Making EV a Preferred Option

Electric vehicle makers may have a bumpy uphill journey towards mass consumer adoption, however, there are solutions coming to market.

Analysts, researchers and incentive facilitators offer insight into how EVs can succeed in the future. The challenges with EVs, as it relates to batteries, has been cost, range, infrastructure and uncertainty about battery reliability, says Scott Shepard, senior research analyst at Guidehouse, formerly Navigant Research.

However, he notes that battery costs have decreased and “we should see purchase parity with internal combustion engines without incentives in the second half of the 2020s. Price decline also means longer-range EVs”.

Shepard adds the EV battery charging is getting faster and batteries will become more resilient. The challenges of lithium-ion batteries include controversial mineral supply chains, GHG emissions tied to manufacturing and end-of-life disposal. The industry is working on solutions for each of these problems reports Shepard.

Reliance on lithium-ion batteries places strain on the raw material supply chain. Lithium for these batteries is, of course, critical, as are a number of other raw materials key to the cathode compounds such as nickel, manganese, cobalt and aluminum.

“Efforts to de-risk the supply chain have focused on decreasing reliance on cobalt in favor of nickel. However, profitable extraction and processing of these materials are as critical as ensuring sustainable, ethical supply, meaning raw material pricing will be a critical factor in EV availability and profitability,” says, Graham Evans, associate director, automotive supply chain and technology at IHS Markit.

What about the grid?

Many people worry that the old power grids cannot handle the power needed to charge the increasing demand by electric vehicles. Vehicle grid integration (VGI) is the process that enables plug-in hybrid EVs (PHEVs) to participate as generation or demand assets for grid operators. VGI has become of increasing interest to a large variety of automotive and electric power sector industry stakeholders because it can improve the PHEV purchase decision and increase the efficiency of grid reliability efforts, says H. Christine Richards, senior research analyst, Guidehouse. In fact, Fermata Energy’s bidirectional EV charging system was recently certified for North American safety Standard, UL 9741.

Show me the money and emotion

“At the moment EVs are not the money makers for the OEMs. However, over time with increasing volumes and therefore economies of scale and therefore declining costs, this will change. At the moment we are seeing a little bit of a chicken and egg phenomenon,” says Henner Lehne, vice-president, global vehicle group with IHS Markit.

Prices are higher than for traditional cars and practicality might appear limited, if charging is not broadly available. In order to decrease prices, the automakers need to produce and sell more to achieve the needed economies of scale. Naturally, you can only sell more if the price is right hence the need to push the vehicle via special incentives and government subsidy into the market, in order to reach a critical mass. Once that tipping point is reached, incentives can be scaled back and we will see a more normalized vehicle market like before.

It is the same issue with charging. You need a solid charging infrastructure to increase the amount of EVs but, until recently, many investors were not willing to get involved since there were not enough EVs on the road to justify such an investment. This is another chicken and egg problem but that is now changing as well with government support in many areas, added Lehne.

“There is not just one barrier to EV adoption such as cost or range. When we surveyed people, who are considering buying a new vehicle, one of their biggest concerns is reliability,” says Mike Dovorany, vice-president, automotive and mobility at Escalent that recently released the EVForward platform that profiles six different “personas” of potential EV buyers.

Car buyers were also confused about charger installations and some are concerned that if they take an EV through a car wash they will be electrocuted. Many consumers who are loyal to their brand are waiting for their brand to offer an EV in the style they want. There are also buyers who are waiting for SUVs and larger storage. Escalent found that different personality types want different kinds of electric vehicles.

“Car buying is an emotional experience, automakers should offer customers electric vehicles that have an emotional appeal that are exciting beyond what internal combustion cars have been offering,” says Dovorany. He says Ford’s Mustang Mach-E is an example of using emotion to entice buyers. The Mustang brand increases the appeal, using nostalgia and performance attributes of the iconic Mustang sports car.

“In the end, it will be the product that counts. In the next couple of years, the EV market will still be a so-called push market. Vehicles are pushed via all kinds of incentives into the market. The next generation of EVs, however, need to be so good from a product point of view (price, range, performance, features) that it turns into a pull market, with true consumer demand,” concluded Lehne.

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