacy is two-horse race, say Bloomberg Intelligence.

Bloomberg Intelligence’s (BI) Europe Autos 2023 Outlook concludes that escalating battery costs and battery supply could be the industry's next bottleneck. This means that there is only a two-horse race for battery electric vehicle (BEV) supremacy, with Volkswagen the sole contender for Tesla’s crown.

Tesla's new EU capacity and robust global demand should enable it to retain its BEV sales crown for at least another two years, though Volkswagen is hot on its heels and could overtake in 2025-26 assuming software delays are resolved.

Michael Dean, BI Senior Industry Analyst (Autos) added: VW already enjoys a leading 21% BEV market share in Europe, but this dominance needs to be replicated in other regions, particularly China, where its BEV share in year-to-September was only 4% vs. 15% for the overall market. China's BYD is set to become the third-largest BEV player in 2022 and may exceed 1 million units annually in 2024.

Battery Prices Are Key to BEV-Cost Competitiveness

As the battle for BEV leadership intensifies in 2023, battery prices remain critical to cost competitiveness, with all automakers chasing the same commodities at the same time. Adding battery capacity raises the stakes further, suggesting battery supply may be the next bottleneck. VW is investing as much as €30 billion in the supply chain, including six new battery-cell plants in Europe by 2030. The company is also extensively hedged on commodities. 

Audi's CFO has highlighted the company’s progress, with its midsize Q4 BEV SUV's margin now similar to its internal-combustion-engine (ICE) counterpart, the Q3. The brand benefits from VW's economies of scale and high-volume MEB platform, unlike peers, where BEVs remain largely margin-dilutive.

Can Ferrari, Porsche Luxury Prove Winners in 2023 vs. Tech?

Luxury automakers may prove a safe haven in 2023, given Ferrari, Porsche and Lamborghini's strong order books, with accelerating BEV sales a differentiating factor for the German brand. Porsche’s share price has outperformed peers since its late-September IPO, which may encourage a Lamborghini IPO by VW. 

Tech-related stocks lost their shine in 2022, with Tesla's shares halving on doubts about lofty growth expectations and autonomous driving, as it faces its first real competition in 2023 with a wave of competitive BEV launches from VW, Audi, Porsche, BMW and Mercedes, all seeking their own tech recognition.