Meeting EV demand and scaling for the future
Electric vehicles (EVs) have taken off worldwide. Among the varied challenges like ongoing component shortages, geopolitical influences, and market competition, is the question of how to meet this rising demand. To succeed in the evolving market, the automotive industry has several factors to take into consideration.
First, let’s take a quick look at the rapid growth of the EV market.
Growth in the Market
Every region is undergoing a dramatic transformation into the EV market. According to Bloomberg, in 2021, global passenger EV sales were forecast to top 6.3 million units, nearly twice that of 2020. Leading the charge are Asia and Europe, two areas with increasing fuel economy regulations and sustainability initiatives.
In Europe, significant subsidies in the U.K., France, and Germany continue to drive the adoption of EVs. Germany is one of the countries undergoing a revolution. In July 2021, 21.7% of all cars produced in Germany were EVs. This is a stark increase from the single-digit percentages seen in 2020 and 2019. Another promising trend there is that EV production was up in August, even though German car production was down.
Scaling Challenges
With this tremendous growth, comes a few considerations for scaling effectively.
I. Shortages
The EV segment isn’t immune to the semiconductor and part shortages impacting the auto industry. While some automakers reduced their overall production, others focused their output on specific vehicles to support their financial success. One of the largest EV manufacturers even reprogramed their software and procured chips from new suppliers to alleviate the major disruptions.
II. Charging Infrastructure
To power the EVs, there will need to be a sound strategy regarding the energy grid and providing enough charging stations to meet the need. The concern is voiced, “there’s not enough EV infrastructure at any level to meet some of the ambitious goals set by EV advocates or even car-makers and to transition transportation away from fossil fuels in the next 10 to 15 years”.
There’s also the matter of where to prioritize charging station development and investment. Reaching the ambitious sustainability goals set by governments and organizations will likely require investments in a blend of public quick-charge stations at retail, parks, schools, and more, in addition to workplace and home charging options. One area of opportunity is Level 1 charging, which is low-power, low-speed, and simply requires a standard outlet without any added infrastructure.
Charging infrastructure must be reliable, accessible, affordable, and equitable in all regions and local areas. In the U.K., the head of future markets at National Grid, Graeme Cooper, says the energy network operator is “working with [the] government to map out where critical grid capacity is needed to enable the faster roll out of charging points.” He adds, “There will be an uptick in demand for energy, so we need to ensure that we are future proofing…for future demand”.
III. Batteries
The increasing demand for materials required to make EV batteries is already impacting the supply and cost for production. In addition to the main elements: nickel, cobalt, and lithium, the carbon-compound graphite is expected to experience a major shortage, bumping up the price considerably. Manufacturers will need a plan to source these essential resources during critical times.
Scaling During the Current Market: Supply Chain Visibility and Resilience
Supply chain visibility and resilience are paramount for the success of continued growth. Converge’s market intelligence allows us to educate our customers of rapid changes amidst the EV revolution. To request a personalized consultation, reach out to our experienced EV team today.
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