Sector News

The future of electric vehicles: Will US manufacturers lead?

September 23, 2019
Sustainability

National Drive Electric Week 2019 is underway in the United States, with organizers hoping to underpin the growth of electric vehicles and highlight the benefits of EV ownership. While the long-term impact on car manufacturing jobs appears murky, there is little doubt that there will be more market penetration of EVs in the next decade, especially with manufacturers such as Volkswagen, Mercedes-Benz, and Volvo setting phase out dates for internal combustion engine-only cars.

In the coming years, there is no logical reason why, if there is a two-car family, one of those cars should not be an EV. While the upfront costs of EVs are currently more than your middle or low-end car on the road, EVs cost significantly less in the long term. Prospective car buyers have to remember, with an EV, you do not have to pay for gas, change the oil, or even redo the transmission. When it comes to maintenance, you are really only paying for tires and possibly the a/c if it were to go out.

If EVs are less expensive than traditional cars in the long run, what is hindering their growth? It mostly comes down to range and hesitant car manufacturers. The largest current impediment to public perception of EVs is that of range. People want to be able to travel 500 miles without stopping, even though you couldn’t do this with your traditional combustion engine car. Growth of the EV industry also depends on what manufacturers do—when they begin the wholesale transition to producing EVs. The EV industry is not so much demand driven but supply driven. One automobile manufacturer just has to take the risk of transitioning and thereby break the floodgate. It really just depends on a single strategic decision by one of the major automobile manufacturers.

As for another public perception issue, at least to those working in the automobile manufacturing industry, there is the concern that transitioning to EVs will cause many to lose their jobs. During the transition to EVs, there will be some job loss because there are simply fewer parts going into an EV. However, if U.S. manufacturers don’t move fast enough, then they risk losing out to foreign manufacturers of EVs. Thus, if U.S. automobile manufacturers don’t move at all, there is the risk that they will be at a severe disadvantage and miss out on what will likely be a major industry opportunity, which in the long term, could mean greater job loss.

When it comes to auto manufacturers and which ones will take that strategic step forward to be the lead innovators of EVs, it will probably be the ones you wouldn’t expect right now. Ford, GE, Toyota, Volvo, Chrysler, and the other majors are all working on it and have for a long time. So far, there has been a lack of engineering progress and little movement on reducing the cost of manufacturing, battery pack notwithstanding. EVs are going to be an integral part of the future of transportation, and U.S. automobile manufacturers should take the strategic step forward to lead the transition by investing more in the technology behind EVs and figuring out how to reduce the cost of producing EVs. Only time will tell who will lead this movement. But one thing is certain: U.S. manufacturers do not want to drag their feet.

By Ed Hirs

Source: Forbes

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