Maria Bengtsson of EY outlines the major obstacles to continued acceleration of EV adoption
Decarbonization of transportation is absolutely important to achieve the global goal of CO2 emissions. Sales of electric vehicles (EVs) are accelerating in Western Europe, with 2.2 million units sold in 2021 to 1.4 million units in 2020. As of the end of 2021, there are 5.6 million EVs on roads in Western Europe. However, not everything is going well, and many barriers may limit further acceleration of EV adoption.
Supply chain vulnerabilities
In the first place, recent global events such as semiconductor shortages, COVID epidemics, and the war in Ukraine show how vulnerable supply chains are to turmoil. Most of the semiconductor manufacturing is outsourced to Asian foundries, and in Taiwan, one company has a market share of nearly 60% based on revenue. The lack of companies that can manufacture chips and the long lead times for switching suppliers limits the flexibility of original equipment manufacturers (OEMs). Since EVs require more semiconductor content than internal combustion engine vehicles, this shortage will have a greater impact on EVs.
There is also concern that OEMs in the EV sector may face a serious battery shortage, and it is estimated that current global cell production is well below 10% of what is needed in 10 years. increase.
OEMs are trying several strategies to manage this risk. For example, diversifying the supplier base, signing forward contracts (including volume commitments) with battery manufacturers, and building unique battery manufacturing capabilities. There are rumors that it is considering diversifying into the mining and refining of lithium, which is an important element of battery production.
COVID hit the supply chain in 2020 and 2021. While many markets are moving into a world of “living with COVID,” China’s zero COVID policy is affecting the supply of materials and parts. In other parts of the world, virus outbreaks can still disrupt supply chains as workers become ill.
The shortage of parts supplied from Russia and Ukraine has also disrupted manufacturing. The closure of the Ukrainian plant is affecting production in other markets (for example, the closure of the European OEM plant in Ukraine is affecting the EV plant in Germany).
Deployment of charging infrastructure continues to be frustrating
Second, the charging infrastructure remains a concern. EY conducted several studies to understand the experience of different types of players in the emotional sector. The main issue that consumers quote is the reliability of charging points. 70% of respondents cite this as a problem. Many also state that there are only not enough public billing points to cover their needs. Approximately 60% of respondents highlighted both range and vehicle charging issues at home.
Issues with the charging point operator include grid permissions and access. Regarding permits, companies responded that the process of applying for a plan with a local government could be long and complex, and that gaining access to public real estate was often a complex process. When it comes to connecting to the grid, many charging point operators find that charging point connections are not always a priority, the process is very complex and lacks technical transparency ( For example, regarding the network strength of the exact location).
Finally, long-term government policy uncertainty is seen as a risk of accelerating investment. Many also say that governments need to begin to focus on facilitation and realization, in addition to setting goals.
As a result, EV sales continue to accelerate, but there are significant barriers to the pace of continued adoption, primarily in the form of macroeconomic risks, delays in the construction of charging infrastructure, and uncertainty about government policy. increase.
The opinions expressed here are those of the author and do not necessarily reflect the position of Automotive World Ltd.
Maria Bengtsson is EY’s UK and Ireland partner and EV leader.
The Automotive World Comment column is open to decision makers and influential people in the automotive industry. If you would like to post a comment, please contact firstname.lastname@example.org.
https://www.automotiveworld.com/articles/what-is-holding-back-ev-adoption/ What is blocking the adoption of EVs?