But dont expect prices to match affordable ICE cars anytime soon, or ever even.

In 2021 demand for electric cars surprised everyone, even Tesla and in 2022 the numbers continued to double and as we arrive in 2023 the auto industry will hit the inflection point towards zero emission vehicles.

Despite all the posturing in the West and Japan, it seems that China’s BYD, SAIC-GM-Wuling, and GAC Aion that dominated the top five EV brands in terms of global sales for 2022.

This should come as no surprise as China’s strategy has always been to learn the rules of the game better than anyone else and beat them at their own game.

Thanks to years of well targeted subsidies and regulations that favour cars with no tailpipe, they have made huge strides in the EV industry, with domestic demand driving a stable supply chain that covers everything from batteries and car electronics to cars and car software.

By 2023, it is predicted that global EV penetration will reach 17%, with sales volume likely to hit 14 million units. This is set to rise to 24% by 2024 and nearly 33% by 2025, with sales volume reaching 28.5 million units.

We are, basically hitting the point of no return in 2023.

Some suggest that government resistance to EV may slow down adoption but I am of the opinion that the convergence of technology has become so compelling that very few buyers will opt for internal combustion engines in the next few years.

That is not to say that there are no challenges; one key hurdle is ensuring data security as cars resemble computer-powered mobile living space and the amount of data generated by these vehicles will be tremendous and the potential of security breach is very real.

Coupled that with the nascent prevalence of artificial intelligence, and the cavalier wild frontier attitude taken by some companies in the implementation of ever more functionality in cars, we are really staring into the abyss of the unknown unknown.

Some of the more basic concerns, such as carbon footprint during production and overall energy source still looms large over the industry, but the shift to renewable also seems unavoidable as countries begin to realise not just the cost but security implications of being fully in charge of their energy supply if they go green.

On the more practical side, range anxiety will wax and wane as the charging industry and automakers return volleys to each other until a stable equilibrium is established.

As it is, there is really no reliable business model that the industry can call upon as they set up infrastructure electric cars; this is because even basic data such as consumer behaviour and charging trends are very scarce still.   

As EVs become more closely intertwined with the Internet of Things (IoT) through software-defined vehicles (SDVs), there is a growing demand for innovation in automotive solutions and the use of cloud storage, machine learning, and edge computing.

Features such as advanced driver assistance systems (ADAS), e-mobility services like ride-sharing and goods delivery, in-vehicle infotainment, and personalized driving control will become standard in future cars.

This is leading to a shift in the global automotive supply chain, with startups and tech companies entering the market and traditional original equipment manufacturers (OEMs) trying to keep up with the pace of innovation.

One of the big implications of this is the automotive industry shifting from being a mechanical-based industry into and electronics-based industry and all the implications that come with it; from Research and Development centres to cost structures and much less need for proprietary technology where it is not in direct contact with consumers.

Looking at the DVD industry as an example, the cost of players dropped 90 per cent in less than a decade in the early 2000s as the technology matures and the cost of RnD were quickly amortised by the main suppliers of the laser reading head, which is the most complex and expensive part of the device.

Due to the complexity of the component only a few companies made it and it was based on the RnD work of a few companies.

This is similar to the computer and smartphone industry where just about anyone can start their own smart phone brand by combining processors with storage, display screens and wireless modules and focus on developing an effective integration strategy.

Apart from the consolidation of the electronic parts industry, the industry will also see consolidation in terms of automotive operating system (OS).

Companies such as Xiaomi, Huawei, Baidu, Google, and Apple are reportedly working on car OS, smart cockpit solutions, or autonomous driving technology.

The key technology there is autonomous driving, which is a very tough nut to crack and there is a very high likelihood that once the nut is cracked it will not be cracked again.

It is likely that there will be no more than three autonomous technology that will underpin the car OS that enables the vehicle to connect to the cloud, interact with the Internet of Vehicle (IoV), manage in-vehicle applications, and even control the movement of the vehicle and chassis.

It is the glue between hardware and software that keeps connectivity intact and is a key factor in determining the price of a vehicle.

Actually, it is my firm belief that once autonomy is achieved, the car will more likely to used as a service rather than something that we own and maintain.

With autonomy, EVs will become more like a third living space for people, therefore it is important for carmakers to focus on user experience and this is where the identity of the brand and its experience will matter.

Companies that focus on building all the tech late in the game will perish while those that develop advantage of big data and software development will be able to offer the best user experience and win the most market share.

In the meanwhile, we will see the price of electric vehicles fall somewhat but it is not likely to reach parity with internal combustion cars in the economy segment as the cars will simply pack too much technology to be allowed into the wild at price that matches an entry level ICE which is much less feature rich.

While there may be some success in providing basic EVs at relatively competitive pricing, that business model will evaporate once full autonomy is achieved.

If we look at the market from 2023 to 2025, we are likely to see sales doubling in any market that has some sort of intention of moving towards EV.

Malaysia will likely see EV sales breach 5,000 units this year on the conservative side or even reach for 10,000 units if all the stars align,

That number will likely be between 10,000 units and 15, 000 units in 2024 and be at least 20,000 units in 2025.

Admittedly those numbers are less than 5 per cent of the total industry volume but these are conservative estimates based on past experiences, if we were to plug in the smartphone transition trend into the automotive industry curve, the jump may be a lot bigger.

At least one car company thinks the jump will be much bigger, Volvo is targeting their annual sales in Malaysia to comprise 75% electric cars.

I think they are right, at least in the premium segment, the jump will be much bigger

For premium brand BMW, the shift has already happened with i7 bookings exceeding 3,000 units since order books were opened in October. Basically, their entire year sales of 7-series are now electric.

Number from Mercedes Benz is less clear but I do expect that they can pretty much sell everything they can get their hands on in 2023.

Meanwhile Chinese brand Ora is looking to shift at least 2,000 cars in 2023 while BYD Malaysia and local partner Sime Darby Auto Connection is looking to spend RM500 million in the next two years, surely that includes a CKD operation.

With CKD operations, who is to say that BYD will not shift at least 5,000 car a year once the local assembly facility is up and running. After all they got 1,000 bookings in 10 days.

Whatever little tremor that we felt in 2022 will likely grab Richter by the scruff of the neck and really shake that scale in 2023.

The Malaysian automotive industry has had ample time to digest the moves that are happening and it is up to them to come up with a strategy that will allow them to defend their existing market, response time will be measured in months and no longer years because if they only want to execute in 2025, it would be like joining training a week before the competition is flagged off. Good luck everyone.