How the EV market will be shaped in US, China in 2024

US consumer demand for electric vehicles has started to wane as economic headwinds and inflation pick up, reducing affordability options. As inflation seems to cool and new competitors join the EV space, is there a possibility things could pick up in 2024?

Bill Newman, Industry Executive Advisor at SAP North America, joins Yahoo Finance Live with Autos Reporter Pras Subramanian to discuss the state of the EV market, domestically and in China heading into 2024.

Newman gives context to China's ability to expand with its existing electrical grid system and also explains competition entering the US.

"I think that you're also seeing some not just in China, but you're seeing some of the Asia Pacific companies — VinFast (VFS) is one — take advantage of some of the IRA funding and some of the Infrastructure Bill opportunities available to help offset some of their expansion in the world's largest market right here in the US and North America," Newman says. "Two very different markets, two very different energy frameworks, and two very different industrial policies."

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

JOSH LIPTON: And, Bill, I also want to get your take on the market over there in China for EVs and names like BYD. Bloomberg's saying BYD will actually surpass Tesla as the new worldwide leader in EV sales, likely in the current quarter bill. How do you see that market in China evolving? I mean, it certainly has the support of the government over there? How does it evolve, Bill? And what does that, by the way, mean for US companies like Tesla?

BILL NEWMAN: Yeah, right. So if you build to market, obviously, China is one of the largest markets in the world. Interesting industrial point from respect to China, China actually has quite a bit of electrical grid potential available. And so they don't frankly build as many combustion engine cars.

So their electrification is very nuanced around their government policy and their energy policy to have many, many power plants that generate the electricity versus trying to be part of the petrol economy, as many of the rest of the world will be, frankly, for a very, very long time. So I think there's that.

And think that you're also seeing some not just in China, but you're seeing some of the Asia-Pacific companies-- VinFast is one-- take advantage of some of the IRA funding and some of the infrastructure bill opportunities available to help offset some of their expansion in the world's largest market right here in the US and North America.

So again, very interesting to watch. You're right. Keep an eye on China. But also see how they play into this market. Two very different markets. Two very different energy frameworks. And two very different industrial policies.

PRAS SUBRAMANIAN: So, Bill, sticking with our looking at the United States here, what do you think are some of the big catalysts next year that could drive some EV growth? For instance, is it the point-of-sale EV tax credit happening at the dealer level? Is it maybe finally more cheaper EVs coming? What do you think is going to sort of drive more sales potentially next year?

BILL NEWMAN: Yeah. Well, I think you hit on a few of them right there. And so let's double-click on those, right? So obviously, there's range anxiety-- so getting above that 500 mile per charge. So I think there's some really good innovations that are coming out that we've seen developing, not only just with respect to battery technology from precious heavy metals but also from synthetics-- silicone, for an example, other designs.

I think you're going to see pushing into that midrange we mentioned earlier in our conversation here that most of the EVs have been in kind of the luxury category. And so now as we start to push in, keep an eye on GM's Equinox, right? I can-- depending on what kind of luxury I want, I can push into that for under $40k. Now you're making that available.

Also, keep an eye on interest rates. Interest rates for car and homes seem to be taking a bit of a pleasant drop in the last, you know, three, four weeks. So obviously, the Fed has an influence on that. And again, just keeping in touch around the availability for charging.

You know, and as I like to tell my kids, who are grown adults, if you really want to make a difference now, you can still look at a plug-in electric hybrid. I know it's not cool as maybe some of the other models that are out there. Sorry. I'm just kind of, you know, more mature in the market here. But they are California 2035 compliant, as well as many parts of other countries. So you know, maybe there's some additional options that just people haven't thought of because we've been so caught up on the hype curve, right?