The Car Giants Racing to Dominate Electric Vehicle Markets

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The Car Giants Racing To Dominate EV Markets | OilPrice.com

Many automakers worldwide are going all-in on their electric vehicle (EV) investments as they see the future of road transportation as being electric. 

Car manufacturers across Asia, Europe, and the U.S. are battling it out to become the dominant force in EV manufacturing and sales as uptake increases, each hoping to dominate the market by the end of the decade. 

 This month, Volkswagen’s CEO Herbert Diess stated “The outlook is very good, we have [a] very good order intake in Asia,” talking about the EV market. This was in response to concerns around ongoing delays in the supply chain meaning longer waits for consumers purchasing EVs. Disruptions caused by the Covid pandemic and other factors have meant automakers have had difficulties getting hold of certain car components such as semiconductors, although Diess believes the situation will improve in the coming months. 

Volkswagen has boosted production in recent months in response to a backlog in its EV deliveries, with five new assembly plants opening their doors. Diess highlighted a rise in EV demand in Asia, Europe, and the U.S., suggesting that delivery times would improve later in the year as production increases, expecting that semiconductors will also become more readily available. 

With the breaking of ground on its new cell plant in Salzgitter, Germany – SalzGiga – this month, VW announced an investment of $20.38 billion in its battery cell business through its PowerCo unit. The company is expected to create 20,000 jobs and anticipates annual sales of over $20 billion by the end of the decade. SalzGiga will provide the blueprint for five more VW battery cell plants across Europe, with the aim of developing a joint capacity of 240-gigawatt hours (GWh), as the region becomes a battery manufacturing hub. This will make it a major competitor to leading U.S. EV firm Tesla, which also has plants in Germany. 

PowerCo will manage VW’s battery production industry as well as research in several battery-related fields, such as mining and recycling. The unit will also explore energy storage systems as renewable energy projects become more widely developed. German Chancellor Olaf Scholz supports the move, pointing out the need for Europe to develop its battery and EV 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 makes clear the dependence on global supply chains means a great risk," he said.

But several Asian automakers are also investing heavily in their EV production to gain a competitive edge over Europe. Hyundai Motor just announced its first South Korean EV factory, with production expected to start in 2025. Hyundai has recently announced several new EV models, due to arrive in the Asian and E.U. markets in the next couple of years. The company, which includes Hyundai and Kia, will invest around $48.1 billion in South Korea between now and 2025, as well as a further $5.5 billion in its EV and battery operations in the U.S.

Chang Moon-su, an analyst at Hyundai Motor Securities, explained, “sales of internal-combustion-engine vehicles are scheduled to be banned in certain markets so the new EV factory is vital to Hyundai Motor's survival.”

Japan is also racing to catch up with U.S., European and Chinese markets, with the country’s largest automaker, Toyota, releasing its bZ4X electric SUV in May. In 2021, the car manufacturer announced an investment of $35 billion to increase the pace of its EV  business development. Toyota is offering the vehicle via a subscription scheme, meaning consumers don’t have to worry about battery degradation and other maintenance costs. Shinya Kotera, president of Japanese subscription service firm Kinto Corp, stated “We should take on risks regarding trade-in prices, a major source of worry for drivers, and battery degradation.” Kotera hopes this will encourage more drivers to choose EVs through subscription services. 

However, Toyota is already facing problems, further stalling Japan’s burgeoning EV market, as it had to recall its first mass-produced EVs less than 2 months after their launch. In June, Toyota recalled 2,700 EVs due to a malfunction with the tires, meaning they could come loose. The bZ4X SUVs that were bound for European, U.S., Canadian, and Japanese markets were recalled when Japan's safety regulator voiced concerns about the wheel coming off the vehicle during sharp turns, although no accidents had been reported. 

Many companies, including Toyota, are also finding it difficult to develop their EV 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 EV tax credits in the U.S. This has become a greater concern in the face of rising manufacturing costs due to supply chain disruptions in recent months, increasing the price of EV production. 

Despite several challenges concerning supply chain disruptions, material scarcity, and rising costs, many automakers worldwide are investing heavily in their EV business in the hopes of becoming more competitive, as traditionally-fuelled vehicles are gradually phased out over the next decade and beyond.