In its latest report, Tech, Media, & Telecom (TMT) Predictions 2022 – Thematic Research, data and analytics company GlobalData predicts that Tesla and China are set to maintain their dominance in the EV sector. GlobalData also suggests that the lithium shortage will not affect all players equally.

In the short term, the lithium shortage will barely scuff the shoes of the big players like Tesla and Toyota, as their supply chains are more vertically integrated. Further, lithium supply issues won’t necessarily mean a drastic rise in the cost of EVs in the short run—automakers could compensate elsewhere on the production line and offer lower-quality interiors.

Looking further into the future, Tesla and Toyota are betting on different horses for the future of EV batteries, with Toyota set on solid state. We’ll see the first EVs powered by solid-state batteries hit the roads by 2025, but these will be a lot costlier than regular lithium-ion EVs, and so won’t reach the mass market until later.

—Amrit Dhami, Thematic Analyst at GlobalData

Dhami noted that in 2020, 48% of all EVs on the road could be found in China—more than the combined figure for the US and Europe. China’s EV fleet will be 60% of the world’s total by 2030.

China’s large domestic market, raw materials access, and favorable government policies mean it will continue to dominate the EV landscape and won’t be as disadvantaged by the lithium shortage. Xi Jinping has facilitated the growth of the domestic EV market, causing Tesla to lose market share in China to BYD. This is not only to cement China’s dominance in EVs but also to help meet the net zero target year of 2060.

—Amrit Dhami

GlobalData further notes that the shift towards EVs is becoming demand led.

EVs as a proportion of new light vehicle production will rise from 5% in 2021 to 11% in 2025, with annual EV production exceeding 10 million units. The shift towards EVs has mainly been driven by environmental, social and governance (ESG) related legislative changes, but momentum is also becoming led by demand. This year’s energy crisis means people don’t want to be so reliant on global supply chains, accelerating the move away from petrol and diesel. Consumers are also becoming more environmentally conscious—particularly Generation Z.

—Amrit Dhami