The automotive industry is undergoing a transformation. Environmental pressures and rapid technological advancements are reshaping the landscape, challenging traditional car ownership and usage models. To stay ahead of the curve, it's critical to understand these changes and their long-term implications.
The Future is Hybrid
“Range Anxiety”- the fear of needing an electric vehicle charge with no charging station in sight is a very real concern impacting consumer adoption of electric vehicles. Imagine yourself as a stranded motorist who drove an extra twenty miles to avoid a construction zone. Is there a spare battery in your car, just like a spare tire? While this anxiety may resolve over time with improved charging infrastructure and modernized electrical grids, what can drivers do in the meantime?
The compromise seems to be hybrid. Hybrid vehicles reduce gasoline consumption and improve fuel efficiency, resulting in less money at the pump and a reduced impact on the environment. Hybrid models also incorporate many of the desirable features found in electric vehicles, such as connected and intelligent driving systems. For these reasons, there has been growth in hybrid vehicle adoption and slower growth in electric vehicle purchases in the first part of 2024 in the US.
But What About the Rest of the World?
China and Europe are driving electrification forward, whereas South America and India aren’t moving as quickly to adopt.
Psychologically, the leap from internal combustion engines (ICE) to hybrids seems smaller than the leap to EVs. While governments are pressuring manufacturers to meet aggressive electrification targets, you could argue that the shift to hybrid is still making a significant impact on reducing carbon emissions.
China is Here
Not only are the 1.4 billion people in China now the world’s largest automotive market, but they are also leading the globe in electric vehicle manufacturing. In 2023, Chinese OEM BYD surpassed Tesla as the number one electric vehicle company globally. Along with BYD, a significant number of new OEM entrants are looking to expand their reach to foreign markets, including the United States and Europe.
Like most countries, governments are poised to support and protect their domestic manufacturers, but so far, the economies of scale the Chinese OEMs have achieved haven’t been realized in other countries. Chinese electric vehicles are cheaper than most comparable vehicles produced by other OEMs, and they are rapidly proliferating. These lower-cost vehicles are appealing to consumers in numerous markets. Both the EU and the US have responded with higher (48%-100% higher, respectively) tariffs, risking increased trade tensions between the dominant world economies. How China responds may negatively impact the manufacturers these governments are trying to protect.
Want to stay up to date on the automotive supply chain? Contact your local Expeditors representative to learn more.
