The automotive industry has been facing some headwinds in recent times. Concerns over the environment and the sheer impact of vehicles on cities has many people questioning its merit.
However, the invention and now widespread distribution of EVs is changing the situation. The ever-improving technology is allowing the industry to renew in a way that nobody expected.
But what specifically is happening? And why is it so significant?
Creating Jobs And Improving Skills
One of the biggest reasons EV brands are saving the automotive industry is the sheer number of jobs they’re creating. Manufacturing is growing, even in the West, because of the supply chain needs of the automotive industry, and the demand for software, charging infrastructure and parts. These are driving demand in entire sections of the economy in ways that didn’t seem possible even ten years ago. Now, a massive buildout is occurring, and more people than ever are witnessing the benefits of vehicles on the economy.
For example, China is driving the option of EV hubs and battery manufacturing, hiring many thousands of high-skilled engineers. Meanwhile, GM is driving growth in the US, encouraging the industry to evolve.
At the same time, the workforce is also reskilling. More people than ever are seeing the benefits of training and entering the industry, due to its exciting, high-value future.
Fostering Global Competition
Another benefit of EV brands is the fact that they’re driving a level of competition in the automotive industry that hasn’t been seen for decades. Companies like Tesla got the ball rolling, but now China is very much taking the lead. Examples of new vehicles, like the MG IM5, show just how far it has come in recent years.
With that said, industry analysts expect many of the EV makers in the industry to go broke in the next few years. As few as 15% of existing companies will continue until 2030.
Boosting Profitability
Another perk of EV brands (and why they might be saving the car industry), is how they are basically boosting profitability across the board. A lot of companies are now benefiting from premium pricing combined with what is, essentially, a more efficient product.
Tesla, for instance, was able to make significant profits early on by turning electric vehicles into luxury, premium designer cars. It managed to build a supply chain around maximizing profits and now has some of the lowest production costs around.
BMW moved into the market later, but managed to use EV to surge its overall production, making 2024 one of the best years in the company’s history. The German brand called the year a “tipping point”, indicating that it expected the rise of EV brands to continue well into the future.
Some brands, like Cadillac, are literally rethinking their entire lineups around electric vehicles. Fully electrifying the drivetrain brings all sorts of benefits, like smoother operation and more reliable servicing, while getting rid of many of the risks of owning a premium vehicle.
Attracting Massive Investment
The requirement to electrify the automotive industry driven by the EV brand is also leading to massive investments in building new supply chains. Huge amounts of money are being poured in to ensure that the supply of batteries and the shift to EVs can continue.
The US, for example, says that EV sales will be around 70% of new vehicles by 2032. Meanwhile, China will be exporting much of its EV manufacturing capacity to Europe by 2026, which isn’t far away.
Driving High Sales Growth
Finally, EV brands are driving high sales growth and market expansion in the automotive industry. According to industry reports, around 20% of total new car sales worldwide are EV-based, allowing the industry to grow further.
What’s more, a lot of that growth is coming from new and emerging markets, providing conventional automakers with opportunities to expand their markets and sell at higher volumes.
Many new brands, like BYD, are doing well in developing countries where consumers don’t have high income levels. They’re entering the market at up to a 50% discount compared to traditional rivals.
The push towards the technological frontier is also having a significant impact. The days of one-size-fits-all sedans are now well and truly behind us.
Furthermore, the electric revolution is bleeding into other vehicle classes. Previously, it was just premium private cars, but now even motorcycles and vans are being made electric, with trucks to follow shortly.
Overall, the EV brand revolution has had a massively beneficial effect on the automotive industry. It’s been forced to change (in a good way).