Rising Demand for EVs Will Disrupt Auto Manufacturing
The electric vehicle industry is expanding at a rapid pace. Growing consumer demand, investment from major automakers and improved EV infrastructure contributed to a record year for EV sales in 2021. It’s expected that 3.5 million vehicles will be sold this year compared to just 2.2 million in 2020.
While it’s hard to predict future sales numbers, many major firms forecast that EV sales will soon make up a significant portion of the auto market. This growth of EV demand is likely to significantly impact how cars are made and sold.
The most significant transformations are likely to happen in factories, where the differences between EV and ICE vehicles could reshape workflows and drastically reduce labor hours.
EV Simplicity Could Radically Transform Auto Manufacturing
Mechanically, EVs are much simpler than conventional vehicles. They do away with fuel engines, gas tanks and fuel injectors. They do not need valve train transmissions. Alternators and starters are replaced by AC/DC converters that down-step current from the main battery to keep the vehicle’s 12-volt lead-acid battery charged.
The implications of this change haven’t gone unnoticed by prominent industry organizations. In late 2019, United Auto Workers released a 44-page report on “the coming EV powertrain disruption” and the potential implications of a shift toward electric vehicle production.
To quote the report, “EVs are not simply a shift in consumer preference. They are a complete shift in the way we power vehicles. This could have disruptive implications for where and under what conditions vehicles are made.”
According to the report’s authors, the relative simplicity of electric vehicles is likely to reduce the labor hours necessary to manufacture new cars.
Existing employment in engines, transmissions, exhaust systems and fuel systems could be replaced by positions in batteries, electric motors, thermal management systems and crucial electronic components, like semiconductors. Training may be necessary to prepare workers for this changeover. Demand for existing skill sets may fall rapidly while demand for new ones quickly outpaces labor supply.
Safety practices at manufacturing sites may also need to change. High-voltage systems present new safety threats that manufacturers will need to account for. Employees may also require additional training in how to operate and work around high-voltage EV systems safely.
The amount of energy EV batteries can store may create problems in other ways, as well. When lithium-ion batteries ignite, they burn at extraordinarily high temperatures and can often be unpredictable. In tests conducted by the National Fire Protection Agency, battery fires required large amounts of water to put out and would sometimes reignite after being apparently extinguished. In one test, a lithium-ion battery fire ignited again 22 hours after being extinguished.
Battery fires at manufacturing plants are rare but have happened in the past. In 2013, Mitsubishi paused production of its all-electric i-MiEV hatchback after a battery fire at a Japanese manufacturing plant.
As EV production accelerates, manufacturers may need to adopt more sophisticated fire suppression systems capable of handling the intense flames li-ion batteries can produce.
Automaker Investment in EVs
It’s not clear when this transformation will truly begin to take place. A recent IHS Market report predicts that EVs will be 10% of the U.S. auto market by 2025. In some parts of the country — like San Francisco — EVs already account for more than 10% of auto sales.
Adoption seems to be accelerating. Earlier predictions by the Center for Automotive Research and other firms forecast that we wouldn’t see that level of EV adoption until the late 2020s.
The most significant barriers to consumer adoption — cost, range and EV infrastructure — are becoming less relevant as falling prices, improved battery technology and new charge station investment make ownership much more practical.
Even major automakers are beginning to invest heavily in the EV space — a sign that established businesses are expecting demand to pick up significantly and soon.
Major players include Ford, which has invested $11 billion in the EV space and has brought several vehicles to market so far, including the all-electric Ford F-150 and the Mach-E, the company’s electric Mustang SUV. GMC has invested heavily in EVs, with notable offerings including the Bolt, the Chevrolet Volt successor and the GMC Hummer EV.
Other market leaders, like Mazda, have plans to release EVs and plug-in hybrids sometime in the next few years. Automakers’ investment in the EV market makes these vehicles increasingly affordable.
Several startups and wildcards could also shift the direction of EV production and further accelerate widespread adoption. These companies plan for various EVs to come to market through the end of this year, including several new electric trucks. Deliveries of the Rivian R1T will begin in September, and Tesla expects to release its Cybertruck by the end of 2021. Startup Lordstown Motors and Nikola also have truck releases planned for the near future.
While the shift to EV production isn’t here yet, it’s safe to assume that the transformation will be here sooner than later. By the mid-2020s, we’re likely to start seeing major changes in how and where they are manufactured.
Ethical Sourcing of EV Components May Become Key Issue
The disruption to manufacturing caused by EVs could also have significant implications on automotive supply chains.
A crucial difference between EVs and conventional ICE vehicles is the raw materials each one needs. EVs depend on the water- and energy-intensive processes of lithium and cobalt extraction. Sustainable and ethical sourcing of these raw materials may become much more important. Supply chain oversight may be necessary to ensure the pivot to EVs doesn’t come with high environmental and human costs.
New practices, like manufacturer support for battery recycling, could also be essential in ensuring EV production doesn’t create new environmental or social challenges. Reuse of batteries and use of recycled materials in the manufacturing process may also be critical.
How Demand for EVs May Reshape Auto Manufacturing
The automotive industry may be on the verge of a major transformation. If EV adoption continues to accelerate, electric vehicles may make up 10% of all vehicle sales by as early as 2025. This growth in EV production would come with significant changes to how vehicles are manufactured. New skill sets would be necessary, and the total labor hours needed to produce cars may decrease significantly.
Major organizations, like UAW, are already preparing for significant disruptions to come — and investment in EVs from automakers like Ford and GMC suggests change may arrive sooner than later.
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