Investment is positive, but supply is critical in the race to electrification

Investment is positive

As the transition to electrification continues to accelerate, investment from the world’s leading automotive brands is hitting new heights. Lee Sutton, CEO of myenergi, believes that with vehicle demand now far outstripping supply, the UK needs greater volume from OEMs to maintain its impressive progress.

According to recent insight from Reuters, the world’s top automakers are planning to collectively invest almost $1.2 trillion between now and 2030 into the development of electric vehicles (EVs). Alongside the design and production of new models, this also includes financing new battery development programmes and funding rising raw material costs.

Dwarfing previous projections, this announcement shows intent. Indeed, OEMs are predicting that 50% of all global production will be electric before 2030. Tesla alone plans to be manufacturing 20 million EVs per annum within the next decade (a 13-fold increase), with the development of a smaller vehicle platform already underway that could cost half as much as the hugely popular Model 3.

Volkswagen, on the other hand, will channel $100 billion toward expanding its portfolio, while Toyota expects to boast a range of 30 EV models before 2030. Ford is further boosting its spending level (currently at $50 billion), Mercedes-Benz has earmarked $47 billion and BMW $35 billion. Stellantis (parent company of Chrysler, Dodge, Fiat, Opel, Jeep and Citroen) is planning an aggressive battery programme, aiming to achieve 400GWh of capacity including four new plants in North America.

Importantly, consumer demand is increasing alongside. Indeed, according to recent data from the Society of Motor Manufacturers and Traders (SMMT), more than 19,000 battery electric vehicles (BEVs) were registered nationwide in October, alongside 8,899 plug-in hybrids (PHEVs). More than one in every five new cars now boasts an electric powertrain, while the decline of the internal combustion engine continues. Indeed, compared to 2021, diesel car sales have already dropped by 41% year-on-year, while petrol registrations have fallen by 13%.

Yet while the speed of EV uptake and ever-increasing public demand is positive news, global supply challenges are beginning to hamper the sales of new electric models.

Market pressures begin to bite

Global demand, combined with a widespread shortage of semiconductor microchips, part supplies hit by the war in Ukraine and the continuing impacts of the COVID-19 pandemic is putting pressure on the availability of the latest electric models. According to insight from This is Money, EVs that just a few months ago were freely available (such as the Vauxhall Corsa-e, Mokka-e and the Renault Zoe) now have a waiting list of up to 16 weeks.

At the top end of the market, customers looking to purchase a new Audi e-tron, Ford Mustang Mach-E, Porsche Taycan or Lexus UX300e can expect a build timeline of upwards of 12 months. Production of the Tesla Model X and S have even been temporarily paused, with the company’s production facilities struggling to keep up with demand for its more affordable Model 3 and Model Y alternatives.

The SMMT suggests that the motor retail sector is facing its ‘most challenging year for three decades’ as supply impacts sales, forecasting total registrations of just 1.6 million vehicles in 2022 (31% less than in 2019). While 2023 could see numbers begin to rise, predictions have been revised downward since the April estimate, with overall registrations anticipated to reach just 1.89 million.

With legislation passed that will see the UK ban the sale of new ICE-powered cars faster than any other nation, combined with a rapidly increasing EV adoption rate, we’re tracking far ahead of targets.

The fact remains, however, that UK demand for new EVs is outstripping supply. If we’re to maintain momentum and retain our position as a world leader in EV adoption, we need far greater volume from vehicle manufacturers – even in challenging times. While agreed investment is significant, we need to see things accelerated and demand from the UK prioritised.

Without this, we run the risk of slowing progress and unintentionally putting the brakes on transitioning to an all-electric car park. A significant step backward, both from an industry and environmental perspective. To this end, it is also important that we see clarity from government on the promised Zero Emission Vehicle mandates, including targets for EV sales by 2024, to set the trajectory for the 2030 phase-out date.

As the transition towards electrified mobility continues to accelerate at pace, myenergi is committed to operating at the forefront of the industry. The days of ICE-powered vehicles are numbered and we must all prepare for the technological shift. Supply, however, is currently the missing piece of the jigsaw puzzle.

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