The future is electric: Three ways to advance EV industry in a year

by TERRENCE LIM

WITH the EV (electric vehicle) market projected to soar to global sales of US$34.7 million (RM146.8 million) by 2030, industry analysts estimate that by 2040, electric cars will outsell ICE (internal combustion engine) vehicles. Already, sales of EVs have gone up threefold — 9% of all cars sold were electric in 2021, compared to 2.5% in 2019.

Deloitte estimated in its global EV forecast that the industry will grow at a compound annual growth rate of 29% over the next 10 years, with total EV sales growing from 2.5 million in 2020 to 11.2 million in 2025, then reaching 31.1 million by 2030. It also estimated that EVs would secure approximately 32% of the total market share for new car sales in this period.

Automakers are going all-in with electric, too. Across the globe, major names in the automotive industry are pouring the dollars into electrification. German automaker Volkswagen AG, for example, has upped their spending on electric to more than half of all expenditure — it will spend US$100 billion to speed it’s push towards electricification.

Other carmakers say they plan to sell only electric cars in the next decade: Japanese carmaker Honda Motor Co Ltd says it will phase out all ICE cars by 2040 and sell only electric cars in Europe by 2022. American car giants Ford Motor Co say that by 2030, all of its passenger vehicles sold in Europe will be all-electric. It also claims that two-thirds of all its commercial vehicles will be either electric or hybrids by the same year. France’s best-selling automaker, Groupe Renault, revealed plans for 90% of its vehicles to be fully electric by 2030.

The race towards this future is heating up, so here are three ways to advance the EV industry in just one year:

1. Get smart (manufacturing).

Big Tech and unicorn start-ups from Silicon Valley, the UK and China are, without a doubt, disrupting the EV market with their willingness to embrace advanced digitalisation and automation capabilities, and by doing so, they are able to see time-to-market reductions from several years to as little as three months.

These disruptors benefit from the fact that low EV order volumes are helping speed overtake scale as the key factor in automotive manufacturing — in fact, new car designs render as many as 90% of automotive parts from existing ICE vehicles redundant. Electric-first automakers are also less reliant on current supply chains and mass-manufacturing plants.

The electrification and digitalisation of transport is driving seismic disruption of traditional automotive monopolies, supply chains, product portfolios and manufacturing models. Electrification is the biggest disruptor to the automotive industry in the last five decades, but a lot of traditional automakers are struggling with legacy systems that have left them with inflexible systems that are not future-proofed. Our research confirms that although almost half of the automotive industry is increasing investment in smart manufacturing and Industry 4.0 strategies, 52% of the industry still has no plans to invest more.

That is not good news because smart manufacturing is critical to resolve much of the challenges they face, such as accelerating time to market, replacing large, linear manufacturing facilities with lean, adaptable assembly lines and creating

more automated, efficient and productive manufacturing, and striking the right balance between price and performance, profit and planet.

As such, getting to the victory line in this EV race means not just working hard, but working smart.

2. Advocate, educate & integrate…holistically.

It’s not easy to get everyone on board — no pun intended — but the push for EVs needs to be supported by industry-wide advocacy and education that spans not just the automakers, but regulators, policymakers and consumers.

Automakers and regulators need to work together towards creating a conducive ecosystem for the adoption and use of EVs, while simultaneously focusing on other relevant industries like energy and mining.

To illustrate, no conversation around EV is holistic until we also talk about renewable energy as the source for charging the EV batteries, for example. Or, in the mining of rare earth materials needed for these batteries,  action must be taken to ensure that the mining practices do not leave a negative impact on the environment.

All these must be considered together, hand in hand, as a part of the advocacy, while the myths surrounding EVs for consumers should be debunked; for example, that EVs lack driving power and speed, or that they have extremely limited range.      

Automakers, regulators and related industry leaders can and should be talking about challenges they face, engaging each other and collaborating to share industry best practices. The journey towards electrification cannot be done alone, or in silos.

3. Sweeten the pot.

What will it take for consumers and automakers alike to pick EVs over ICEs? While this is an ongoing process, we know this much is clear: Incentives help a lot.

Although overall car sales dropped 16% during the pandemic, electric car registrations grew by 41% in 2020, according to the International Energy Agency (IEA). That rise meant that there were around 10 million electric vehicles out and about on the world’s roads by the end of last year. 

A growing level of awareness about climate change and environmental impact means that many are willing to swap their ICEs for electric, or even hybrid cars. Across the world, governments are spending as much as US$14 billion (RM59.23 billion) to support electric car sales, up 25% from 2019, mostly from stronger incentives in Europe.

These can come in the form of tax rebates for both manufacturers and consumers, discounts on car prices with packaged after-sales service, cheaper road taxes or insurance premiums. These incentives are short term in nature, not requiring long, drawn out policy debates, and private sector players can be encouraged to take the lead in making EVs more attractive to users.

The race for 100% clean automotive should be accelerated and it can be, by using Hexagon Manufacturing Intelligence’s global perspective and end-to-end understanding of automotive development and manufacturing to set a higher bar for the industry.

Our goal is to help manufacturers rise to meet the e-mobility revolution, make the clean automotive market transition more effective and reach the 100% EV goal faster. We offer the industry an integrated approach to improve, speed up and simplify the development of EVs, hybrid transition technologies and clean automotive energy models.

So, as mobility evolves to meet the changing requirements of today’s customers, the ability to adapt and deliver relevant innovations quickly, sustainably, affordably in a secure fashion will be an important success factor.

Terrence Lim is the GM for Asean and Pacific at Hexagon Manufacturing Intelligence, a global leader in digital reality solutions, combining sensor, software and autonomous technologies.