Several factors will make 2023 a real test for the determination of governments and the automotive industry to push battery electric vehicles (BEVs), according to Gartner, Inc.
“2023 is the moment of truth to drive full electrification,” said Pedro Pacheco, vice president analyst at Gartner. “Rising electricity prices in Europe are making the running costs of BEVs less attractive, some countries such as the UK, Switzerland and Australia are starting to introduce taxes on electric vehicles. In addition, the China ended EV subsidies at the beginning of 2023 and the global charging infrastructure still has many coverage gaps and the average quality of service is poor.”
In addition, the sharp increase in the prices of raw materials such as lithium and nickel will inherently increase BEV costs, making it difficult for original equipment manufacturers (OEMs) to close the price gap with internal combustion. As a result, BEV sales may grow at a significantly lower rate or stagnate in some markets, making BEV-related investments take longer to break even.
Gartner expects supply chain shortages in the automotive industry to continue until 2023. “More than two years after the start of the pandemic, automakers still cannot foresee the end of the “shortages of semiconductor chips or the subsequent shortages of vehicles they can produce. They also face tight supplies of key materials for BEV batteries, pushing up commodity prices,” said Mike Ramsey, vice president analyst at Gartner.
“The digital transformation of automotive retail hasn’t stopped, it’s just slowed down,” Pacheco said. “As the challenging economic environment is slowly moving the auto market from supply-constrained to demand-constrained, automakers and retailers will once again focus on the transition to retail sales in line. They will also do this to reduce sales costs.”
This down period offers an opportunity for automotive CIOs to help their companies increase their market share through technology. For example, several established car manufacturers are trying to transform themselves into technology companies, but their corporate culture has been a major obstacle to their ambitions. “This must be their starting point to avoid widening the gap with digital native automakers and further increase their revenue through the use of technology,” Pacheco said.
Beyond 2023
Gartner predicts that by 2026, more than 50% of electric vehicles sold worldwide will be Chinese-branded cars. “There are more than 15 Chinese companies selling electric vehicles, and many of them are smaller models that are much less expensive than those sold by foreign rivals,” Ramsey said. “While foreign automakers such as Tesla, VW and GM sell many electric vehicles in China, growth is much faster with Chinese companies.”
As demand for electric vehicles increases worldwide, Chinese companies are well positioned to take advantage of the growth with good access to key minerals and battery manufacturing capacity in China. Gartner recommends that automotive CIOs focused on EVs integrate supply chain planning and visibility software to ensure better business decisions about where key materials are sourced and ensure key materials resiliency.
Analysts at Gartner estimate that by 2025, tech giants will own part of the operating system in 95% of new cars on the road.
Tech giants have begun displacing established tier 1 automotive vendors as providers of in-vehicle software (eg Google Automotive Services and CarPlay) and are also using their ecosystems to claim a larger share of the market’s territory. vehicle operating system (eg Renault’s partnership with Google and VW’s partnership with Microsoft). In addition, several technology giants are directly involved in the development, manufacture and sale of automobiles. Foxconn, Huawei, Alibaba, Xiaomi, Tencent and Sony they are all examples of this tendency.
“Being successful on your own is not going to be possible for a traditional OEM or supplier,” Pacheco said. “Each of them needs to forge partnerships with at least some digital giants if they want to remain profitable and competitive in the industry.”
Gartner clients can read more in “Top Automotive Trends 2023” and “2023 Predictions: Automotive and Intelligent Mobility.”
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