Tomorrow Investor

What Does the EV Boom Mean for the Global Automotive Sector?


When Ford Motor founder Henry Ford introduced the moving assembly line over a century ago, he changed the game when it came to the manufacturing sector. But while Ford’s assembly line remains the standard when it comes to the global manufacturing industry, the company that continues to bear his name is hard-pressed to keep up with the big players in the emergent field of electric-powered transportation, especially electric vehicle (EV) pioneer Tesla and rising players from China like BYD and Geely.

Indeed, the rise of EVs marks an epochal moment in the global automotive industry, as the original top dogs like Ford, General Motors (GM), and their European counterparts have been spending a great deal to shift their product lines towards those reliant on renewables. 

Shifting production to EVs is even more relevant now that governments are scrambling to find ways to reduce their respective carbon footprints, decrease the release of destructive greenhouse gasses into the atmosphere, and offer citizens an affordable alternative to fossil-fuel-reliant transport.

A Chasm Between the Old Guard and New

Last year, EV makers had a field day over their conventional counterparts, with Tesla delivering around 1.31 million EVs to its customers and BYD tripling its sales in terms of both pure EVs and hybrid vehicles.

Experts point out that this is because EV makers have the first crack at any innovations in the industry. At the same time, Chinese manufacturers pride themselves on being able to spend less in terms of production – a factor that enables them to sell their products at a lower price than conventional vehicles.

But these developments show how wide a disparity stands between EV makers and the automotive sector’s old guard. Germany’s Volkswagen Group, a conglomerate that includes superbrands Audi and Porsche, was only able to sell 527,100 EVs; America’s Stellantis, on the other hand, only sold 288,000 in 2022.

Can Old-School Carmakers Catch Up?

While many conventional automotive firms have made substantial investments in the shift to EV-making, many analysts wonder if such investments will eventually pay off as most of these companies do not have the relevant skills to actually make the shift.

Also, recent developments in global carmaking have seriously impacted production and operations at these companies. Many carmakers have had to deal with supply chain issues, recent unrest among unionized laborers especially in the United States, as well as a shortage of necessary semiconductors.

Some firms have also been rethinking their strategies regarding the matter, as a recent drop in demand for EVs has prompted the likes of Volkswagen to suspend related production at its facilities in Germany.

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