Why electric vehicles are waitlisted
April 23, 2018
April 23, 2018
Electric vehicles are the future of the auto industry, but if you’re looking to get one right now, you might have a bit of a wait. EVs are more popular than ever before, especially now with the huge investment by the top car manufacturers in the industry. With an increase in popularity and heavy investment from automakers, there is a lot of promise for the electric car industry, but the lack of battery technology development and cumbersome manufacturing processes are holding back mass production.
However, OEM’s are looking to ramp up production, which means there is something to get excited about if you’re on the waiting list for an electric car.
Tesla’s “manufacturing hell”
You may have heard of Tesla’s Elon Musk resorting to sleeping at the manufacturing plant to help meet the challenges for increasing production of the Model 3. The production of the Tesla Model 3 is at 2,000 per week, but the demand is around 400,000 units. If you’re one of the last ones to order you may have to wait for years before your car is ready for delivery. However, Musk predicts that the production will ramp up to 8,000 units per week by the end of the year.
Part of the problem with the rate of production is that number of robots that are utilized to automate the process. The lack of human oversight is actually counterproductive as mistakes by robots result in setbacks. Consequently, the reliance on robotics is being reduced and an increasing amount of human involvement is being integrated.
Furthermore, the number of new technologies introduced in the Model 3 is proving too overwhelming for the manufacturing process to handle. The improved battery and new drivetrain are highly competitive in the luxury sports sedan marketplace, but manufacturing the components is a challenge.
Bigger car manufacturers with more money to throw at the electric car problem will have an easier time absorbing setbacks and still have the enthusiasm to ramp up production. BMW plans to release an electric car with a 500 km range by the year 2020. The technology will be based on nickel-manganese cobalt batteries as opposed to the lithium-ion batteries used by most competitors.
However, what’s keeping BMW from rolling out a huge number of units sooner is that the battery technology is not yet developed to a reliable level. It’s a challenge that most in the car industry is still trying to crack.
Electric cars have higher manufacturing costs
Despite the potential to make huge sales in the coming decade electric vehicles right now are costly – even for the biggest manufacturers. For example, General Motors loses around $9,000 on every Chevrolet Bolt sold and the Fiat Chrysler around $20,000.
The rate at which companies are burning through cash is one of the roadblocks for mass development of electric vehicles. The manufacturing process and technologies of these vehicles are still being developed, and until a feasible solution is found the waiting list for electric vehicles will be bigger than the number sold.
Here is a roundup of the current challenges that are holding back production:
- Charging infrastructure
- Battery technology investment
- Vehicle design strategy
- Platform development costs
- Optimal vehicle pricing strategy
- EV product portfolio optimization
OEM’s will increase production
Regardless of the challenges OEM’s will inevitably increase production of their electric vehicles. In fact, they may have no option but to do so as legislation is moving in the direction of outlawing traditional internal combustion vehicles in favor of electric ones.
For instance, in San Francisco, a ban on all combustion-engine vehicles may be imposed by 2040, and until that date, the losses related to combustion-engine vehicles will gradually increase. Countries such as France and the UK are leading the charge for creating legislation for incentivizing the manufacture of electric vehicles.
Furthermore, the cost of a kilowatt-hour is expected to drop to $80 by 2025 compared to $150 today, according to BCG. This drop makes the operational costs of running electric vehicles a more attractive proposition for car owners and therefore the demand will rise.
According to a study OEM’s will release 3 different electric vehicles with around 110,000 units per vehicle type by 2025. As the emission restriction become tighter it will begin to make financial sense to increase production and slowly phase out internal combustion vehicles.
The manufacture of electric vehicles at scale is proving to be a challenge for all car manufacturers, but there is light at the end of the tunnel. As the technology improves and the demand rises the rate at which electric vehicles are built may be exponentially increased.
Hopefully, waiting lists will be a thing of the past and the consumer will have plenty of affordable options to buy electric vehicles from well-trusted brands. There is no doubt that electric vehicles are the car of the future – the only question is how long before you’ll be able to get your hands on one.