The COVID-19 pandemic continues to have a lasting impact on the global supply chain across all industries – strongly illustrated in the automaker market. When the pandemic initially began, the availability of certain car parts quickly diminished and ultimately created a greater domino effect within the auto industry, where new vehicle development and sales nearly stagnated. In contrast, the used car market has continually risen. It could be considered more competitive than new vehicles in certain regions. The Internal Combustion Engine (ICE) sector is still determining how to rebound its market and has increased its competitiveness with the EV sector to try and reclaim lost market share.
In 2023, the Biden administration made strides to provide EV incentives and funds to increase cleaner transportation. Entering 2024, the ICE and EV sectors have teetered from mild to harsh competition, with 3,000 ICE-focused auto dealers requesting President Biden halt his EV-supportive regulations and incentives. ICE manufacturers stress the slowdown of EV purchases as a key reason government support isn't positively affecting industry growth. However, they often fail to acknowledge that both the ICE and EV industries are facing a parallel downturn primarily driven by the impacts of the post-COVID recession.
A key contributor to EV teetering vehicle sales is auto dealers' ability to sell these vehicles. Since these are newer technologies, it takes a new approach to marketing and sales to influence consumers to adopt this type of innovation. And, auto dealers aren’t as interested in this extra work for various reasons – but particularly due to their limited understanding, education, and communication with consumers to illustrate the benefit while acknowledging and addressing any preconceived concerns.
US EV Push Mirrors Global Trends
Recently, under the Biden administration, traditional ICE lobbying tactics to slow EV growth in the market haven’t been as successful as initially hoped. Biden's efforts mirror the global trend toward increased EV development, production, and transition toward more sustainable solutions. So instead of fighting this progress, ICE automakers should prioritize partnering with Original Equipment Manufacturers (OEMs) that design, manufacture, and supply EV solutions specifically for the North American electrical grid to further bolster EV infrastructure development. For the US to have an EV infrastructure and charging network comparable to other global regions, like APAC and EU, these companies are indispensable to success. Strides have been made, such as IONNA and their commitment to the deployment of 30,000 charging stations by 2030.
Increased EV Education Will Help Adoption
While American ICE automakers are attempting to be more intentional about their EV product investments and offerings, a fundamental struggle these businesses have is a lack of understanding of the EV industry. They are often unfamiliar with the necessary product marketing and accessible consumer talking points to effectively sell their EV solutions. Essentially, they’re trying to apply ICE strategies to EV products, and it isn’t working, which partly explains their recent pushback against EVs. They don’t feel comfortable selling them, so they don’t want to. A key to increasing EV adoption is superior EV education and consumer understanding of the reality of vehicle charging and maintenance. This could include some aspects of government support – like how they supported the introduction of seatbelts – but where the most impact can be made is in better education during the shopping experience.
The EV Shopping Experience & ICE Auto Dealers’ Inability to Market and Sell EVs
Understandable, ICE drivers are used to a truncated fueling experience – usually lasting 3-5 minutes without wait time - and believe the charging experience is an extensive and timely process. Educating and contextualizing how EV transportation won’t be a majorly new fueling experience is essential for expanded adoption. Education needs to reinforce how EV OEMs and charging station operators are prioritizing consumer-friendly locations so they can accomplish multiple tasks at once – like charging your car while getting groceries for instance. Since EVs are reliant on electrical grid support, consumer locations are primed for installation. Education must address charge anxiety while acknowledging how drivers can take advantage of plug-in time. Additionally, to try and remain competitive, ICE automakers are looking to produce hybrid vehicles as a stop-gap solution and prioritize Telsa’s standard charger connector to utilize their existing EV infrastructure. However, consumers aren’t favoring hybrid vehicles, and the successful interplay between Telsa and non-Telsa EV technology is still unclear, as best illustrated through Telsa’s new Cybertruck. Notably, Telsa introduced the ability to interplay amongst chargers in part to receive a portion of Biden’s 7.5B EV infrastructure incentive. Furthermore, auto dealers have consistently remained uninterested in collaborating with Telsa since the company is less interested in partnerships vs. individual-brand exposure and extension.
Effects on the automotive supply chain are still an ever-present obstacle. ICE manufacturers have a deeper history, partnership, and collaboration within the global supply chain, and want to retain that competitive advantage by completely shifting production to EVs. Without the same access to global manufacturers, producers, and suppliers, the EV industry won't be able to balance, or even overtake, ICE’s market share. Building and strengthening relationships within the automotive global supply chain is vital but can be largely reliant on time. However, this underscores the need for EV OEMs in the regions that want to prioritize EV transportation. To sustain supply and demand, there first needs to be a robust infrastructure with an electrical grid to support it. To achieve this, cooperation amongst auto OEMs and charging station operations – in both the commercial and educational side - is paramount to scale the industry and drive EV adoption further.