The Automotive Industry’s Electrified Future: The Brewing Battle Between Legacy Manufacturers And Emerging EV Makers
In February 2021, U.S President Joe Biden signed an executive order requiring his administration to conduct a thorough review of critical supply chains that focus on four areas. High capacity batteries, especially automotive-grade batteries, were among the four segments highlighted for review. Many see the executive order as confirmation sealing the internal combustion engine’s fate in favor of greener propulsion.
The executive order is one of the many signs indicating the automotive industry’s fast-paced approach to the electric vehicle era. California state announced in September 2020 that all the light duty trucks and passenger vehicles in the state should be emissions-free by 2035. Over in Europe, many EU countries have vowed to target net-zero emissions by 2050.
The race for EV supremacy
The push for a departure from fossil fuel propulsion is primarily aimed at reducing carbon emissions’ effects on global warming. As a result, many legacies automotive manufacturers have started to develop plans to switch to EV production. There has also been an influx of new players determined to leverage the new demand for emission-free vehicles. The two classes of automotive manufacturers are no competing for dominance in the same space.
U.S-based electric vehicle manufacturer Tesla is leading the charge for new automotive manufacturers pioneering the EV market. It can be argued that Tesla had a big hand in the aggressive push to the EV market. The EV maker proved to legacy carmakers that EVs can keep up with ICE vehicles and are superior in many ways. For example, they have zero emissions, are easier to maintain because they do not have engines and internal parts that need regular maintenance, and can be recharged affordably.
Tesla’s story has inspired many other promising EV startups, with some interesting approach to the market. Here are some of the EV innovative EV manufacturers that have a potentially promising future in the automotive industry.
It is a Chinese EV brand that is turning out to be a formidable force in the automotive industry thanks to its unique approach. Slow charging is one of the biggest problems for EV owners, and NIO plans to overcome this challenge through swappable batteries in its vehicles. However, it requires the company to set up battery swapping and charging networks with each node containing automated systems that remove depleted batteries, place them in a charging area and insert a charged batteries. The solution is fast enough to get commuters back on the road in just five minutes, roughly the same amount that it takes to refuel an ICE vehicle.
Another advantage of the swappable battery approach is that it allows customers to access lower price points. NIO vehicles can be as much as $10,000 cheaper than offerings from rivals such as Tesla. How does it work? Buyers have the option of purchasing a vehicle without the battery. They can then subscribe to the battery swapping service called the battery as a Service (BaaS) subscription.
Renting out a battery pack will cost a standard $12 per month without charging at NIO’s battery swapping points. Customers who can charge the battery pack at home get to save a lot of cash while having a perpetual battery that can easily be replaced rather than buying a new battery pack when the old one wears out. There is another option where customers can swap a 70kWh battery up to 6 times for $142. (Source: Car And Driver)
This EV maker is unique because it targets the commercial segment, which is an area that not many EV manufacturers have focused on. The company plans to sell electric buses and delivery vans designed from the ground-up with optimal EV and commercial needs in mind. The UK-based company has already secured orders for 10,000 delivery vans from UPS.
The technology and manufacturing process for the electric vans and buses and the ease of setting up assembly are key areas that the company has focused on.
Rivian made headlines when it debuted its robust electric pickup and SUV for the consumer market, but it also intends to serve the commercial market with electric delivery vans. Its choice market means it will be competing with Arrival and Tesla, among others in the commercial segment. Rivian is currently backed by Amazon, which is great news because the e-commerce giant is cash-rich.
Amazon is already test-driving some of Rivian’s electric vans. However, the commercial rollout of the vans is expected to take place in 2022. (Source: Investors.com)
Legacy manufacturers getting into the EV market
Many traditional automotive manufacturers have accepted that the internal combustion engine is headed for its demise, and they are making adjustments to start making EVs. Some of the legacy manufacturers going down this road include BMW, Mercedes, Volvo, General Motors, Ford Toyota, and many others.
However, the influx of new companies presents an interesting dynamic. For example, traditional automotive makers have to reinvest a lot of money into converting their existing manufacturing plants to fit EV standards. Another major change for these companies is switching to dependence on batteries from other suppliers unless they have inbuilt battery production. This is where Tesla has the edge over the competition because it makes its batteries.
It will be an uphill battle for many manufacturers because they have to set up charging infrastructure. Heavy investments will be necessary for securing strong revenue growth and profits in the future. It would be better for the entire industry if manufacturers could agree to a universal charging network, but that will likely not happen any time soon.
Lithium ion batteries are currently the standard for EVs, but range is still a major challenge. While in-house production is a major advantage, battery technology, and the entire EV industry, in general, are susceptible to challenges such as slow charging and limited range. Fortunately, battery research is already making advancements that make a stronger case for EVs. Research on solid-state batteries promises to provide more range, faster charging, and more charging cycles.