Raw Material Cost Threatens BEV Growth

By Staff Writer June 24, 2022 212

The latest AlixPartners forecast calls for BEVs (battery electric vehicles) to be the majority vehicle type by 2035 in all major regions, surpassing internal-combustion-engine (ICE) vehicles. BEV market growth, however, will be challenged by a raw-material cost that is 125% higher than a comparable ICE vehicle; scarcity and price inflation of parts and commodities (including increased use of chips on EVs); and a lack of readiness for the “BEV era” in the supply bases of both automakers and their larger suppliers.

“Automakers and suppliers are benefiting from strong demand despite the economic clouds and are showing resolve in their commitment to shift to electric vehicles, but expectations are high for the industry to hit record economic-profit levels these next two years even while funding for the beginning of the BEV transition is taking place ahead of sufficient volumes for economies-of-scale and cost competitiveness,” said Mark Wakefield, global co-leader of the automotive and industrial practice at AlixPartners and a managing director at the firm. “While many companies are planning their own transition, proactive supply-chain redesign and rigorous cost management needs to be improved to avoid costly surprises down the road.”

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Last modified on Friday, 24 June 2022 12:36