Financial advisory and global consulting firm AlixPartners released new projections for the future of the electric vehicle market, predicting sales could reach 33 percent by 2028 and 54 percent by 2035 as demand ramps up in major markets.
EVs attributed for less than 8 percent of global automotive sales in 2021 and are now under 10 percent in the first quarter of sales in 2022.
According to the firm’s annual Global Automotive Outlook briefing, to reach 33 percent of EV sales, automakers and suppliers would have to invest $527 billion in EVs and batteries from now until 2026, which is more than twice as much as the $234 billion five-year expectation for EV investments from 2020 to 2024, Reuters said.
Mark Wakefield, co-leader of the firm’s automotive practice, said rising investments have made EV growth imperative. Companies are funneling massive amounts of capital into electric vehicle ventures, with no guarantee of innovation or success. Growth is a need to justify the massive expenditures some companies, like GM, have made, with $35 billion committed to the cause of electrification.
The transition from internal combustion engine (ICE) vehicles to electric vehicles (EVs) is still posing economic and supply chain issues for the industry. The growth will require “drastic changes to operating models not just plants and people, but the whole way of working,” Wakefield said. He added that certain corporations would profit from dividing their ICE and EV operations as Ford did with its automotive business earlier this year. CEO Jim Farley announced in March that Ford would handle all EV ventures under the “Model e” moniker, while ICE vehicles would operate under the “Ford Blue” division.
The separate divisions could be advantageous as EVs and ICE vehicles require different amounts of raw materials, which is a significant difference in price and can complicate financials. As of May 2022, the price of raw materials for EVs was $8,255 per vehicle compared to $3,662 for ICEs.
Elmar Kades, co-leader of automotive practice, estimates that the ICE-to-EV transition will cost automakers and suppliers $70 billion by 2030, including bankruptcies and restructuring.
AlixPartners believes supply shortages will persist through 2024, resulting in a decline in total global vehicle sales this year to 79 million units until they rise to 95 million in 2024.
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