More and more, headlines throughout the web learn, “(Insert automotive firm) sells out of EVs for 2022 in america.” 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 consumers could must preserve ready, in some cases, till 2023. Within the case of business fleets, this may increasingly 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 accordance with latest analysis by Canalys, international EV gross sales rose by 109 p.c in 2021, with an estimated 6.5 million EVs offered worldwide final yr. Whereas that does embrace totally electrical and plug-in hybrids, EVs proceed to extend in market share, even when the share of complete automotive gross sales they account for continues to be comparatively low. In 2021, EVs represented 9 p.c of all passenger automotive gross sales, rising from 4.1 p.c in 2020.
Manufacturing an EV may be very totally different from manufacturing a automobile that runs on an inner combustion engine. The provision chain, meeting line and design of an EV are totally different, and attaining 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 using a completely new chassis with an built-in battery alongside the bottom, sometimes called a “skateboard chassis.”
As well as, continued provide chain points associated to semiconductor shortages and an entire checklist of different points together with the dimensions at which uncooked minerals equivalent to lithium are extracted and refined, in some methods clarify why EVs are promoting out for a complete yr or extra. Merely put, it’s complicated to make an EV, particularly when shifting from making solely inner combustion engine automobiles.
Even Tesla could lastly be feeling sure supply-side points, because it pushes again buyer deliveries. Previously, Tesla has managed to skate by many provide chain troubles felt by its opponents as a result 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 supply automobiles. Nevertheless, Tesla CEO Elon Musk lately went so far as to say that Tesla could quickly cease taking orders of sure automobile fashions as a result of the supply estimates are greater than a yr away.
In talking with Corey Cantor, electrical automobile affiliate at BloombergNEF, I used to be given additional perception into what’s doubtlessly occurring 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 growth for the brand new technology of EVs … so it simply takes time to get the provision chain arrange, the battery parts, 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 matter.
In the primary quarter of 2022, Volkswagen of America offered 64,993 automobiles within the U.S., of which solely 2,755 had been its all-electric ID.4. Evaluating the ID.4, VW’s essential all-electric SUV automobile (not counting different manufacturers below the Volkswagen Group, equivalent to Audi and Porsche) to the Tiguan: The corporate produced and offered greater than six instances 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 comparable narrative in Q1. Ford offered 412,984 automobiles. Its Mustang Mach-E, Ford’s mainstream all-electric SUV EV solely accounted for six,734 automobiles. (The outcomes don’t embrace the brand new F-150 Lightning, which began delivering lately.) How did the mainstream SUV fashions fare? Ford produced and offered 39,962 Escapes, 26,412 Edges and 42,736 Explorers — within the case of the Explorer, that’s greater than six instances the variety of Mach-Es.
A choose group of automotive corporations has made daring commitments or set formidable objectives to shift in direction of EV manufacturing and gross sales. Over the previous couple of years, main automakers, together with Basic 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 Basic Motors and 2030 for Daimler/Mercedes-Benz.
Ford and VW appear to even be shifting in the appropriate course, however not evenly and at totally different speeds. As an instance, VW lately shared it’s planning to discontinue 60 p.c of its gas- and diesel-powered fashions in Europe by 2030 to shift priorities to EVs. Moreover, VW has acknowledged that by 2030, 55 p.c of its U.S. automotive gross sales will likely be totally electrical. Within the case of Ford, it lately introduced 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 offered out, I can’t assist however suppose — transfer extra shortly to supply much less gasoline automobiles, and shift assets to supply 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 totally different from producing a gasoline-powered automobile. Moreover, there are additionally actual provide chain points reverberating throughout the whole automotive trade which have made it troublesome to satisfy demand. Thus, it appears comprehensible why EVs are promoting out.
Nevertheless, then again, it’s also clear there may be sufficient manufacturing capability inside the legacy automotive corporations to satisfy the demand for fashions the trade ought to be phasing out if these corporations are actually centered on lowering transportation-related emissions. After all, it’s unrealistic to imagine they’ll 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 exhausting to satisfy that focus on … and these dedication dates come up quite a bit faster than one may suppose. The numbers at all times inform: You (automaker) are promoting these automobiles. What number of are EVs now, and what number of had been EVs a yr 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, promoting a whole lot of hundreds of EVs every quarter.
Time will inform how shortly legacy automotive corporations transition away from inner combustion engine-powered automobiles and in 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 offered out, I can’t assist however suppose — transfer extra shortly to supply much less gasoline automobiles, and shift assets to supply 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.
