“E2”: Possible or Combustible?

?Electric cars are buzzing along the streets of New York.?

An innovation that only a few years ago was confined to drawing boards has quickly accelerated its way into the city, making up a third of the city's transportation vehicles.??

Some of the largest names in the industry are making massive investments in the quickly evolving electric vehicles (EVs) market. 90% of New York’s cabs are EVs; about a third of all the vehicles on the road are electric as well.

The people (specifically New York’s urban consumer class) have placed their bets and made their voices heard. They want and demand cars that are not only faster, cleaner, and quieter, but also more reliable.?

The year is 1905.?

Fast-forward to more than a century later, we look back at history to see what might have been.? The world, specifically Henry Ford, ditched his EV portfolio and investments for a more profitable technology. Similar to the turn of the century, we are once again flooding the auto market with new innovative products but also new conversations, debates, predictions, and massive investments.?

In the last 5 years, nearly every major international automaker has issued a statement regarding their future electrification. Some of these announcements, one could argue, have had more to do with pleasing shareholders and environmentalists than actually going ‘all-in’ (major EV pledges).?

PR blitzes and headlines aside, the demand is clear and the industry is getting serious. The automotive landscape is seeing a wave of investment nearing $3 trillion globally, indicating a paradigm shift with what's powering our means of transportation and how, where, and when they are built.?

Is E2 Possible? Or Is It Just a Pipe Dream??

We are poised to soon enter what I like to call a state of E2 (E Squared): this is something I coined to describe the idea and notion that the world is heading to a future of “every vehicle will be an electric vehicle.”?

The question is: is this a massive short-term fad not dissimilar to the rise of early electric cars in the late 1800s and early 1900s? Or is E2 a very possible reality that will mark a global shift in an arguably archaic industry?

The production of early electric cars peaked in 1912. The technology lost its steam (another failed form of consumer vehicle power) as automakers made advances in mass-produced and gas-powered vehicles (most notably Henry Ford and the Model T).

This time, however, signs point to full vehicle electrification finally realizing its potential for creating a more sustainable future. E2 is a very real possibility. But for it to become a reality, it will require the intersection and concurrence of multiple factors at a perfect point.?

It Starts With the Manufacturers

One such factor involves carmakers digging deep into the heart of their manufacturing operations and forcing a reflection.?

From a 100,000-foot view, the automotive industry has remained largely stagnant for the last 20 to 30 years. Sure, electronic sensors, in-vehicle diagnostics, hybrid engines, and even assisted driving have made headlines, but the core of today’s vehicle remains very similar to the ones our parents and even grandparents bought and drove.

For E2 to happen, manufacturers must hold up their end of the bargain with ambitious adaptation and transformation.?

This means preventing semiconductor and chip shortages from weighing heavily on production, reducing investments in combustion engines, and developing the infrastructure necessary to support the global adoption of EVs.? Like all great promises, there needs to be as much focus on the action as there is on the intention.

Manufacturers must respond to evolving consumer expectations and prove their ability to innovate and deliver longer ranges at scale. (My own father admits he wouldn’t buy an electric car unless it has a 1,000-mile range.)?

According to a June 2022 Forbes survey of current EV customers, 37% say they still “frequently” worry about range, 25% say they “always” worry about range, while only 9% of customers surveyed said they never worry about range.?

E2 won’t happen unless carmakers participate in new ecosystems and commit to having a clean, green supply chain. The speed at which this becomes reality will be influenced, if not determined, in large part by regulatory push, which will vary at local and international levels.?

President Biden has announced steps to make half of all new vehicles sold in 2030 zero-emissions vehicles. This entails the development of long-term fuel efficiency and emissions standards.?

Meanwhile, a multitude of new legislative proposals has been introduced by the EU to accelerate the electric vehicle revolution. Governments are promoting EVs by providing a range of subsidies on the supply side, while also tightening regulations in order to pressure manufacturers to reduce their emissions.?

Consumer Mindsets Have to Transform, Too

Mintel recently published a study that highlighted consumers’ top 3 environmental concerns:

• Climate change / global warming (46%)
• Air quality (36%)
• Plastic pollution (33%)

These concerns are leading to a massive shift in spending habits. According to Bloomberg, consumer spending is nearing a 40-year high — even with rising inflation rates, an increase in environmental catastrophes, and a war in Europe looming.

Just like in the early 1900s — when consumers chose electric cars because they were “quiet, easy to drive, and didn’t emit a smelly pollutant like the other cars of the time” — there is now an ongoing mentality shift towards going electric, alongside a growing sense of consumer morality towards a more environmentally friendly world and more sustainable future.

According to Mintel:

• 59% of consumers overall are interested in buying a car in the next 1 to 3 years, and 43% are interested in a hybrid/electric car.??
• This alone will result in trillions of dollars being spent by consumers in the next 1 to 3 years. Where they invest is what we are waiting to see.?

This type of demand has driven a 63% growth in global EV sales in the first half of 2022. (According to the IEA, 60% of all new vehicle sales need to be fully electric to keep us on course to achieve net zero by 2050.)

However, consumer acceptance is not guaranteed. Vehicle costs were and could be the breaking point of where the consumer chooses affordability over sustainability. On average, the cost of a new EV is roughly over $65K vs. the current ICE vehicle just north of $46K.

Limited infrastructure availability and geographic distribution also pose a challenge. If E2 is to become a reality, operators must address the need for expanded charging networks, particularly in regions where stations are spaced much farther apart.?

Increased demand for EVs may also require new investments in grid infrastructure footed not only by OEMs but state and federal funding as well.

To keep up with the pace of disruption, automakers and suppliers must deliver experiences that reflect the lives of their customers. Those who sit out the transformation not only risk being marginalized and forgotten; they also risk impeding the growth of the EV market and the full realization of E2.? Dare I bring up the likes of Blockbuster, Kodak, Motorola, etc.: those that were a step behind innovation and customer demand.??

So, is E2 a guarantee? At least in the short term, I would be willing to bet on it.?

Combine a rapid acceleration in battery technology, an abundance of billionaires jumping in, and an even larger pool of OEMs and start-ups coming along, and the future is certainly looking bright. I look forward to continuing to see the advancements and innovation that continue to happen over the next 5 to 7 years.?

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If you made it this far, thank you. I aim to publish content to share what’s new and exciting out in the world of automotive, marketing, advertising, and anything that may seem to be trending in the vast world of digital consulting. Please feel free to share your feedback with me by leaving a comment, sharing my article, or connecting with me on LinkedIn or at zachbambach.com