Are electric vehicle sales about to stagnate?

We are continually told that electric cars are the future. Sales have already skyrocketed and the entire automotive industry is switching from internal combustion engines to electric power.

There is also talk of a huge giga-factory in Coventry to build batteries for electric vehicles which will become the norm as we move forward.

We are now well past the early adoption stage and many people have already made the switch. But, as automakers grapple with a number of challenges – foremost among which is the global shortage of semiconductors that is dramatically slowing production – could the seemingly inescapable march of the electric vehicle risk be stopped short, for example time being at least?

Read more: Iconic Coventry office building set for £9million makeover

The dreaded ‘R’ (recession) word has yet to become official, but with soaring energy prices, the escalating war in Ukraine and the worsening cost of living crisis, is it true that the adoption of electric vehicles will be much slower than expected? ?

CoventryLive caught up with Warwickshire automotive expert Dr Charles Tennant. Charles is a former chief engineer at Land Rover and a former board member of Tata Technologies.

Doctor Charles Tennant

The pandemic has hit automakers hard, but now they have another big problem with the shortage of chips or semiconductors. How serious is it?

Charles Tennant (CT): “The automotive sector has had a tumultuous few years now, from Covid undermining customer demand to a supply chain crisis due to a global shortage of semiconductor chips.

“This has caused a new and used vehicle famine, where prices have skyrocketed and waiting lists of up to 12 months for some models, in a scenario of demand exceeding supply.”

What is the overall situation regarding the adoption of electric vehicles?

CT:“Pure electric cars – battery electric or EV – have seen an increase in sales over the past year, with global sales doubling last year to 4.2 million (6% market share) where American company Tesla held the crown as the top-selling electric car brand, followed closely by Volkswagen (including their brands Audi, Porsche and Skoda).

“China still accounts for half of all EV sales, with Europe in second place, where one in five sales are electric, and in the UK EVs had an 18% market share in February. .”

Where are we now in terms of EV adoption?

CT: “In Europe and the UK, EV sales were boosted by government green policies and financial incentives, where the tipping point for mass adoption was seen to be imminent as EV prices are gaining parity with petrol and diesel cars, and charging infrastructure is improving.

“However, new EVs are currently 35% more expensive than petrol or diesel cars, which is around £10,000 off the price, meaning they are still mainly aimed at wealthy families (and car users). company cars), where 55% of buyers earn over £50,000 a year.

CGI of plans for the West Midlands Gigafactory at Coventry Airport
CGI of plans for the West Midlands Gigafactory at Coventry Airport

So what could cause a serious slowdown in electric vehicle sales?

CT: “Now, with a cost of living crisis in the UK, driven by soaring inflation and rising gas and oil prices, cash-strapped customers may have to wait even longer for this affordable mass-market electric car.

“That’s because battery prices, which have been steadily falling over the past few years to around $100 per kWh, are about to skyrocket – and that matters because the battery accounts for around 30% of the cost of power. an EV.

“The increase in battery prices is driven by soaring prices for one of the key metals in the lithium-ion battery at the heart of an electric vehicle, which increased fivefold to around $100,000 per ton.

“With a typical electric vehicle battery consuming 27.5 kg of nickel, this equates to a cost increase of $500 to an incredible $2,500 per vehicle.

“And since Russia’s invasion of Ukraine is driving up commodity prices for other battery feedstocks, such as lithium and graphite, it’s easy to make the connection to the decline. electric vehicle sales.

Tesla Model 3
The Model 3 is the most affordable Tesla yet

Why is what’s happening in Ukraine impacting EV sales?

CT: “Sanctions on Russia – which provides 10% of the world’s nickel supply while being a major supplier of aluminum used in batteries – will only further exacerbate the problem.

“Higher energy density batteries needed to increase the range between charges tend to use more nickel, so a move to other battery chemistries such as lithium iron phosphate (less nickel dependent) may be part of the solution as well as a possible switch to solid-state batteries.

“But all this takes a considerable amount of time and is not useful at the moment.”

So a slowdown is inevitable then?

CT: “Are electric vehicle sales about to stagnate? Well, new buyers looking for electric cars on the UK Auto Trader market have fallen from 26% last September to 16% in February, with buyers seemingly returning to petrol or hybrid cars.

“But even if you can afford it, customers who now want to go electric have literally nowhere to go except on a long waiting list.

“One thing is certain, if electric vehicles don’t become more affordable, mass adoption remains a pipe dream.”

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