The Automotive Industry Is About To Undergo A Paradigm Shift To EVs

MAR 4 2019 BY EVANNEX 20

INDUSTRY ANALYSTS WEIGH IN ON THE FUTURE FOR ELECTRIC VEHICLES

What’s in store for the future of the auto industry? Camila Domonoske at NPR recently spoke with a number of industry experts to get their feedback. It turns out that the auto industry could (soon) undergo a significant paradigm shift — transitioning from gas-powered cars to EVs. According to Domonoske, “Going electric is not just an eco-friendly goal, an ambition that would help fight climate change. It’s a business reality, according to industry analysts.”

*This article comes to us courtesy of EVANNEX (which also makes aftermarket Tesla accessories). Authored by Matt Pressman. The opinions expressed in these articles are not necessarily our own at InsideEVs.

Above: Tesla’s Model 3 (Flickr: Gillfoto)

“Electrification, you cannot stop it anymore — it’s coming,” says Elmer Kades, a managing director with the consulting firm AlixPartners. “We have fantastic growth rates, between 50 and 60 percent on a global level.”

After all, according to Tom Murphy a managing editor at Wards Auto which ranks the world’s best engines, electric cars are just “fun to drive.” Extolling the electric vehicle’s ninja-like performance and instant acceleration, Murphy says, “They’re enjoyable, they’re quiet… and there’s loads of torque.”

According to Wall Street Journal’s automotive columnist Dan Neil, electric vehicles “are such better machines than the machines they’re replacing,” that consumers could elect to retire their gas guzzlers long before the end of the vehicles’ useful lives. “Just like plasma TVs… A lot of plasma TVs didn’t see the useful end of their lives before they were replaced by much cheaper, but also much betterLCD screens.”

Above: Projected growth for non-gas car models (Credit: Thomas Wilburn, NPR; Source: Wards Intelligence and LMC Automotive)

Nevertheless, the timeline for the transition to electric cars continues to be a point of contention among analysts. Felipe Munoz, a global analyst at JATO, predicts electric vehicles will outsell conventional ones by 2030. Bill Visnic, editorial director at the Society of Automotive Engineers is less optimistic. He predicts gas and diesel-powered “combustion engines really aren’t going anywhere for quite some time.”

Mary Nichols, who heads the California Air Resources Board, agrees that internal combustion engines aren’t going away anytime soon. “We can’t turn them all into planters or sculptures,” she says. “So I think we’re going to have to provide for them to continue to exist.”

Ultimately, much of the argument hovers around the point at which electric cars can effectively compete, on price, with the internal combustion engine. Sam Abuelsamid, an auto analyst with Navigant says, “Probably in the mid-2020s time frame, it becomes comparable or cheaper to actually buy and operate an EV than an internal combustion vehicle.”

Above: Tesla’s Model 3 topped the global BEV market last year, outselling the nearest competitor by about 50 percent (Chart: Bloomberg; Source: Jato Dynamics)

Tesla isn’t standing still though. The company could pull that goalpost forward with its $35,000 Model 3, March 14th Model Y reveal and, later this year, an unveiling of its new pickup truck. David Reichmuth, a senior engineer at the Union of Concerned Scientists says, “We’re moving in the right direction with electric cars… But the question is: How fast do we get there? And, you know, if you look at what we’re already seeing with climate change, we’re going to have to move faster.”

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Source: NPRBloombergElon Musk

*Editor’s Note: EVANNEX, which also sells aftermarket gear for Teslas, has kindly allowed us to share some of its content with our readers, free of charge. Our thanks go out to EVANNEX. Check out the site here.

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20 Comments on "The Automotive Industry Is About To Undergo A Paradigm Shift To EVs"

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The big risk for ICE manufacturers is that while people might not be ready to buy an EV they see it in their future and thus will likely keep the car they have while they wait. I foresee a plummet in new ICE sales in the near future. Perhaps the start of this drop is already occurring with the slow down we’re already seeing. As EVs become more common on the roads more people are going to start ,making their plans.

Plummeting ICE sales. It’s already happening, as you surmise, though, not just because better electric cars are coming, or are already here depending on your driving needs.
The mass herd mentality has not kicked in just yet, but the leaders are moving off in a different direction searching for better grass and others are starting to notice. In a few years it should be a stampede to the fresh grass of the “Evisian Fields.”
Worldwide car sales fell over 1 million, last year, I would expect it to fall close to or below 80 million this year, down another 2 million or so.

Totally agree. Combine the general slow growth in several countries of current wages and the general uncertainty of the global economy, and most current auto owners have a few years that they want to hold on to what they have. Not only will this make the change more important, but it will hurt the companies right when they need cash on hand to change. That might even slow the change slightly, which will slow battery development, which in turn keeps the cost high, which means people will want to hold on to those cars a little longer…

Question after that is, what will gas prices do as the shift starts?

