The EV market is rapidly growing due to the development of technologies, the support of governments, and the rising concern of people about the environment. This new industry has attracted both the traditional automotive companies and new entrants in the market as they try to establish themselves in the market, and as such, the industry holds great opportunities as well as threats.
Global EV sales have been increasing at a fast pace with the sales figure standing at 6. 6 million units by 2024, it is estimated that this will be a 108% increase from the sales made in 2020. This growth is particularly evident in China and Europe, whose governments have set rather aggressive goals for EV adoption. In the United States, the current administration has pledged to make half of new car sales electric by 2030 while investing in charging stations and offering buyers incentives.
Tesla remains the market leader and has a 14% market share globally in 2024 and still remains the market leader. Nevertheless, the conventional car manufacturers are not far behind and are investing a lot of efforts. The German automaker, Volkswagen, which owns the Audi and Porsche brands, has pledged to spend €73 billion to advance electrification by 2025. General Motors has announced that by 2025 it will have 30 all-electric models on the market worldwide and by 2035, it will only sell zero-emission vehicles.
The transition to EV is a revolution that has disrupted the automotive supply chain in a big way. Battery production is emerging as a key competitive factor as car makers rush to secure supplies of key inputs such as lithium, cobalt and nickel. The global lithium-ion battery market is anticipated to expand at a CAGR of 7. 8% during the forecast period of 2015-2023 and reach $41. From $1 billion in 2024, it will reach $116. 6 billion by 2030.
Another important aspect that needs to be developed is charging infrastructure. The success of EVs is anchored on the provision of adequate and easily accessible charging stations. There is a significant investment being made by the governments and the private companies to develop the charging infrastructure. For instance, the European Union has set a target of having one million charging stations for the public by 2025 from the current 200,000 that is expected to be in place by the end of 2024.
However, the EV market has its own problems, and these are the following. The main concern that has always been a turn-off to consumers is the range anxiety, but as the battery technology advances, this problem is slowly being solved. Another challenge that has been identified is the relatively expensive price of EVs compared to the conventional vehicles; however, this is reducing as batteries’ costs reduce and economies of scale increase.
Concerns have also been raised on the environmental effects of EVs and especially the manufacturing of the batteries. While EVs are known to be less emissive throughout their life cycle than ICEVs, the manufacturing process is more energy consuming and involves extraction of rare earth minerals. Enhancing the sustainability of battery technologies and enhancing the recycling procedures are some of the most important goals for the industry.
The shift to electric vehicles is one of the most transformative processes that is taking place in the automotive industry and has a significant impact on the workforce. On the positive side, it generates new employment in the battery manufacturing and software industry, yet it is a potential threat to the conventional automotive employment especially in the engine and transmission assembly. States and businesses are struggling to find a way to deal with this shift and retrain their employees.
EVs are also changing other industries that are related to it. This has become a potential threat to the oil companies and hence they are expanding their business by investing in EV charging and renewable energy. Utilities are readying themselves for the higher power consumption and are also looking at how the EVs can be used in the smart grid as flexible energy storage systems.
New companies are coming into the automotive industry because there are relatively low entry barriers in the EV manufacturing. New market entrants include Rivian, Lucid, and NIO that is competing with traditional auto makers while tech giants like Apple and Xiaomi are reportedly working on their own EVs.
The Tesla’s success has proved that direct to consumer sales model is feasible in the automotive industry thus disrupting the long standing dealership networks. This is causing tensions with the dealer associations and requires the change in the state laws in the US.
In the future, as the EV market continues to develop, we will notice that the products become more and more diverse. While early EVs were sedans and SUVs, we now have electric trucks, sports cars and even flying taxis in the pipeline.
The transition to electric vehicles is a part of the larger change in the transportation industry where greater focus is being placed on clean and innovative solutions. It is directly related to the emergence of autonomous vehicles, connected vehicles, and shared mobility services. The intersection of these trends will probably redefine not only car manufacturing but also the whole transportation system.
The shift towards electric vehicles is one of the biggest transformations that the automotive industry has witnessed in a while, much like the shift towards the Model T. As technology progresses and consumer uptake increases, it is likely that we are going to see more changes and disruptions in this exciting market. The companies and the countries that will be able to manage this shift are likely to be the kings of the new mobility world.
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