Cost, not speed, is the key to mass market success for electric vehicle (EV) manufacturers

AlixPartners 2022 Global Automotive Outlook says that when the global EV sector enters the mass market, manufacturers must shift their emphasis from speed to affordability.

According to the survey, worldwide sales of battery-electric cars are expected to account for half of the global vehicle market by 2035, up from 8.3 percent in the previous year.

The electric vehicle industry is moving beyond the first-mover advantage that stressed speed by placing batteries in vehicles originally meant for gasoline engines.

A global co-leader of AlixPartners’ automotive and industrial group located in Detroit remarked, “You simply fundamentally can’t compete on a cost basis with that strategy.” “It really has to be a ground-up EV design in order to target that large market.”

Up to 2026, the auto industry expects to invest $526 billion on the development of electric vehicles. On a rolling five-year basis, that’s up from the $330 billion stated last year.

AlixPartners predicts that in 2024, buyers would have 212 battery-electric models to select from, up from 80 nameplates in 2021, fueling the expected adoption surge.

According to Elmar Kades, the Munich-based co-leader of the firm’s automotive and industrial department, notable models include the Hyundai Ioniq 5, which swept the 2022 World Car of the Year honours, Toyota Bz4X, and the impending BMW i5.

However, until 2024, the availability of chips will remain a problem. Lack of supply is driving the industry to adopt Enzo Ferrari’s idea of producing one less vehicle than the market requires.

As Wakefield put it, “all manufacturers have been driven into that bucket.” In the end, defecting and striving to generate more is of little use.

Partnerships and collaborative enterprises are critical to thrive in an electrified world, Kades said. According to the findings, Hyundai has formed the most joint ventures, followed by Volkswagen and Toyota, the world’s two biggest manufacturers.

Hyundai, formerly known for its bargain models, is now producing more luxury models using B[attery]EV technology, according to Kades. “Companies like Hyundai are changing the scene,” he said.