Tesla clearly has the best overall EV story, with solid product. They have effectively demonstrated a better solution.
But this major shift won’t happen in this timeframe without the major legacy manufacturers.
Ford/GM/Toyota/Honda are all working on programs but slowly.
Hyundai seems to be on the right track but low volumes.
The Chinese outside of China are a big unknown.
The major shift might coincide directly with VW’s commitments coming to fruition because they have immense reach (geo and product coverage) and manufacturing might.

Between companies not keeping up with the ICE->EV revolution and a potential shift to subscription service (vs purchase), the second half of the decade could see significant carnage in the auto industry. WHich of the two that does more damage is a huge TBD.

Excellent take, Brian. I like to characterize it this way: We’re far away from the center of the automotive map, and squarely in the “here be dragons” periphery. In less colorful terms, there are huge disruptions converging on an industry that abhors uncertainty and change like few others. As I’ve said here before, to me the big question is not just which companies will do (or fail to do) X or Y or Z, but how will the economy unwind from FF vehicles. It won’t be smooth or pretty or even predictable. To take just the most obvious example, what happens when EVs really start to take off, to the extent that it impacts gasoline sales and gas stations start closing? In some rural areas that could create a nasty situation where people suddenly have to drive 20 or 30 miles, instead of 5, for gasoline. That will push people to EVs even quicker, which will put more downward pressure on gas stations, and the feedback loop spins. We’re all eagerly waiting for the rEVolution to hit warp speed. We need it to happen, and it will happen, but it will also bring new flavors and depths of disruption that… Read more »

I think they are being highly optimistic about the sales of hydrogen fuel cell vehicles.

The forecast is in number of models, not sales.
So they are just saying that manufacturers are going to try, not that they are going to be successful.

Even at that I think they are being optimistic. They are showing ~20 FCEV models in 2025. The 3 that exist now are barely surviving. I don’t see many more automakers jumping into that ring, and the ones that are there now are likely to pull back and lick their wounds.

Automotive industry other than Tesla may see a huge drop in EV sales in coming months. As such, there may be a paradigm shift away from what little EV they tried and attempt to Tucker Tesla.

Very possible. If Musk really wants to change the industry, he should help others get over the “The Chasm” by making batteries / charging available to all manufacturers.
Replicating the Nevada Gigafactory battery production should be just a matter of capital and adding CCS to their superchargers is already being done in Europe.
Lower cost per unit, additional source of income and acellerate adoption. Win, WIn, WIn.

Except that Tesla spent billions to build out the super charger network for the benefit of it’s direct customers. The only way it would make sense for Tesla to add strain to that network (and reduce on demand availability for actual tesla owners) would be if the rest of the industry ponied up into a fund to pay for expansion of current stations and addition of more stations. tesla can’t simply make them compatible out of the goodness of their heart especially since doing so would come at the detriment of their actual paying customers. Don’t think of super chargers like a normal gas station as in, Tesla b uilt them to sell electricity to make money, Tesla built the network to sell Tesla’s full stop.

In Europe, Tesla Superchargers will be fully compatible with other vehicles (CCS standard adopted by Tesla from Model 3 on (in Europe)
If they want to open it to other manufacturers, they can do it, offering a different pricing for example.

Even charging non-Tesla users an extra 1¢ per kWh to charge will add right up and 5¢ per kWh extra wouldn’t be unseemly.

It’s funny. When you ask an automotive expert about the pace of ev adoption and the answer is a forgone conclusion. And you know quite sometime is how long I’ve been coming to insideevs and it’s sort of sad that with someone with a degree in engineering can’t be more specific than that. To me it bespeaks the complete lack of weight of the entire argument.
Be specific, jerk. 10 years, 20, whatever. But don’t say quite some time, the foreseeable future, or other such worthless phrases that are subject to a wide range of interpretation.

Truth is they don’t know. Predicting the transition to 50% sales or 50% on the road depends upon a lot of factors – all of which have probabilities of being in a certain range. So, any projection should come with associated probabilities of occurrence (error bars for each factor and for the composite results), but I think the standard errors are going to be large enough such that the prediction can only give upper and lower limits, that will be so wide, that most people could guess at, and just say “duh!”.

Why do you think a degree in engineering would help them predict something so dependent on human whims as this is?

My thoughts exactly.

Tony Seba, who has a track record of being right, predicts ICE car sales will approach zero by 2025. Part of that drop has to do with autonomous electric transportation as a service which will cost 1/10 as much as owning a vehicle.

It will not be zero by 2025 … it simply cannot, considering how diverse the world is.

Just consider the sheer absolute brush Seba’s statement has painted …. it never says “where” … so in 2025 we can turn around and say “Yes there are zero new ICE vehicle sales in Norway …. but look at Canada, they are still selling plenty.” …. will Seba be considered wrong or right?

Can’t see Australia not selling ICE in 2025. We barely started to build DC chargers and most of the population loves their 4WD SUV and big pickup truck, so can’t even get them yet.