Many automakers around the world are banking on their investments in electric vehicles (EVs) because they see the future of road transport as being electric. Automakers in Asia, Europe and the United States are battling to become the dominant force in electric vehicle manufacturing and sales as adoption increases, each hoping to dominate the market by the end of the decade.
This month, Volkswagen CEO Herbert Diess declared “The outlook is very good, we have [a] very good order intake in Asia,” referring to the EV market. This addressed concerns about continued delays in the supply chain, which means longer waits for consumers buying electric vehicles. Disruptions caused by the Covid pandemic and other factors have made it difficult for automakers to source certain auto components such as semiconductors, although Diess believes the situation will improve in the coming months.
Volkswagen has ramped up production in recent months in response to a delay in its electric vehicle deliveries, with five new assembly plants opening. Diess pointed to an increase in demand for electric vehicles in Asia, Europe and the United States, suggesting that delivery times would improve later in the year as production increases, expecting that semiconductors are also becoming more readily available.
With the grand opening of its new cell factory in Salzgitter, Germany – SalzGiga – this month, VW announced a $20.38 billion investment in its battery cell business through its PowerCo unit. The company is expected to create 20,000 jobs and expects annual sales of more than $20 billion by the end of the decade. SalzGiga will provide the master plan for five more VW battery cell factories across Europe, with the aim of developing a common capacity of 240 gigawatt hours (GWh), as the region becomes a battery manufacturing hub. This will make it a major competitor to leading US electric vehicle company Tesla, which also has factories in Germany.
PowerCo will manage VW’s battery production industry as well as research in several battery-related areas, such as mining and recycling. The unit will also explore energy storage systems as renewable energy projects develop. German Chancellor Olaf Scholz supports the move, stressing the need for Europe to develop its battery and electric vehicle industries. “Not so long ago, many Germans thought: we can get batteries from Asia. Today we know better. The pandemic and Russia’s brutal attack on Ukraine make it clear that reliance on global supply chains means great risk,” he said.
But several Asian automakers are also investing heavily in their electric vehicle production to gain a competitive advantage over Europe. Hyundai Motor has just announced its first South Korean electric vehicle plant, with production expected to start in 2025. Hyundai recently announced several new electric vehicle models, which are expected to arrive in the Asian and European markets over the next two years. . The company, which includes Hyundai and Kia, will invest about $48.1 billion in South Korea by 2025, along with another $5.5 billion in its electric vehicle and battery businesses in the United States.
Chang Moon-su, analyst at Hyundai Motor Securities, Explain“Sales of internal combustion engine vehicles are expected to be banned in some markets, so the new electric vehicle plant is vital to Hyundai Motor’s survival.”
Japan is also battling to catch up with the US, European and Chinese markets, with the country’s biggest automaker, Toyota, launching its bZ4X electric SUV in May. In 2021, the automaker announced a $35 billion investment to accelerate the pace of development of its EV business. Toyota offers the vehicle through a subscription program, which means consumers don’t have to worry about battery degradation and other maintenance costs. Shinya Kotera, chairman of Japanese subscription services company Kinto Corp, declared “We have to take risks on trade-in prices, a major source of concern for drivers, and battery degradation.” Kotera hopes this will encourage more drivers to choose electric vehicles through subscription services.
However, Toyota is already facing problems, further slowing the booming Japanese EV market as it has had to recall its first series-produced electric vehicles less than 2 months after their launch. In June, Toyota recalled 2,700 electric vehicles due to tire malfunction, meaning they could come loose. The bZ4X SUVs which were destined for the European, American, Canadian and Japanese markets were recalled when Japan’s safety regulator raised concerns about the vehicle’s wheel rolling off during sharp turns, although no accidents were reported. reported.
Many companies, including Toyota, are also struggling to grow their electric vehicle markets without greater government incentives for consumers. General Motors, Tesla and Toyota all asked for more tax credits after running out of their $7,500 electric vehicle tax credits in the United States, this has become a major concern as manufacturing costs rise due to supply chain disruptions in recent months, raising the price of producing electric vehicles.
Despite several challenges regarding supply chain disruptions, material scarcity and rising costs, many automakers around the world are investing heavily in their electric vehicle business in hopes of becoming more competitive as vehicles conventional fuel will be phased out over the next decade and beyond.
By Felicity Bradstock for Oilprice.com