The EV Transition: How The Automotive Industry Is Adapting

The EV transition is a topic of great interest in the automotive sector, with countries feeling pressure to meet global climate change milestones. This has resulted in higher demand for electric vehicles (EVs) and ultimately caused automotive manufacturers to shift their focus.?

Electric-powered vehicle technology has therefore become a trend that has recently started gaining traction along with the charging infrastructure that supports EV usage. Early adopters will gain the largest market share and benefit most from this technology. Likewise, late adopters will fail to establish a significant market share and achieve limited innovation before falling out of the marketplace.

This article will delve into how EV technology is disrupting the automotive sector. We’ll also see how established businesses fear being left behind. Let’s first take a look at the current state of EV transition.

Current State of The EV Transition

The EV transition has been driven by consumers looking for innovative ways to reduce their dependence on non-renewables as they consider the impact they’re making on the climate. Consumers are also being forced to look at alternative modes of transportation due to macroeconomic pressures—including soaring gas prices and inflation eating away at monthly spending power.?

That said, climate change and soaring expenses aren’t the only reason behind the transition. Auto manufacturers like Tesla are producing aesthetically desirable and high-performance EV vehicles, tempting consumers to consider an EV. This is attracting early adopters who are environmentally conscious but won’t compromise on quality and performance.

What about traditional auto manufacturers? They will indeed need to invest in research and retooling to gain a piece of this rapidly emerging market.?

Traditional automotive companies, with a faithful and traditional consumer base used to gasoline-based vehicles, need to create a product similar to what these users know in terms of aesthetics, power, and performance.?

This is truly a great time for manufacturers, shareholders, and consumers as the EV transition continues globally. How do electric vehicles fit into the automotive industry?

How Electric Vehicles Fit into the Automotive Industry?

It all boils down to balancing internal combustion engine (ICE) vehicle production with EV production. If companies fail to manage the transition from ICE vehicles to EVs that would result in reduced profitability.

Companies must therefore invest in research to secure their stance in the marketplace and create a so-called economic moat against their competitors. Many companies have been conducting EV R&D and filing patents to protect their market share.?

Many auto manufacturers are investing in infrastructure to help them create the product. Fundamentally, an auto manufacturer is a sheet-bending company. They don’t make ICEs or subcomponents. Instead, they outsource these items. This is a major challenge with new technology and a budding sector as manufacturers won’t find many part vendors. That then impacts costs and has led manufacturers to produce parts in-house.?

How are automotive companies adapting to the EV transition??

4 Ways the Automotive Industry Is Adapting to the EV Transition?

To understand how fast the automotive industry is adapting to the EV transition, you need to consider the adoption rate. India’s EV adoption is growing at around 155% yearly. This year, India’s EV sales is already set to surpass all historical years. This means, at this rate, India is on course to meet its EV30@30 pledge to have 30% of all vehicles as EVs by 2030.?

So what technologies will continue to influence this growth? Consider 4 key areas the auto industry may focus on.

1. Battery Range Technology??

Charge density relies on a battery’s composition and size. Currently, research is ongoing to create better battery technology. Depending on the findings, the industry may alter the battery’s chemical composition. This can also help improve battery production with more abundant or easier-to-mine elements being used. Another consideration is the charging process and charging station availability.?

2. OEM Manufacturing??

Original equipment manufacturers (OEMs) are currently changing their offerings to accommodate the EV transition. You’ll also find businesses that fit within a different business model adapting to serve the EV industry.?

That said, OEMs supplying many larger companies will be phased out as integration becomes the focus to improve competitiveness. Tesla, for instance, looks to scale through vertical integration. Likewise, others may follow with key OEMs to secure their supply chain and reduce their cost per unit.???

3. Own Electric Vehicles?

Automotive companies started by creating concept and small-batch EV cars. That helped them meet EV goals to appease their target demographic and maintain brand and customer alignment. The market is evolving though, especially in countries like India, and requires each manufacturer to progress with EV manufacturing plans. Otherwise, they’ll lose their demographic.

?4. Charging Stations

Charging stations are now being welcomed at traditional gasoline stations to ensure they don’t lose their business to a competitor. And the rollout of charging stations is occurring proportionally to growth. Similar to the EV transition, early adopters of EV charging stations will be the most profitable over the long term, making the most money in the short term.

Final Thoughts

The EV transition is still relatively in its early stages. And new battery technology will potentially replace current chemistries or impact charging behavior.?

In terms of technology, most companies have a researched solution and a number of patents to help give them a chance in the marketplace to thrive. So it’s a difficult question to answer – where to from here??

The market could focus on 4 key areas to adapt to the EV transition. These areas include battery range tech, OEM offerings, creating EVs, and the charging infrastructure.

For now, we can only sit back and watch how the EV transition will unfold and adapt to the on-going paradigm shift in automotive manufacturing processes.?