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www.langmarketing.com Jobber Population Hit Hard by Pandemic

At mid-year 2019, there were just over 16,800 jobber stores across the U.S., more than 500 outlets fewer than in 2011. The jobber store population receded at a 0.4 percent average annual rate between 2011 and 2019. This was a much slower annual pace of jobber store attrition than had occurred during the previous 10-year span (2001 to 2011), when nearly 1,800 jobber stores were shuttered.

Over the past two years, jobber stores have closed at a sharply increased rate, over double the annual pace from 2011 to 2019. This has changed the mix of auto parts stores (jobbers and retail auto parts stores) across the U.S.

Electric Vehicle VIO Growth Faces Bumpy Road

Electric vehicles must overcome a number of hurdles in order to significantly increase their share of vehicles in operation (VIO). At the end of 2020, EVs (PEVs, not including hybrids) represented less than one percent of all cars and light trucks on U.S. roads.

In expanding their VIO share, EVs face six major challenges, ranging from manufacturing capacity and infrastructure issues to consumer needs. While some of these challenges are probably fleeting, others will persist for the balance of the decade and, perhaps, beyond.

VIO Challenges Faced by EVs

Electric vehicles (PEVs not including Hybrids) must overcome six major challenges in order to significantly expand their U.S. VIO share: consumer acceptance of a broad range of EV nameplates, a robust vehicle-charging infrastructure, computer chip shortages, battery shortages, reliance on rare earth metals, and the ability of EVs to pass through a number of owners over their life cycles.

Tesla Dominates EV Market

While electric models are being introduced by virtually all nameplates in the U.S. market, EV sales in the U.S. have been dominated by Tesla. Through 2021, Tesla has accounted for over 80 percent of electric vehicle sales in the U.S. (not including PHEVs).

In order for EVs to represent a significant portion of the VIO, the EV models of other nameplates must gain the acceptance of U.S. buyers, expanding EV sales beyond Tesla enthusiasts. Charging Station Infrastructure

Most current EV buyers have installed home-charging equipment. However, in order for EVs to have a broad consumer base, people without this ability (apartment dwellers, etc.) must be able to easily charge their EVs at public sites.

The growth of a charging infrastructure has been painfully slow, and unless there is a massive program (probably government backed) to develop this infrastructure, this requirement for wide-spread EV use will not be available within the next five to 10 years.

Shortages of Two Key Components

The chip shortage, which currently is hobbling the production of virtually all vehicles in the U.S., is expected to persist for several years before smoothing out.

EVs are semiconductor dependent and continued chip shortages could curtail EV production over the next year or two.

More significant and probably much longer lasting than the chip shortage is the worldwide lack of battery manufacturing capacity. Experts have indicated that between 2022 and 2029 battery shortages will reduce the global production of electric vehicles by more than 20 million.

Rare Earth Metals Are a Choke Point

Rare earth metals (metals that are difficult to find in significant concentrations to make mining possible) are critical for manufacturing the types of electric motors that are most common in current EV designs.

Rare earth production is concentrated in China, and the U.S. could be dependent on China for most rare earth metals for decades.

In switching from ICE to electric-powered vehicles, U.S. vehicle producers are trading one cartel (oil) for another (rare earth metals). In fact, the offshore availability of rare earth metals is much more highly concentrated than oil production.

If offshore rare earth metals were suddenly denied to the U.S., domestic EV production would abruptly stop.

Secondary Owners Operate Most Vehicles

Cars and light trucks in the U.S. pass through a number of owners as they increase in age. Most consumers never purchase a new vehicle. The average age of cars and light trucks is more than 12 years in the U.S. and the number of automobiles in high-age categories (15 years and older) at record-high levels.

ICE-powered vehicles have proven to be very durable and easy to repair. It remains to be seen if Electric Vehicles will be able to fill this same market need across the broad range of secondary buyers in the U.S.

EV batteries (costing thousands of dollars to replace) have yet to show their durability over many years in the various operating and climate conditions to which they will be subjected.

Six Major Takeaways • In order to significantly expand their VIO share in the U.S., electric vehicles (PEVs) must overcome major challenges. • Electric models of many nameplates must gain the acceptance of U.S. buyers over the next few years in

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order for EVs to capture a large portion of the country’s VIO. • Unless there is a massive program to develop a charging-site infrastructure across the U.S., there will not be enough public and convenient changing capacity to support a large number of EVs on the road. • EV production is dependent on two key components: computer chips and batteries. The future capacity to manufacture these two key components is highly questionable in the U.S. • Rare metals are critical to producing the types of motors that are most common in current EV designs. If rare metals were suddenly denied to the U.S. by the world’s largest supplier, China, EV production in the U.S. would stop abruptly. • Electric vehicles might not meet the needs of used-vehicle buyers across the U.S., who own the majority of cars and light trucks. More analysis of this key challenge will be presented in a future issue of the Lang iReport.