Auto Industry SPOTLIGHT

By Suzanne Beckham Squyres.

According to the International Energy Agency’s (IEA) Global EV Outlook 2023, sales of electric vehicles (EVs) continue to rise. The IEA expects some 31 million EVs to be sold worldwide in 2027, up from 10.5 million in 2022. Kelly Blue Book estimated that 7.6% of vehicles sold in the United States in 2023 were electric, up from 5.9% in the year before. That portion is expected to reach 10% by the end of 2024.

Although the EV market has experienced many ups and downs in consumer satisfaction and acceptance, global sales of EVs increased by 30% in 2023 over 2022. Toyota Motor North America Inc. views the upswing in sales as a harbinger of changing attitudes toward EVs.

“Toyota’s multi-pathway approach to electrification accelerated in 2023 with even more vehicle choices to meet our customer’s lifestyle and budget,” said Jack Hollis, executive vice president, Toyota Motor North America, and president of Toyota Motor Sales. “By 2026, we plan to offer electrified options for every Toyota and Lexus vehicle in the United States.”

Last year, Toyota announced that it was developing solid-state batteries that can power a car for 750 miles before needing a recharge. The current average range is about 300 miles. Toyota’s battery will debut in the company’s Lexus models in 2028, the same year the battery is scheduled for mass production. The company is also working on an internal combustion engine fueled by hydrogen, the most abundant element in the universe.

The battery conundrum

As demand for EVs climbs, so does the need for the critical elements that go into the batteries, such as lithium, nickel and cobalt. These minerals are concentrated in only a few countries, which can be disruptive to supply chains for many reasons, such as weather, geopolitics and varying technologies.

Currently, the United States accounts for about 10% of global battery cell production, while China produces almost 70%.

The BMW Group is working to change the disparity in battery production, teaming up with Automotive Energy Supply Corp. to open a battery cell factory in Florence, South Carolina, in 2026. The facility will produce cylindrical lithium-ion battery cells specifically developed for the sixth generation of BMW eDrive technology. Electricity for production of the battery cells and cathode raw material will come exclusively from renewable sources.

“The BMW Group pursues a globally balanced procurement strategy in the three main geographical regions of the world,” said Joachim Post, member of the board of management, BMW AG, purchasing and supplier network. “Our battery cell supplier in the U.S. will source key primary materials from Canada going forward. We are pleased that Canada is playing a strong role in establishing a robust and efficient battery cell supply chain for the BMW Group in North America.”

Charging ahead

According to the U.S. Department of Energy (DOE), about 60,000 public charging stations with just over 160,000 charging ports existed across the nation as of December 2023. The DOE plans to build a national network of 500,000 charging ports by 2030. There is no precise number of private charging stations. Since it takes anywhere from 20 minutes to half a day to charge an EV — depending on the size of the battery and the speed of the charging point — manufacturers are partnering with gas stations to add charging stations.

Seven automakers — BMW Group, General Motors (GM), Honda, Hyundai, Kia, Mercedes-Benz Group and Stellantis NV — are creating a joint venture to accelerate the transition to electric vehicles in North America, by installing 30,000 high-powered charge points in urban and highway locations to ensure customers can charge whenever and wherever they need. The first stations are scheduled to open this summer.

As part of the initiative, GM is joining forces with Pilot Travel Centers LLC to install 2,000 charging stations at 500 of its outlets by 2025. “We are committed to an all-electric, zero-emissions future,” said Mary Barra, chairman and CEO, General Motors Co. “What we have done is build a multi-segment EV strategy with economies of scale and flexibility.”

Grid-friendliness

Concerned about EV-associated challenges to the electric grids in the U.S., American Honda Motor Co. Inc. is collaborating with BMW Group and Ford Motor Co. to create ChargeScape LLC, a platform that will give electric utility companies access to EV battery energy. By participating in the platform, EV customers will have the potential to earn financial benefits by charging at grid-friendly times through flexible, managed schedules and, eventually, share the energy stored in their EV batteries with the grid during times of peak demand through vehicle-to-grid applications.

“As Honda seeks to achieve our global goal of carbon neutrality, we are counting on this platform to create new value for our customers by connecting EVs to electric utilities, strengthening grid resources and reducing CO2 emissions,” said Jay Joseph, vice president, sustainability and business development, American Honda Motor. “With automakers accelerating toward the electrified future, we must find solutions like ChargeScape that enable all stakeholders to work together for the good of our customers, society and our industry by enabling greater use of renewable energy for and from mobility.”

Supply-side shift

As part of its target of 40% of its U.S. sales being electric by 2030, with more to be electrified, Nissan North America Inc. is using battery electric heavy-duty trucks to haul vehicles from the Port of Los Angeles to dealerships in the Los Angeles region. The program is being conducted in collaboration with Avant-Garde Auto Logistics LLC, a woman-owned transportation company headquartered in Smyrna, Tennessee.

The use of these trucks for new vehicle delivery is an important milestone in Nissan’s journey toward carbon neutrality, said Chris Styles, vice president, supply chain management, Nissan North America Inc. “By being an early adopter of this technology, we’re positioning ourselves to meet our long-term goals for zero-tailpipe-emission transportation.”

Suppliers that produce parts for internal combustion engines are facing a daunting reality. According to the 2023 Deloitte Automotive Supplier Study, earnings from internal combustion engines and fuel and exhaust systems, are expected to decrease almost 45% through 2027. Meanwhile, revenues for electric drivetrains and batteries or fuel cells are expected to rise some 245%.

Further, an internal combustion powertrain has about 2,000 parts. Battery electric vehicle powertrains have about 20. The National Institute of Standards and Commerce, a division of the U.S. Department of Commerce, encouraged traditional Tier II companies and smaller suppliers to consider shifting their focus to new gateways in the EV supply chain. For example:

• Transmission parts suppliers should consider serving electric one-speed transmissions and e-transaxle units.

• Manufacturers of fuel systems should consider diving deeper into fuel cells and hydrogen storage.

• Tech companies should examine growth opportunities in advanced driver assistance systems, telematics, electric motors, electric powertrains and battery packs.

Jack Hollis, executive vice president, Toyota Motor North America Inc., president of Toyota Motor Sales

Joachim Post, member of the board of management, BMW AG, purchasing and supplier network

Mary Barra, chairman and CEO, General Motors Co.

Jay Joseph, vice president, sustainability and business development, American Honda Motor Co.

Chris Styles, vice president, supply chain management, Nissan North America Inc.