TECHNOLOGY UPDATE
Thoughts on Vehicle Electrification in the U.S. Brian Daugherty Chief Technology Officer, MEMA 248.430.5966 │ bdaugherty@mema.org
We are well aware of the media hype surrounding the future of electrified vehicle sales and the more than $300B being invested globally by vehicle OEMs on battery electric technology and vehicle launches over the next several years. However, last year only 2.5% of new vehicles registered in the U.S. were gasoline/electric hybrids and only 1.8% were full battery electric vehicles (BEVs). More than 252,000 BEVs were registered in the U.S. in 2020 – up from 227,161 in 2019 – and Tesla models accounted for close to 80% of them. This is a slight, yet somewhat impressive, increase in Tesla’s U.S. BEV market dominance from 2019 since it is hard to maintain an 80% market share selling anything for very long. In the U.S., we expect to see 125+ BEV models on the market within the next several years with some projections of 140 models in 2025. Consumers will soon have many more purchase options – everything from full-size trucks and large SUVs to compact cars. As the competition heats up, the BEV market will continue to grow, and Tesla’s share of the market will naturally decrease. I still expect the BEV market to grow much slower than many in the media predict for a wide range of reasons including cost, consumer acceptance, lack of OEM battery capacity, the pains of planning charging, and range anxiety. Did I mention cost? Many of the new U.S. BEVs are targeting the $50K and up market, but it is very unclear how large that market can be. And it will be very interesting to see how many $100K+ BEVs will be sold, but I am betting on not that many. The availability of lower priced BEVs will continue to increase as more mass-market vehicles are available, but whether OEMs can make any money is still a big question. Like any vehicle segment, we will see winners and losers among the many U.S. BEV models. However, the losers may lose a lot. If you take 125 to 140 models and subtract the estimated Tesla share of the annual U.S. BEV sales volume (I assumed a reduced 40% share for Tesla in 2025), you end up with an estimated average of 4000 to 7000 units per year for the others depending on the year. After you also subtract out the non-Tesla models with sales over 40,000 units, you have some exceptionally low annual average sales numbers for the remaining models. Everyone is playing to win, but the opposite is more likely for most BEV models. In the past, many suppliers did not care which engine option was chosen since their parts were on all models regardless of powertrain. But most of these BEV models are on their own dedicated platforms, which means all suppliers will be affected if volumes differ significantly from OEM contract forecasts. This means everything from doorhandles to roof liners, but especially the Class A surface part suppliers that are not supplying multiple models. One of the other narratives in the media is that BEV sales are growing slowly due to lack of available highway DC fast charging capacity. So, if we just build more DC fast chargers, will everyone buy BEVs? In most areas of the country, charging stations are rarely full – except during holiday travel – so where are the constraints? Also, well over 80% of vehicle charging occurs at home and most of the remainder occurs at or near work. It also costs up to 3 or 4 times more for a vehicle 3 │ OESA News - 2021 Third Quarter
