Knee-jerk reactions aren’t advisable when billions are at stake.
It’s still big news of course, but motoring journalists (like yours truly) and industry observers have become desensitised to carmakers making big & bold claims as they try to stay ahead of ‘Mobility 2.0.’ With electrification being the topic of the day, it feels like every announcement of major investment towards zero-emissions propulsion comes off the back of a similar announcement from another company, but ahead of yet another announcement about more silent, exhaust-less cars from another company.
Volkswagen says they’ll devote some US$50-billion towards fortifying their family of I.D. zero-emissions vehicles, while Daimler has said it’ll commit US$11-billion in investment while also buying more than US$20-billion in battery cells to forward the development of advanced energy storage technology. BMW, Jaguar-Land Rover, Geely are all singing the same tune, each with a different set of numbers insofar as capital expenditure and product timelines.
But those whose jobs are to look at data, crunch numbers, and translate overwhelmingly-nerdy things into a language we all understand have some rain to pour on the electrification parade, it seems. A UK automotive partner at accounting & risk management firm Deloitte had something to say about the push into EVs, and it isn’t pretty.
“Whilst there is a distinct trend developing in the EV market, the story is not a clear cut one. As manufacturers increase their capacity, our projections suggest that supply will vastly outweigh consumer demand by approximately 14-million units over the next decade. This gearing up of EV production is driving a wide ‘expectation gap’ and manufacturers, both incumbent and new entrants alike, will need to adapt towards this new competitive landscape.” – Michael Woodward, Consulting Partner & UK Automotive Leader, Deloitte
Deloitte does however believe that the increased volume of EVs will bring their prices to comparable (if not more competitive) levels as conventional cars by 2024. And while some 21-million EVs will be manufactured over the next 10-years, demand for them will increase, but not by as much as the carmakers think. 2-million EVs were sold globally last year, a 100% increase over 2017. But even then, the ratio of EVs to ICEs is still relatively lopsided, where even BEV-happy Norway only counts one EV to every 250 combustion vehicle. Globally, EVs and even plug-in hybrids accounted for just 2.2% of sales, with the US alone (the second largest car buying market in the world) charting a marketshare below 2%.
But with billions at stake, the EV wave is one that carmakers cannot afford to misjudge. While companies like the VW Group could perhaps dust itself off after relieving itself of US$50-billion, smaller firms who have put either most if not all of their eggs in the EV basket might not be able to take the hit (companies like Aston Martin & Jaguar-Land Rover come immediately to mind). And while Tesla is (finally) on track to hit its 500,000 annual sales figure, it also had to lay off 3,000 employees to do so. The major automakers are planning for numbers far greater than that, and if poorly judged, there could be major effects in the auto industry that could very well spell the end of some carmakers as we know them.
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