EVs are on the rise, but the market for fuel-efficient cars is still far from the billions of dollars the industry says it needs to stay competitive.
The biggest threat to electric vehicles may be a global economic slowdown, as the price of oil remains at a historic low and the pace of growth slows.
That could drive a steep price hike by electric car companies, and the stakes are high.
“If you think about the climate impact of the climate, the economic impact of climate change is enormous,” said Jeff Koons, chief executive of electric car maker Tesla Motors Inc. “If you don’t have a viable EV market, that could be the first time in history that the whole market goes extinct.”
The EV market is growing, but it is growing slowly.
The average EV sold in the U.S. last year was roughly 25,000, according to IHS Automotive.
That’s a drop from more than 200,000 in 2014, but still more than twice as many as in 2015, according the IHS.
The market’s growth rate is expected to plateau in 2019, the I.M.F. said, while demand will remain strong.
Tesla and others say that the market is in a state of transition, with growth slowing and a drop in interest in plug-in vehicles due to a growing number of consumers who want to do more driving.
“There’s a lot of room for growth,” said Paul Rivelli, an analyst at Sanford C. Bernstein & Co. “We’re not going to see the kind of mass adoption that you see in the 1990s and 2000s.”
Tesla is in the midst of its largest-ever investment in its Fremont, California, factory, to build its second electric car, a $5,000 Model X SUV.
The company plans to sell more than 4,000 units in 2019 alone.
The car is expected at $69,000.
Tesla CEO Elon Musk said in March that the company was in “a race against time” to bring its Model 3 electric sedan to market by the end of the decade.
The Tesla stock is up more than 70 percent so far this year, on Wall Street’s most optimistic forecasts.
But the market has never been able to keep up with demand, and Musk has been vocal about the need to keep pace.
Tesla’s Model S sedan has sold just over 2,500 in its first year on the market, and sales are expected to drop to 1,200 cars in 2020.
The Model X, the most affordable of the EV brands, is expected in the low 20,000s.
Tesla is not alone in trying to ramp up demand for its vehicles, though.
Ford Motor Co., for example, plans to increase sales of its Fusion sedan by 15,000 cars this year.
The growing demand for electric cars is also pushing Tesla and other electric car makers to ramp-up production.
The U.K.-based automaker plans to ramp its electric vehicle plant by 200 workers, to meet demand in 2020, and it plans to double its capacity in 2021.
“We are now in a phase where the demand is coming in,” Musk said last month.
“I think the demand for our products is going to increase exponentially.”
That growth could also push electric car buyers into the auto-trader market.
Tesla has been in talks with automakers such as Ford Motor, General Motors Co. and Chrysler Group LLC about making a car-sharing program.
But the automakers are unlikely to offer any sort of deal until a deal with the company is done, according on Thursday to people familiar with the talks.
Tesla CEO Elon Trump also has been active in the auto industry, even as he has tried to curb the emissions of his cars.
Last month, he said he was exploring a merger with Ford to bring electric cars to market.
He has also criticized automakers for making more expensive gasoline, saying it should be free to all drivers.
Tesla shares fell more than 3 percent in early trading on Friday.
Ford shares were down 0.7 percent.GM shares fell by nearly 2 percent.
Ford was down 0,814.
Chrysler Group was down 2.4 percent.
Tesla shares were up 1.4.