Pub. 2 2020-2021 Issue 3

wvcar.com 26 WVADA Goodbye Gas, Hello Electrification T he global move toward vehicle electrification has been going on for a long time now, but it is understandable if you feel like it will never arrive since few manufacturers have sent many EVs to dealer showrooms. Two of the controlling factors are regulations and the cost of building the necessary infrastructure. Although change is coming, it is still slow. NADA’s market beat for June 2021 and July 2021 ends with a graphic for powertrain market share. The percentages should surprise no one: • Gasoline has 87.5% of the market. The percentage at the end of June 2021 was 88.4%. • Diesel market share was 4.0% (up from 3.6% in June). • Hybrid market share was 5.0% (versus 5.0% in June). • Electric market share was 2.4% (the same as in June). • Plug-in hybrid market share was 1.1% (versus 0.8% in June). What are the important trends? One source of expertise is the McKinsey Center for Future Mobility, which offers advisory services to its clients. It has four hubs: Beijing, Detroit, Munich and Silicon Valley, and it advises many OEMs and other key stakeholders. The website for the McKinsey Center for Future Mobility lists four major trends in the automotive industry that will transform it and also have a ripple effect on other industries such as insurance: 1. A utonomous driving: Driver-assist technologies are making it safer for people to drive. Eventually, people will be passengers instead of drivers, and by 2030, the robotaxi market will control 70% of the market. 2. Connectivity: Engineers will continue connecting cars to information systems. Asutoth Padhi, a senior partner at McKinsey & Company, has said, “A car is really a supercomputer on wheels.” So far, people generally seem to like driving these supercomputers. Of potential buyers who answered a survey, 40% would switch automobile brands to gain more connectivity than they currently have. 3. Electrification: The industry is nearing an inflection point caused by changing regulations, infrastructure, battery economics and market demand. The website says that in 2016, 30-40% of the people in the U.S. and U.K. considered buying an EV. Drew Desilver wrote an online article on the Pew Research Center website, dated June 21, 2021, with more recent numbers. In the article, Drew Desilver said 7% of U.S. adults own an electric or hybrid vehicle, and 39% of survey respondents said they would consider buying an EV the next time they look for a new vehicle. 4. Shared mobility: Car ownership is convenient but expensive. New alternatives hope to offer equal or almost equal convenience without the stress and expense. However, shared mobility is still in the dream category since less than 1% of all miles traveled globally resulted from e-hailing trips. During a company video, Asutoth Padhi said the U.S. has had two inflection points: the shift from horses to cars and the current shift to electrification. However, since electrification probably won’t be profitable for another 3-5 years, industry participants reasonably want to know who will fund the necessary losses between now and then. It isn’t clear what the answer is to that question, but answers may come through collaboration and changes in regulations and technology.