5 Reasons Why Car Manufacturers Love Electric Cars More Than Petrol And How You’ll Be Able To Buy More Horsepower For Your Wild Weekend

Cheap competition drives the move away from traditional cars

The automotive industry, a traditional business untouched for a century, is now at a critical juncture.

Until Elon Musk’s game-changing entry, electric vehicles (EVs) were often dismissed as unexciting prospects.

Some of my clients say, “You know, I don’t see many electric cars on the roads yet.”

They consider it premature technology. So, they’re afraid to buy these cars. I tell them that their decision is probably based more on emotions than facts. But here’s the thing: there are some serious changes happening in the car industry.

Let me explain why automakers are really pushing for EVs, and it’s not just because of environmental issues.

Breaking Down Barriers With EVs

Traditional automakers enjoyed a near monopoly due to the high entry barriers of internal combustion engine (ICE) vehicles, which require complex and costly design and production processes.

The Chinese market, constrained by these barriers, was previously sidelined. The advent of electric vehicles has changed everything. Simple in design, focusing mainly on battery and motor production — areas where Chinese manufacturers excel — EVs have lowered the entry threshold significantly.

This shift has not only opened the gates for new players like tech giants Apple and Google but has also allowed Chinese companies, such as BYD and Nio, to emerge as key competitors.

The Geopolitical Tug-of-War

In the automotive industry, China’s ambition to rival the US plays a big role.

By creating demand for its products and materials, China is positioning itself as an essential player in the global market. The reliance of countries on Chinese goods, reminiscent of Europe’s dependence on Russian oil and gas, is a strategic move by China to gain economic leverage. If the European makers want to beat China effectively, they’ll have to make better cars with lower prices.

Supply Chain Problems

During Covid, the supply chain showed weaknesses.

Those days were golden for us in the dealership at the beginning, because there was more demand than we could handle. For a while, at least

There was a shortage of semiconductors, which are exclusively made in Taiwan, leading to a 10% reduction in global car supply.

Automakers rely on cheap suppliers from China and Asia to provide car parts. Most of the car production is outsourced, with only the design and final assembly done in-house. When Covid hit, they faced serious problems delivering these cars.

The shift towards EVs offers a solution by simplifying production and reducing dependency on outsourced parts, except for complex components like semiconductors.

The Evolution of Consumer Demand

The market is seeing a shift in consumer preferences.

EVs are increasingly compared to high-tech gadgets like iPhones, focusing on efficiency, power, and reliability. Our clients don’t want just cars, they want fun and personalization.

With EVs, traditional parameters such as engine power and efficiency are becoming standardized, leading to an overwhelming array of choices for consumers.

This democratization of technology means that the differentiating factor for EVs will likely be in their digital features and user experience, rather than traditional automotive metrics.

Let’s say you have a car with 150 HP, and you want to make it sportier at the weekend by adding another 150 HP. With EVS, you can do that. There are different packages you can buy from the manufacturer. The same way you have apps in your app store

The Drive for Innovation and Control

Automakers are realizing the need to innovate and maintain greater control over their supply chains and product offerings. The rise of Chinese automakers has prompted European manufacturers to rethink their strategies, focusing more on EV production, which is cheaper and more streamlined.

Besides that, there’s a push to control more of the supply chain and reduce outsourcing, prompted by Covid and supply chain problems

Conclusion

The shift to EVs is not just a trend but an essential strategic move for European carmakers.

With new competitors, changing consumer demands, and geopolitical tensions, embracing EVs is no longer a choice, but a necessity.

While challenges like high production costs remain, the industry’s future undoubtedly lies in the realm of electric mobility.

Nikita