With clear gaps between reality vs. projections in the U.S. electric vehicle market, Berylls Strategy Advisors, a management consulting firm focused on the automobility industry, has completed a market analysis of the projected 30 million electric vehicle sales opportunity in the U.S. What must market players understand and enact to seize on the potential?
Berylls sites key insights from the study as:
- U.S. buyers are contradictory: Berylls Strategy Advisors says the U.S. buyer cites good fuel economy, maximizing residual value and low total cost of ownership as the top-three purchase factors. Considering still substantial price differences between EV and ICE, automakers have to push toward making EVs more economical. However, the highest-selling vehicle in the U.S. is the Ford F-150 pickup truck – ranked as having one of the lowest fuel-economy ratings globally. OEMs must bridge the gap between what U.S. buyers want and how EVs are perceived to perform against such criteria.
- OEM readiness: Considering the substantial size of the U.S. EV opportunity and the U.S. customer product wants, OEMs can no longer treat the U.S. as another platform to sell their Europe/China-centric vehicles. While current U.S. EV sales shares can hardly compete with the EV sales share in Germany, the U.S. will battle Europe for the runner-up position behind China with both regions forecasted to show EV sales above 6 million by 2030. EV growth in the U.S. will dramatically shrink internal combustion engine vehicles (ICE) quickly, likely by more than 30% by 2030, Berylls says. The majority of CEOs are concerned about capability gaps in their organization and partnerships, from e-drive capabilities to the EV readiness of their dealer network, Berylls says.
- Can anyone unseat Tesla?: A 15% profit margin at a 64% market share – judging by today’s metrics, Berylls says Tesla is well positioned to claim vast parts of the U.S.’s EV growth potential with scale economy advantages and breathing room for tactical price movements. However, OEMs are tripling the number of EV models by 2025 in a joint effort to unseat Tesla and to exploit the Californian’s weaknesses (e.g., aftersales and repairability of EVs).
- Made in America: The Bipartisan Infrastructure Law and the Inflation Reduction Act offer nearly 30 times more than federal government investment to date. Access to funding will necessitate a re-assessment of supply chain setup and go-to-market strategies to comply with the investments’ production and customer-related criteria, Berylls says. Tesla’s Nevada, Ford’s Michigan and VW’s Ontario plans are only the beginning.
- California dreaming: Focusing on purely California will not be enough for players to fully participate in the U.S. EV game, Berylls says. Automakers need to identify those parts of the U.S. that follow the Californian model in optimizing the subsidy, infrastructure and policy triangle. OEMs need to dig deep in their regional assessment to reflect inner-state differences in population density, customer makeup and city-level incentives.
“The U.S. EV market offers a significant platform for EV growth and scale backed by an unmistakably clear commitment by the U.S. government,” says the Berylls U.S. Team in a press release. “The U.S. offers a substantial EV alternative to the currently leading EV geographies but makes access to this potential dependent on a laundry list of production and customer-related criteria. The speed of players’ demystification of the IRA, and the (re-)configuration of their EV value chain, will be a key success factor in the U.S. EV race. Stay tuned.”