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February 16, 2022 by Adam Malik
Kindel Media / Pexels
If fully electric vehicles are to become mainstream and grab a sizeable share of the car parc, there are six challenges to overcome: Customer acceptance, charging infrastructure, chip shortages, battery shortages, reliance on rare earth materials and the ability to have multiple owners.
The list was put together by Lang Marketing in a recent Aftermarket iReport.
“In expanding their VIO share, EVs face six major challenges, ranging from manufacturing capacity and infrastructure issues to consumer needs,” it stated. “While some of these challenges are probably fleeting, others will persist for the balance of the decade and, perhaps, beyond.”
Tesla currently dominates the market, making up 80 per cent of electric vehicle sales in the U.S. With about 160 new nameplates on the way, other automakers will need to gain the trust of consumers, not just Tesla enthusiasts.
Infrastructure to allow drivers to charge their vehicles away from home will be another hurdle. While most EV buyers will have a charging station at home, greater availability will allow for a broader customer base. Think of those who live in apartments or don’t have a driveway for their vehicle.
Shortages of two key materials will also present challenges. Computer chips are already an issue, as seen in the current new vehicle segment. That is expected to linger for a few more years, Lang noted.
“EVs are semiconductor dependent and continued chip shortages could curtail EV production over the next year or two,” the report added.
However, more significant is the lack of battery manufacturing capacity. Lang observed that experts have indicated that battery shortages will reduce the global production of EVs by more than 20 million between 2022-2029.
Keep an eye on rare earth metals, Lang said. These are metals that are difficult to find in large quantities to make mining possible, and they’re critical for manufacturing the types of electric motors most found in current EV designs.
“If offshore rare earth metals were suddenly denied to the U.S., domestic EV production would abruptly stop,” Lang warned.
Finally, a key question is how EVs will pass through different owners. Most people don’t buy new vehicles. So can EVs live long enough to be passed down to a second or third owner?
“ICE-powered vehicles have proven to be very durable and easy to repair,” the report said. “It remains to be seen if electric vehicles will be able to fill this same market need across the broad range of secondary buyers in the U.S.”
Todd Campau, global aftermarket solutions associate director with IHS Markit raised a similar question during his AAPEX 2021 presentation 5 Trends in 5 Minutes.
He found that from 2011 to 2020, 79 per cent of EVs sold during this time are still with the original owner. That’s a vastly different story from gas vehicles where half have changed hands.
“Now, this is not a problem necessarily to be worried about for EVs, but it’s just showing that the behaviour right now [for] the EV owner is a little bit different,” Campau said. “They’re keeping their vehicles a little bit longer. And so that may be why we’re not seeing as much in the aftermarket space just yet.”
6 challenges for electric vehicles
Kindel Media / Pexels
If fully electric vehicles are to become mainstream and grab a sizeable share of the car parc, there are six challenges to overcome: Customer acceptance, charging infrastructure, chip shortages, battery shortages, reliance on rare earth materials and the ability to have multiple owners.
The list was put together by Lang Marketing in a recent Aftermarket iReport.
“In expanding their VIO share, EVs face six major challenges, ranging from manufacturing capacity and infrastructure issues to consumer needs,” it stated. “While some of these challenges are probably fleeting, others will persist for the balance of the decade and, perhaps, beyond.”
Tesla currently dominates the market, making up 80 per cent of electric vehicle sales in the U.S. With about 160 new nameplates on the way, other automakers will need to gain the trust of consumers, not just Tesla enthusiasts.
Infrastructure to allow drivers to charge their vehicles away from home will be another hurdle. While most EV buyers will have a charging station at home, greater availability will allow for a broader customer base. Think of those who live in apartments or don’t have a driveway for their vehicle.
Shortages of two key materials will also present challenges. Computer chips are already an issue, as seen in the current new vehicle segment. That is expected to linger for a few more years, Lang noted.
“EVs are semiconductor dependent and continued chip shortages could curtail EV production over the next year or two,” the report added.
However, more significant is the lack of battery manufacturing capacity. Lang observed that experts have indicated that battery shortages will reduce the global production of EVs by more than 20 million between 2022-2029.
Keep an eye on rare earth metals, Lang said. These are metals that are difficult to find in large quantities to make mining possible, and they’re critical for manufacturing the types of electric motors most found in current EV designs.
Production for rare earth metals is concentrated in China. That could leave countries producing EVs to depend on China.
“If offshore rare earth metals were suddenly denied to the U.S., domestic EV production would abruptly stop,” Lang warned.
Finally, a key question is how EVs will pass through different owners. Most people don’t buy new vehicles. So can EVs live long enough to be passed down to a second or third owner?
“ICE-powered vehicles have proven to be very durable and easy to repair,” the report said. “It remains to be seen if electric vehicles will be able to fill this same market need across the broad range of secondary buyers in the U.S.”
Todd Campau, global aftermarket solutions associate director with IHS Markit raised a similar question during his AAPEX 2021 presentation 5 Trends in 5 Minutes.
He found that from 2011 to 2020, 79 per cent of EVs sold during this time are still with the original owner. That’s a vastly different story from gas vehicles where half have changed hands.
“Now, this is not a problem necessarily to be worried about for EVs, but it’s just showing that the behaviour right now [for] the EV owner is a little bit different,” Campau said. “They’re keeping their vehicles a little bit longer. And so that may be why we’re not seeing as much in the aftermarket space just yet.”
