In the last article I wrote on EV adoption, I ended it by stating the following:
“The automotive manufacturers, multi-tier supplier base and industry elements clearly need a far reaching strategic transformation plan that addresses the speed of change from the technology disruption that EV and decarbonisation will bring.”
The speed of change from the impact of EV will be significant, but so will the scale of change. The recent announcements by Tesla demonstrate this, though it seemed the announcement went largely uncommented on. In the EV space, Tesla announced they intend the Model Y to be “best selling vehicle in the world by the end of 2022”. That would mean selling 1.5million cars to beat the Toyota Corolla, with ~2.5 million total sales per year. It was news to me that 1 in 5 cars sold is a Corolla. Tesla’s energy focused business was reported to have grown 100% on last year, with demand for Powerwalls so high that there’s no separate shipping for now – it’s Powerwalls and panels or nothing.
The strategic plan I suggested would need to consider:
- How to establish a large-scale battery manufacturing capability – with materials supply, distribution, maintenance and recycling.
- Transforming the 1st and 2nd tier supply chains for items such as drivetrains, power electronics, embedded software and fuel cells.
- Up-skilling and re-skilling the automotive industry and related workforce of ~600k+ (including sales staff, mechanics, insurance companies, parts manufacturers).
- Avoiding stranded assets by further capital investment in machinery, tooling, manufacturing, operational software and updated business processes.
- Moving away from a primary relationship with the oil and gas industry (if it doesn’t transform sufficiently) towards sustainable electricity generation and supply.
- Vehicle repair companies transitioning into uncontested markets, such as battery / fuel cell recycling and reconditioning.
- Development of infrastructure to increase the number of charging points – home, On-street, workplace, retails parks, supermarkets and forecourts.
- Policy development around public incentives to adopt EV, such as VAT exemption on new EV cars, trade in to off-set costs.
All this in context of the extra pressure of automotive industry decarbonisation, working to support the Net Zero 2050 goal, not just the needed product-based transformation away from petrol and diesel to EV.
The SMMT plan, a Blueprint for Electric Vehicle Revolution, gives a lot of industry insight into the thinking being done around ensuring this revolution takes place. Transforming manufacturing, lowering production costs and gaining efficiencies, cost of ownership to the consumer, analysis on demand and infrastructure expansion are all mentioned.
However, as we’d expect, it’s very focused on the view from the ground, a little ‘elevation’ is needed. As outlined in my suggested strategy areas above, there’s a much broader discussion to be had. Energy generation and supply along with the availability of charging points are key and needs more consideration. All industries at the scale of the automative industry are enabled through multi-tier suppliers who also need to modernise and adapt. Fundamental go to market strategic approaches, partnerships or consolidation of the supplier landscape through M&A activities, business process and IT infrastructure elements are examples of what will need to be layered across the industrial side of this transformation.
As the industry moves forward, they will need to become active players in power generation and use of low or decarbonised energy sources, low carbon IT technologies, such as cloud infrastructure, hyper-recycling to support the circular economy, and address limited or uncertain resource availability.
The energy transition and introduction of EV technology is the most exciting industrial and transport revolution any of us will see in our life times. To ensure it realisation in the timescales needed requires a bold technology oriented transformation at all levels, only this will ensure the success of the sector for the next 100 years
Mark.
