To succeed in the mass market, EV makers must focus on cost, not speed – TechCrunch

As the global EV industry ramps up and crosses into the mass market, automakers must switch their focus from speed to cost, according to the AlixPartners 2022 Global Automotive Outlook released Wednesday.

The world is continuing to electrify, with sales of battery-electric vehicles set to make up half the global vehicle market by 2035, the report said, compared with 8.3% in 2021.

Now that EV sales are hurtling toward an inflection point in 2024, the industry is maturing beyond the first mover advantage that prioritized speed by putting batteries into cars originally designed for gas engines.

“You just fundamentally can’t compete on a cost basis with that approach,” said Mark Wakefield, the Detroit-based global co-leader of AlixPartners’ automotive and industrial practice. “To hit that that mass market, it absolutely needs to be a ground-up EV design.”

Automakers plan to invest $526 billion toward developing EVs through 2026. That’s a significant jump over the $330 billion on a rolling five-year period they announced last year.

Part of the adoption boom predicted in the report will be fueled by choice: AlixPartners projects that consumers in 2024 will have 212 battery-electric models to choose among, compared with 80 nameplates in 2021.

Notable models that have moved the industry forward include the Hyundai Ioniq 5, which swept the 2022 World Car of the Year awards, as well as the Toyota Bz4X and forthcoming BMW i5, said Elmar Kades, the Munich-based co-leader of the firm’s automotive and industrial practice.

However, the chip supply will be a constraint through 2024. The lack of supply is forcing the industry to follow Enzo Ferrari’s philosophy of delivering one fewer car than the market demands.

“All the manufacturers have been forced into that bucket,” Wakefield said. “There is no benefit to defecting and trying to produce more.”

Instead, success in the electrified future depends upon partnerships and joint ventures, Kades said. The report found that Hyundai has created the most partnerships, followed by the world’s two largest automakers, Volkswagen and Toyota.

Said Kades, “Companies like Hyundai, which were value cars in the past and now catching up and taking the B[attery]EV technology to produce more premium cars, change the whole landscape.”