3 ways to advance the EV industry in 1 year
The verdict is in: the future is electric. Global electric vehicle (EV) sales are projected to soar to 31.2 million units by 2030, compared with 2.5 million in 2020, according to the consultancy Deloitte. It sees EVs making up 32% of all motor vehicle sales by 2030, and other industry analysts estimate that by 2040, electric cars will outsell internal-combustion engine (ICE) models.
Automakers are going all-in with electric as a result. Major names in the industry are pouring billions of dollars into electrification. Volkswagen, for example, has upped its spending on electric to more than half of all expenditure -- it will spend US$100 billion to speed its push towards electrification.
Other carmakers say they plan to sell only electric cars in the next decade: Honda says it will phase out all ICE cars by 2040.
Ford says that by 2030, all of its passenger vehicles sold in Europe will be all-electric. It also says two-thirds of its commercial vehicles will be either electric or hybrids by the same year. Renault, meanwhile, aims for 90% of its vehicles to be fully electric by 2030.
The race towards this future is heating up, so here are three ways to advance the EV industry in just one year:
- Get smart (manufacturing): Big Tech and unicorn startups from Silicon Valley, the UK and China are already disrupting the EV market with advanced digitisation and automation capabilities. By doing so, they are able to slash time-to-market from several years to as little as three months.
These disruptors benefit from the fact that low EV order volumes -- for now -- mean that speed is overtaking scale as a key factor in automotive manufacturing.
New car designs render as many as 90% of automotive parts from existing ICE vehicles redundant, and electric-first automakers are also less reliant on current supply chains and mass-manufacturing plants.
The electrification and digitisation of transport is driving seismic disruption of traditional automotive monopolies, supply chains, product portfolios and manufacturing models. A lot of traditional automakers are struggling with legacy infrastructure that has left them with inflexible systems that are not future-proofed.
Our research confirms that although almost half of the automotive industry is increasing investment in smart manufacturing and Industry 4.0 strategies, 52% of players still have no plans to invest more.
That is not good news, because smart manufacturing is critical to resolve many of the challenges they face, such as accelerating time to market, replacing large, linear manufacturing facilities with lean, adaptable assembly lines, and creating more automated, efficient and productive manufacturing. Doing so will allow them to strike the right balance between price and performance, profit and planet.
As such, winning this EV race means not just working hard, but working smart.
- Advocate, educate and integrate holistically: The push for EVs needs to be supported by industry-wide advocacy and education that spans not just the automakers, but regulators, policy makers and consumers.
Automakers and regulators need to work together towards creating a conducive ecosystem for the adoption and use of EVs, while simultaneously focusing on other relevant industries like energy and mining.
Importantly, no conversation about EVs is truly holistic until we also talk about renewable energy as the source for charging EV batteries. And when it comes to mining rare earth materials needed for these batteries, action must be taken to ensure that the mining practices do not have a negative impact on the environment.
All these must be considered together as a part of the advocacy, while the myths surrounding EVs for consumers should be debunked; for example, that EVs lack driving power and speed, or that they have extremely limited range.
- Sweeten the pot: What will it take for consumers and automakers alike to pick EVs over ICE cars? Incentives help a lot.
Although overall car sales dropped 16% during the pandemic, electric car registrations grew by 41% in 2020, according to the International Energy Agency (IEA). That meant that there were around 10 million EVs on the world's roads by the end of last year.
A growing level of awareness about climate change and environmental impact means that many people are willing to swap their ICEs for electric, or even hybrid cars. Across the world, governments are spending as much as $14 billion to support electric car sales, up 25% from 2019, mostly from stronger incentives in Europe.
These can come in the form of tax rebates for both manufacturers and consumers, discounts on car prices with packaged after-sales service, cheaper road taxes or insurance premiums. These incentives are short-term in nature and don't require long, drawn-out policy debates.
The race for a 100% clean automotive sector should be accelerated and it can be. At Hexagon, we apply a global perspective and end-to-end understanding of automotive development and manufacturing to set a higher bar for the industry.
Our goal is to help manufacturers rise to meet the e-mobility revolution, make the clean automotive market transition more effective, and reach the 100% EV goal faster.
So, as mobility evolves to meet the changing requirements of today's customers, the ability to adapt and deliver relevant innovations quickly, sustainably, affordably and in a secure fashion will be an important success factor.
Terrence Lim is general manager for Asean and the Pacific with Hexagon Manufacturing Intelligence.