More and more, headlines throughout the web learn, “(Insert automotive firm) sells out of EVs for 2022 in the US.” Automotive corporations together with Volkswagen Group, Ford, Mercedes and even Tesla are struggling to satisfy buyer demand given ongoing provide chain points, battery availability, chip shortages and elevated curiosity in EVs exacerbated by rising gasoline costs. This implies people and industrial fleet patrons might must maintain ready, in some cases, till 2023. Within the case of business fleets, this will even delay assembly annual company sustainability targets.
Nevertheless, what’s the actuality behind these headlines? Particularly, the query that involves my thoughts is: If drivers and industrial fleets need extra EVs, why not produce fewer gasoline automobiles and prioritize EVs?
In keeping with recent research by Canalys, international EV gross sales rose by 109 % in 2021, with an estimated 6.5 million EVs bought worldwide final 12 months. Whereas that does embody absolutely electrical and plug-in hybrids, EVs proceed to extend in market share, even when the share of complete automobile gross sales they account for remains to be comparatively low. In 2021, EVs represented 9 % of all passenger automobile gross sales, rising from 4.1 percent in 2020.
Manufacturing an EV may be very completely different from manufacturing a automobile that runs on an inner combustion engine. The availability chain, meeting line and design of an EV are completely different, and achieving scale appears to be the toughest half.
For a legacy automotive firm, meaning constructing new meeting strains or adjusting current ones to accommodate structural variations in manufacturing inner combustion engine automobiles in comparison with EVs. The obvious change is the set up of a battery alongside the chassis or the usage of a completely new chassis with an built-in battery alongside the bottom, sometimes called a “skateboard chassis.”
As well as, continued supply chain issues associated to semiconductor shortages and a complete record of different points together with the dimensions at which uncooked minerals comparable to lithium are extracted and refined, in some methods clarify why EVs are promoting out for a whole 12 months or extra. Merely put, it’s complicated to make an EV, particularly when shifting from making solely inner combustion engine automobiles.
Even Tesla might lastly be feeling sure supply-side issues, because it pushes again buyer deliveries. Prior to now, Tesla has managed to skate by many supply chain troubles felt by its opponents on account of its strategic planning, EV experience and vertical integration. Such planning and experience have allowed Tesla’s gross sales to soar whereas different automakers struggled to provide automobiles. Nevertheless, Tesla CEO Elon Musk just lately went so far as to say that Tesla may soon stop taking orders of sure automobile fashions as a result of the supply estimates are greater than a 12 months away.
In talking with Corey Cantor, electrical automobile affiliate at BloombergNEF, I used to be given additional perception into what’s doubtlessly happening with sure legacy automotive corporations as EVs proceed to promote out. Cantor acknowledged, “For a lot of of those corporations, that is nonetheless early within the stage of improvement for the brand new technology of EVs … so it simply takes time to get the availability chain arrange, the battery elements, to enter every automobile.”
With all that being mentioned, what are the numbers, in actuality, for these legacy automotive corporations? Allow us to take a look at Volkswagen and Ford, as they appear to be within the information on this actual subject.
In the first quarter of 2022, Volkswagen of America bought 64,993 automobiles within the U.S., of which solely 2,755 have been its all-electric ID.4. Evaluating the ID.4, VW’s predominant all-electric SUV automobile (not counting different manufacturers underneath the Volkswagen Group, comparable to Audi and Porsche) to the Tiguan: The corporate produced and bought greater than six occasions the variety of Tiguans than ID.4s, promoting precisely 18,233 Tiguans.
Taking inventory of Ford’s EV ramp-up within the U.S., there’s a similar narrative in Q1. Ford bought 412,984 automobiles. Its Mustang Mach-E, Ford’s mainstream all-electric SUV EV solely accounted for six,734 automobiles. (The outcomes don’t embody the brand new F-150 Lightning, which began delivering just lately.) How did the mainstream SUV fashions fare? Ford produced and bought 39,962 Escapes, 26,412 Edges and 42,736 Explorers — within the case of the Explorer, that’s greater than six occasions the variety of Mach-Es.
A choose group of automotive corporations has made daring commitments or set formidable objectives to shift in the direction of EV manufacturing and gross sales. Over the previous couple of years, major automakers, together with Normal Motors and Daimler/Mercedes-Benz, have set objectives to cease producing inner combustion engine automobiles by a sure date within the subsequent decade or extra — 2035 within the case of Normal Motors and 2030 for Daimler/Mercedes-Benz.
Ford and VW appear to even be shifting in the best route, however not evenly and at completely different speeds. As an example, VW just lately shared it’s planning to discontinue 60 % of its gas- and diesel-powered fashions in Europe by 2030 to shift priorities to EVs. Moreover, VW has acknowledged that by 2030, 55 % of its U.S. automobile gross sales shall be absolutely electrical. Within the case of Ford, it recently announced that it’s going to cut up its EV and legacy automotive manufacturers into separate items because it acknowledges the necessity to produce extra EVs. Nevertheless, as of now, it has solely dedicated to going all-electric and plug-in hybrid in 2026 in Europe.
As I take a look at the gross sales numbers for Q1 … after which headlines that EVs are bought out, I can’t assist however suppose — transfer extra shortly to provide much less gasoline automobiles, and shift sources to provide and promote extra EVs.
As such, the narrative that EVs are promoting out is a fancy one. On one hand, the method of producing an EV is completely different from producing a gasoline-powered automobile. Moreover, there are additionally actual provide chain points reverberating throughout the complete automotive business which have made it tough to satisfy demand. Thus, it appears comprehensible why EVs are promoting out.
Nevertheless, then again, additionally it is clear there’s sufficient manufacturing capability throughout the legacy automotive corporations to satisfy the demand for fashions the business needs to be phasing out if these corporations are actually targeted on lowering transportation-related emissions. In fact, it’s unrealistic to imagine they will flip a change and be all-electric tomorrow as manufacturing transitions take time to ramp up.
“It’s simple to set a goal, however it’s arduous to satisfy that focus on … and these dedication dates come up rather a lot faster than one may suppose. The numbers all the time inform: You (automaker) are promoting these vehicles. What number of are EVs now, and what number of have been EVs a 12 months or two in the past,” mentioned Cantor, whereas nonetheless remaining optimistic that within the subsequent few years, all this ongoing planning and prepping by automakers will permit them to considerably develop EV gross sales into the territory that Tesla is working within the U.S. That’s, selling hundreds of thousands of EVs each quarter.
Time will inform how shortly legacy automotive corporations transition away from inner combustion engine-powered automobiles and in the direction of all-electric, particularly automotive corporations which have dedicated to a sure goal date. However as I take a look at the gross sales numbers for Q1 from Ford and VW after which headlines that EVs are bought out, I can’t assist however suppose — transfer extra shortly to provide much less gasoline automobiles, and shift sources to provide and promote extra EVs.
When do you suppose automakers will obtain scale and meet rising EV calls for? Ship me your ideas at [email protected] or tag me on LinkedIn and Twitter.
