Automotive Webinar: Electric Vehicle Sector Faces Headwinds

Researched by Industrial Info Resources (Sugar Land, Texas)--The automotive sector is one of the most important and dynamic industrial sectors in the world and has a global presence, although activity is largely concentrated in Asia, North America and Europe. In this week's webinar covering the sector, David Pickering, Industrial Info's vice president of research for the Industrial Manufacturing Industry, discussed the properties and dynamic shifts in the automotive sector, largely focusing on its newest element: electric vehicles (EVs).

Unlike many other industries, things move fast in the automotive industry, with projects often taking only 18 to 24 months from conception to completion. Industrial Info is tracking more than 5,100 active automotive projects, with more than 2,500 planned to begin over the next 24 months, although not all of these will move forward as planned.

While focus is often laid on the assembly plants, the tier suppliers to the industry are just as important and account for the bulk of IIR's automotive plant coverage. China dominates the sector with more than 3,000 operational plants. China has been spreading its influence across the globe, seeking to gain market share where it can, particularly in Africa and Latin America. Some regions are attempting to negate this influence through reshoring of assembly and parts plants as well as punitive tariffs. Europe recently enacted a 40% tariff on Chinese vehicles in addition to the existing 10% import duty in an effort to quell China's market share in Europe's EV sector, which has risen from slightly less than 3% to more than 20% over the past three years, according to the European Automobile Manufacturers' Association. For more information, see July 15, 2024, article - Europe's Tax on Chinese EVs Comes into Force.

The onset of the COVID-19 pandemic highlighted the tenuous nature of international supply chains, prompting reshoring and near-shoring of tier parts plants, including semiconductors, which are heavily used in EVs, helping to reduce dependence on foreign parts providers.

The EV sector has been a game changer for the industry, prompting a wave of massive spending, although this has seen some recent slowdown. While EV projects are much lower in number than the 4,000-plus active projects centered around internal combustion engines (ICEs), they account for higher spending--$313.7 billion for active EV-related projects versus $269 billion for the ICE market. Spending on this new sector has changed, particularly in the U.S., in that rather than a large buildout of grassroot plants for new EV models, automakers are retooling and adding equipment to existing plants to help streamline their production footprint and spend less along the way.

However, despite the massive amount of current spending on EVs and their components, there has been a slowdown in the rate of EV sales. This has been seen particularly in North America, where a lack of charging infrastructure worries consumers about long-distance trips in EVs and some EV owners are reconsidering their purchases after experiencing some of the downsides of EV ownership. The lack of charging infrastructure in the U.S. is not being helped by a massive buildout of power-hungry data centers as people increasingly turn online for a variety of activities, including artificial intelligence applications. Power companies are feeling the pinch between providing power for new data centers or new charging stations, and data centers seem largely to be winning, at least in the interior U.S. For related information, see July 18, 2024, article - Electric Vehicles: In the U.S., Initial Enthusiasm Gives Way to Buyer's Remorse.

Another element inhibiting consumers from EV purchases is the higher cost of electric vehicles. This is largely due to the price of the vehicles' batteries. Lithium-ion battery demand is growing rapidly and as production grows, costs slowly could come down. Lithium-ion battery demand is forecast to move from 700 gigawatt-hours in 2022 to 4.7 terawatt-hours (TWh) in 2030 and up to 20 TWh by 2050. How the battery sector responds to this remains to be seen as demand is projected to grow sharply, but the rate of growth for EV sales has slowed, which could potentially lead to an oversupply of EV batteries should too much battery production capacity be built.

On the whole, the automotive sector remains strong, but there is some uncertainty as to its direction as the EV market matures. While EV-related projects account for more spending than ICEs, traditional vehicles still make up the bulk of sales in most of the world, leading one to wonder how rapidly and completely the automotive sector can shift into greener technologies.

If you missed this webinar or would like to review some of its highlights, the presentation soon will be available in Industrial Info's On-Demand Webinar Library.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 trillion (USD).