What is the tipping point for EV adoption and how will this affect automotive logistics?

Published: Friday, 7 July 2023

The Society of Motor Manufacturers and Traders (SMMT) recently announced that the choice of battery-electric vehicles has quadrupled over the past five years. With this being said, petrol models continue to dominate, grabbing a 43.3% market share. While sales of hybrid, plug-in hybrid and battery electric models are slowly rising, they are perhaps not increasing at the rate required to facilitate the goal of ceasing sales of internal combustion engine (ICE) cars by 2030.

According to Bloomberg, EV adoption rates in multiple European countries took off once they passed the
flashpoint of a 5% market share. The latest SMMT data states that EVs took just over 15.4% of the market share of new car registrations in April, so if Bloomberg’s predictions are correct, the UK is now on the right path to mass adoption. But is it realistic to think that customer demand will change significantly enough and manufacturers can react accordingly in just seven years?

A host of factors might explain why EV adoption is not yet following an exponential growth curve in the UK, ranging from perceived infrastructure problems, prohibitive purchase prices and the rising cost of electricity. Meanwhile, vehicle producers still face disruption from semiconductor and wiring loom shortages, which continue to have a profound impact on global automotive supply chains.

It is not simply the transition to EVs which will affect automotive supply chains but also the shift in perception that vehicles are now an extension of our interconnected lifestyle. The demand for semiconductor chips is further heightened by this advancement as much as it is by the switch to electrified powertrains.

So far this year at Priority Freight, we have observed lower numbers of movements of complete vehicles, the volume of parts shipments has remained fairly stable. Some speculate that the reduced number of component parts needed in EV production compared to ICE cars will reduce the length of the supply chain and consequently lower the volume of logistical movements, but this is an extremely long-term view. To cater for the future of electrified mobility, manufacturers need time to adapt, retool production facilities and reconfigure supply chains. This is not a quick process.

As we continue through 2023 and beyond, we may witness an increase in the volume of EVs sold, we believe that there will still be a requirement for aftermarket parts for ICE vehicles for decades to come, even long after their sales are banned. In time, we will reach a crossover point between EV and ICE parts supply, but this is not yet in sight.