Tesla is likely to retain its battery electric vehicle sales crown until 2024 but could be overtaken by Volkswagen in around 18 months. 

Volkswagen is tipped to overtake Tesla’s global BEV volume in just 18 months

New research from Bloomberg Intelligence finds that while global BEV demand is set to more than double out to 2025, traditional, ‘legacy’ automakers will struggle to sell a meaningful share of BEVs in 2022 and 2023, due to a lack of scale.

But the exception to this is Volkswagen, which already leads in Europe and is tipped to overtake Tesla’s global BEV volume in just 18 months with some 2.5 million units annually. It will have a potential 30% BEV sales mix in 2023 and about 45% in 2025.  

While it’s effectively a two-horse race, China’s BYD will rank third for BEV sales globally, starting to close the gap up to and including 2025.   

US and Japanese automakers will only start to become serious challengers for a top three spot later in the decade and will sit around the one million annual BEV sales mark in 2025. The report says that they’re likely to succeed in divesting BEV-related assets that are intertwined with their combustion operations and whose cash flows are paying for the transition.   

Michael Dean, senior European automotive industry analyst at Bloomberg Intelligence, said that looking ahead, automakers in Europe, China and elsewhere will continue to challenge Tesla via an impending wave of new models – but profit incentives are limited amid rising battery costs and a lack of scale.  

“That may change in 2025-26 as more brands achieve critical mass on new-generation models with proprietary software. There are a number of challenging external factors to consider and bold BEV ambitions have done little to prevent crisis-level valuation multiples, stoked by recession fears, rising interest rates, supply-chain constraints and inflation,” he added.  

Volkswagen’s work on investing in EV batteries is seen as critical to its impending market leadership – battery prices remain critical to the cost competitiveness of BEVs and Volkswagen is investing up to €30bn (£25.8bn / US$31.31bn) in the supply chain, including the opening of six new battery-cell plants in Europe by 2030.   

Ford will also wade in on the action with its F-150 Lightning getting an early – and year-long – jump on the competition and making it the first automaker to ramp up production of a full-size battery-only pickup truck.  

“General Motors and Tesla won’t compete in the space before 2023 and Rivian’s small scale makes it unthreatening,” added Kevin Tynan, senior North American automotive industry analyst at Bloomberg Intelligence.  

Meanwhile, Japanese automakers are developing their electrified vehicle strategies with comprehensive offerings to meet the requirements of different markets and drawing on expertise gained from hybrids.  

To access the full Bloomberg Intelligence report forecasting carmakers’ battery electric vehicles sales up to 2025, click here. A longer-term view on electric vehicles up to 2050 is set out in BloombergNEF’s latest Long-Term Electric Vehicle Outlook 2022.