Demand drivers in the electric vehicle market are slowing significantly, prompting Citi US Autos & Auto Parts Analyst Itay Michaeli to trim EV forecasts. Joining Yahoo Finance Live, Michaeli believes Tesla (TSLA) and General Motors (GM) still stand to gain share in 2024 despite "adoption challenges."

Michaeli explains that American households average two cars, so the goal for automakers isn't wholly electrifying every vehicle yet. Rather, it's initially "converting households" to one EV and one gas-powered car.

Even with "revised plans by the EV makers" amid pullback, Michaeli states electric vehicles stand to have "a pretty good year."

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

Editor's note: This article was written by Angel Smith

Video Transcript

- For more on what is happening in the EV space, joining us now is Itay Michaeli, Citi US autos and auto parts analyst. Itay, it is good to see you. And I want to get to a note, Itay, you recently wrote here. You're now trimming your estimates for EV sales, both for this year and next. Itay, why did you make that call there? What are you seeing in the market?

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ITAY MICHAELI: Well, thank for you for having me. Yeah, we did trim our estimates recently by a modest amount. We still see EV sales actually reaching about 9.5% penetration in 2024 and close to 15% by 2025. That said, given the slowdown and some of the revised plans by the automakers that we've seen announced, plus I would say a tough start to January-- December, we think, was actually a very good month. But just given the slower start in January, we did trim our numbers a little bit.

I would say our views are probably still above the current consensus thinking, which has been very bearish on EVs the last few months. We don't completely agree with that. There are some adoption challenges out there. That's reflected into our numbers. But we still think we'll have a pretty good year for EV growth this year on the back of some new product.

- And who do you think is going to be the big winner in EVs? And is that going to then determine who's the big winner overall in sales this year?

ITAY MICHAELI: Yeah. So overall, EVs just a small part of the market, but close to 10% we think this year. We do believe, of course, Tesla will remain by far the market leader. Our forecast for market share this year is just under 50%. We think a new product, including the refresh of the Model 3, is going to be key for them this year. Of course, Cybertruck ramping as well.