Electric Vehicle Trends
Like most industries, the electric vehicle industry was heavily impacted by the disruption caused by the COVID-19 pandemic. However, just as several driving forces were finally making electric vehicles a viable mobility platform prior to the pandemic, the industry has for the large part overcome the challenges and is expected to continue its growth trajectory into 2030 and beyond. In fact, Deloitte is forecasting a 29% CAGR over the next 10 years and is expecting non-hybrid electric vehicles to make up 32% of new car sales globally by 2030.
Source: Deloitte, Electric vehicles – Setting a course for 2030
Today, there is significant EV momentum as consumer perceptions about EV viability as a primary vehicle has improved significantly. A convergence of government driven incentives and regulations has resulted in further private investments into the entire electric vehicle value chain to create the scale needed to achieve cost reductions and technological advancement.
Primary trends driving electric vehicle adoption
1. Battery technology improvements
Until recently, there were few and somewhat insignificant improvements in battery technology for EVs. The primary large pack battery technology continues to be lithium-ion, and until recently, their high costs posed significant challenges to automotive OEMs to make EVs a value viable option for consumers. However, with EV economies of scale starting to be realized, lithium-ion battery prices have fallen by 85% from 2010-2018 according to BloombergNEF and will continue to decrease to nearly a third of their current price by 2030.
With improvements to cell chemistry and electrode materials and scale driven fabrication processes, the incumbent lithium-ion batteries will continue to decrease, resulting in higher range vehicles that cost less and last longer.
In conjunction, alternative battery technologies such as solid-state, graphene polymer, fuel cell, and aluminum ion illustrate the innovation stimulated by the EV market after years of battery technology stagnation. As multiple potential technologies vie for the best mix of manufacturability and value, we expect the price pressure to continue on lithium-ion batteries. We may potentially even see tiers of battery technologies that can allow OEMs to offer models at different price points based on the benefits of the battery technology itself.
2. Improvements in charging technology and better access to charging stations
For some time, an important headwind for adoption has been the amount of time and mileage per charge of electric vehicles. While OEMs are improving their vehicle designs from the ground up to incorporate larger battery capacities, the availability of charging stations and the rather slow charging speeds even at “supercharger” stations had posed a challenge to consumers weary of being stranded and the inconvenience of waiting for a charge to complete.
To mitigate these concerns, OEMs, private companies, and governments have invested in national network of chargers across the globe. As is well known, Tesla continues to build its large charger network in the US and companies such as Blink, Chargepoint, and OEMs such as Volkswagen are offering additional options for consumers to complete long distance trips at a low/no cost. The Dutch government also implemented a program in which it builds a charging station for owners who do not have a readily accessible charging location in their parking area.
In conjunction, some OEMs like Porsche are developing even faster charging stations that can fully charge a vehicle in as little as 15 minutes, while portable chargers offer the flexibility of charging even when only a regular 3 prong outlet are available. Since 14-50 plug-based chargers are faster than a traditional 3 prong, we expect gaps in charging network coverage to be gradually filled with 14-50 NEMA outlets.
With the growth of EV, we may one day see gas stations being converted to serve both combustion engines as well as electric vehicles, outlets being installed at each parking spot and the growth of new business models where users rent their external home outlets to EV users. Further out, inductive charging may be able to charge a vehicle wirelessly in a parking space or even while driving through electromagnetically linked coils.
3. High performance ECUs and sensors enabling autonomous driving
The need to fulfill the heightened expectations from the early adopters of electric vehicles set the bar for OEMs to incorporate ever growing list of advanced technologies into their EVs. One area that is particularly exciting and significant progress has been made is in autonomous driving.
According to the 5 levels of autonomous driving, today’s vehicles have largely incorporated levels 1 to 3, which can allow a driver to take their hands and even eyes off in some specific situations. However, with the development of powerful processors, sensors, and algorithms, EVs can one day reach higher levels, which can allow the vehicle to drive itself most of the time (level 4) or even all the time (level 5).
Significant benefits outside of pure convenience can be realized through autonomous driving technology. Since vehicles can communicate with each other, they will be able to accelerate and brake in tandem as a single vehicle. This can dramatically increase safety as well as nearly eliminate congestion since there will no longer be variations in each vehicle’s speed.
However, even if autonomous driving technology were fully mature, the broad adoption of autonomous vehicles will take some time. Until then, a gradual and incremental rollout of over-the-air updates to test the interaction of autonomous vehicles with human driven vehicles will be implemented by OEMs.
4. Mobility as a service
As consumers became comfortable with ride sharing apps, a car sharing business model also emerged. Companies enable drivers to rent vehicles by the hour, unlock and operate remotely. While the concept of car sharing is no longer new, growth of EVs further contributes to more nuanced and value creating services.
According to BMW, younger consumers living in city centers increasingly value mobility over outright vehicle ownership. With the development of autonomous driving technologies, consumer vehicle ownership in urban centers may decline, replaced by private services that offer driverless mobility as a service. This would result in less parking spaces required and result in further reductions in congestion and due to the reduced number of consumer owned vehicles on the road.
The electric vehicle industry has finally encountered the perfect storm of investment, technological development, and consumer interest. As adoption grows, we can realize greater safety and convenience, while reducing our environmental impact. Moving forward, technology firms, OEMs, and governments should continue their investments and cooperation in the EV market.
“Trends in Electric Vehicle (EV) Charging and Key Technology Developments” – IJERT, Sept 2020
“Electric Vehicles, Setting a course for 2030” – Deloitte Insights
“The future of mobility after COVID-19” – Deloitte Insights
“The future of mobility is at our doorstep” – McKinsey & Company
“Urban Mobility: Discover 5 Trends of the Future” – BMW
“Trends in electric vehicle design, Issue No.2” – McKinsey & Company
“7 EV Tech Trends to Watch in 2020” – Interesting Engineering
“A Behind Scenes Take on Lithium-Ion Battery Prices” – BloombergNEF
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