5 Electrification Challenges for Automotive Companies
Are you concerned about the future of the auto industry as we shift to electric vehicles?
In this video, I break down the 5 biggest challenges facing European and American car companies, from high costs and fierce competition to a lack of charging infrastructure.
You'll see why a smooth transition might be difficult, and I'll discuss the impact on workers and the fact that other players like utilities simply aren't prepared.
If you would prefer to read about it instead, there is a transcript below the video.
5 Electrification Challenges for Automotive Companies - Video Transcript
Watch this video to find out about the five biggest challenges facing European and American automotive companies through the change to electric vehicles.
I am the first person to admit that you need to break some eggs to make an omelete, but the way that the EU is driving this change forward will create unnecessary and impossible challenges for all companies and organisations that will be involved.
Not to mention the millions of people who will become unemployed and who will find it difficult to find new jobs within their present occupations and regions.
In a series of videos, I will outline the most important challenges for different types of organisations.
The 5 most important challenges for automotive companies will be treated in this video.
The first challenge will be the high sales price and the high production costs of electric vehicles.
Electric cars require 30 to 40% fewer man hours for production compared to petrol and diesel ones, and the situation is similar for electric trucks. Still, the price of electric vehicles are much higher. This is due to the high cost of batteries and the high investments in the development of electric cars and trucks.
The sales of electric vehicles is much smaller, and there are fewer vehicles that can cover the cost of the development. The sales of electric vehicles are not growing rapidly enough for automotive companies to be able to recover their investments.
The second challenge will be the competition against Tesla and Chinese manufacturers. Tesla and the Chinese manufacturers have a head start of a number of years over American, European and Japanese industry leaders. This advantage can't be recovered in only a few years.
Tesla and Chinese manufacturers will forge ahead, threatening to increase the distance rather than the opposite. Incumbents are likely to lose market share and make losses during much of this development, and the situation will become even tougher when they have to phase out petrol and diesel vehicles, because those are the cash cows that finance the development of electric vehicles.
Third challenge will be for incumbents to navigate the perilous waters of large scale change imposed by the EU and the UK government. They have to increase sales volumes to increase the market share, but they can only do this by reducing prices far below costs. It will be difficult for incumbents to develop sustainable strategies for the electric car market, considering that tough competitive situation.
The fourth challenge will be the underdeveloped charging infrastructure, the short supply of electricity and grid capacity, and growing without hitting the ceiling.
No country has enough power or grid capacity to cover the needs within the next two decades, and power generation and grid capacity can’t be expanded rapidly enough to cover the needs.
If the EU continues to pursue its very ambitious policies for change, electric car drivers will first find that it will be very expensive to charge their cars and then at some point, they will find that they cannot at all times charge when they want to, because there will be too few charges and too little electricity.
These points will be reached at different times in different countries, but assessing the power needs is a simple calculation task. As countries change to electric vehicles, automotive companies are likely to experience severe setbacks.
The fifth challenge will be the lack of awareness of most players, what they will need to do to drive the change to electric vehicles. Most players that need to contribute to the change do not understand their role, or what they need to do to drive the change forward.
Utilities, municipalities, governments or real estate companies do not mostly know what their role will be or what exact measures they will need to take to drive the change, and this will create setbacks for automotive companies.
My recent book, “The Severe Economic and Social Consequences of the Change to Electric Vehicles”, explains the consequences of the transition. (View on Amazon: https://amzn.to/3UQCf0t )
I am sharing my knowledge about the transformations electric vehicles through this YouTube channel, if you found this video interesting press like and subscribe to the channel.