The automotive show season is well underway, with gleaming new cars and trucks—including electric vehicles (EVs)—destined for exhibit halls in cities like Detroit, Frankfurt and Tokyo. But as the latest EVs are showcased, uncertainty over whether or not they will become part of mainstream car buying remains largely unchanged. And that uncertainty is impacting their manufacture.
Today, this uncertainty is challenging the ability of automotive OEMs to produce the right mix of traditional and green vehicles that will enable them to remain competitive. Unlike traditional vehicles, EVs require a different value chain and processes to support them. Moreover, consumer perceptions of the practicality, functionality and potential advantages of EVs remain mixed in such areas as cost of ownership, savings, convenience, travel range, and charging infrastructure.
To help OEMs face this challenge, Accenture has identified seven success factors that will help spur EV market growth. One of the seven factors is an examination of strategies OEMs will need to consider when manufacturing EVs. Despite concerns about long-term EV viability, public acceptance of the models is growing. OEMs will need to continue hedging their bets by modifying platforms to support a variety of fuel technologies to include gas, plug-in hybrid electric vehicles, and full electric vehicles—all alongside the continued investment in reducing the emissions of traditional combustion engines. In the short term, this is how many companies will meet regulatory and consumer pressures for greener engines.
Manufacturers will need to revamp core processes to prepare for mass production of non-internal combustion engines (ICEs). Manufacturing plant changes and new competencies in chemical and electrical engineering also will be necessary. Major car design will be needed for core parts like the combustion engine and tank, and electronics replaced by an electric engine, a battery and battery management systems software.
OEMs also will need to access and work with new categories of suppliers that will be part of an emerging EV value chain. Furthermore, they will have to negotiate on an equal level with partners; build their own knowledge about new technologies, such as carbon fiber as a steel replacement in body kits; and adhere to battery standards.
In support of the core operations of EVs, new services will be needed, such as battery exchanges and breakdown services. Other services will need to be tailored to EVs, including installation, planning and warranties, especially for batteries. Further, OEMs will have to ensure that dealers and repair shops have the capabilities to service this new type of vehicle and manage customer expectations concerning the ability to make repairs effectively. Select dealers will need to retrofit their service stations and get further qualifications and experience in order to handle specific EV repairs, including the servicing of high-voltage batteries. The warranty and maintenance of the e-powertrain also will be important.
As the EV market evolves, OEMs and suppliers will likely experience greater pressure to standardize core components to comply with new government regulations, grid infrastructure restrictions, and partner requirements. They will need to adjust their core components based on an externally driven schedule of product and component updates.
Today, lithium ion remains the top contender for plug-in EV batteries. OEMs might need to hedge their risk associated with sourcing lithium, a rare metal subject to shortages and price fluctuations. Option contracts or vertical integration to maintain access to the raw material are both options, together with getting involved in exploring new sources for lithium, such as brine extraction. Alternative battery technologies like aluminum-air and graphene also are included in this changing landscape.
Given that the alternative vehicle market is still evolving, it will be critical that OEMs balance their core processes and platforms to accommodate several technologies. They will need to be prepared for various gas and green technologies in a range of market development scenarios, including a growing EV marketplace.