Due to the Russian-Ukrainian war, automotive factories currently located in Russia have shut down successively and stopped importing vehicles, TrendForce asserts. In addition, Russia has stated that if foreign-funded enterprises choose to permanently suspend business or withdraw from the market during this period, the Russian government will nationalize their business assets. Most automotive brands have factories in Russia and now face the dual pressures of international public opinion and corporate losses. According to TrendForce investigations, after Renault-Nissan acquired the Russian brand LADA, its market share reached 32%, making it the largest automotive brand in Russia followed by Hyundai-Kia at 23% and Volkswagen at 12%.

According to TrendForce, since Renault is the largest shareholder of local automaker AVTOVAZ and Russia is the company’s second largest market, whether AVTOVAZ is nationalized or sales are lost, the overall impact on Renault cannot be underestimated. In addition, even if production can continue, the depreciation of the ruble will greatly increase the cost of importing components.

Soaring costs not conducive to automotive industry recovery

The large number of components and the long supply chain inherent in the automotive industry makes mitigating geopolitical risk difficult. Almost all international or regional events will affect the normal operation of this industry. The Russian-Ukrainian war will not only affect automaker assets, supply chains, sales, and revenue in Russia and around the world in the short term but, in the long term, geopolitics will influence business planning, competiveness, and technology options. More broadly, geopolitical and economic conflicts are derailing automakers’ plans to recover from the pandemic and chip shortages.

According to TrendForce, there are three major factors impeding the recovery of the automotive industry and these factors will further affect automobile sales in 2022. First, the production of vehicle components in Ukraine has halted, affecting the production of complete vehicles. Volkswagen indicated that it intends to move production capacity to North America and China due to the shortage of vehicle wiring harnesses. Second, Russia produces various upstream raw materials such as nickel and palladium for vehicle manufacturing. Due to supply constraints, various costs have risen sharply and some car manufacturers have begun to increase the price of complete vehicles. Third, inflationary pressures have risen sharply, leading to rising costs of living and a reduction of consumer spending power.

Global sales of NEV (new energy vehicles, which include both BEV and PHEV) skyrocketed in the final two months of 2020, with various models setting historical sales records, according to TrendForce’s latest investigations. TrendForce estimates total NEV sales for 2020 at 2.9 million units, a 43% increase YoY, and further expects yearly sales to reach 3.9 million units in 2021. However, as the current shortage of automotive chips has had a considerable impact on the auto industry, some uncertainties still exist in the forecast of EV sales.

With regards to the BEV market, Tesla primarily focused on marketing the Model 3 as its key model for 2020. The automaker took leadership position with a 24.5% market share last year, while the Model Y is expected to be key to securing its continued leadership in 2021 primarily because China has issued a sales permit allowing the Model Y to be exempt from purchase tax. Furthermore, Tesla was able to catch its competitors off guard by discounting Model Y prices by 30% on the first day of 2021. Volkswagen took second place in the rankings due to not only the excellent market reception of the e-Golf, but also the remarkable sales figures set by the ID.3 in 2H20, which helped Volkswagen stabilize its market share. Incidentally, as the ID.4 is set to hit the market later on, it is expected to make meaningful contributions to Volkswagen’s overall EV sales in 2021 instead of 2020.

BYD derives its competitive advantage from having a comprehensive model lineup. The Chinese company comfortably took third place with a 6.4% market share. Conversely, fourth-ranked Wuling Hongguang became the dark horse of 2020 by fielding a single EV model, the Hongguang Mini. Not only was the Hongguang Mini attractively priced, but the Chinese government also made a heavy push for NEV sales in China’s rural areas. Both of these factors allowed the Hongguang Mini to become one of the global top sellers within six months of its release. Hot on the heels of Wuling Hongguang is Renault, which took fifth place in the ranking. Renault was able to score a 5.6% market share thanks to its longstanding best seller ZOE. Although other models, including the Nissan Leaf and Hyundai Kona, also posted remarkable sales performances last year, their respective automakers did not place on the top five list because these automakers each had total EV sales that fell short of the five automakers on the list.

On the other hand, the top PHEV manufacturers were neck and neck in terms of ranking by market share. BMW and Mercedes-Benz each possessed a 13% market share, followed by Volvo with 12%. Fourth-ranked Volkswagen and fifth-ranked Audi registered a 10% market share and 6% market share, respectively.

TrendForce indicates that China and Europe are perfect examples of EV markets propelled by government policies. For instance, European automakers have adopted a proactive position to expand their EV lineups as a result of the stringent emissions standards set by the EU, and these automakers have subsequently been aiming to achieve zero carbon emissions or increase the share of EVs in their total vehicle sales. Apart from China and Europe, the US is yet another market where policies may have a positive effect on EV sales. After winning the 2020 presidential election, Biden is now set to launch his clean energy proposal, which includes replacing the US government’s existing fleet with EVs, removing the previously set ceiling on federal tax credits for EV purchases, and offering consumer tax incentives to replacing their conventional fossil fuel vehicles with EVs, among other actions. If these proposed actions were eventually implemented, TrendForce believes they would be able to drive up EV sales in the US.