3 Ways COVID-19 Affects EV Growth
Automakers are eyeing a return to operation at factories after the coronavirus outbreak led to worldwide closures. The short-term headwinds are clear.
But news recently emerged that indicates a potential long-term effect of this unprecedented time. Company after company is putting electric vehicle production on hold—even the big names.
Aftermarket analyst Jim Lang noted in his recent newsletter that, indeed, big changes are afoot in the wake of coronavirus. He predicted that 1 million in potential EV sales will disappear as a result.
“Lower total vehicle sales and a number of disincentives to purchase EVs mean that the projected sales of nearly 2 million Electric vehicles during 2020 to 2023 (which is part of many experts’ scenarios for the elimination of ICE vehicles on U.S. roads) will be slashed by more than half,” Lang wrote.
Let’s start with Ford. The much-anticipated Mustang Mach-E will not reach owners—many of whom have placed reservations already—as soon as planned. The Detroit Free Press reported that the delays don’t affect U.S. customers yet, but European deliveries won’t come until at least November 2020.
Another Ford-backed venture also announced delays. Customers will have to wait until 2021 for the Rivian R1T pickup, reports Cnet Roadshow. The startup electric utility vehicle company got major investments from Ford and Amazon. The original delivery schedule was for late 2020.
In luxury news, Lincoln won’t be bringing an EV with its own badge to market in the near future. Roadshow confirmed with the company this spring that development has been put on hold. Plans are still in the works, eventually, though there isn’t a firm date yet. The eventual Lincoln EV will utilize Rivian’s platform.
General Motors shelved another high-profile EV in its electric Hummer. The company announced that the public debut of the new Hummer is delayed due to the pandemic, but development should remain on track for a 2021 release.
GM’s electric sedan, the Bolt, also experienced a setback. The model refresh will come in 2022 rather than 2021, according to Green Car Reports.
Lang points to three factors that are effects of the coronavirus pandemic and will ultimately slow the rise of EV adoption among drivers.
First, consumers will be even more skeptical of EVs’ higher price tags, a barrier that proponents had been getting closer to breaching. But now, Lang wrote, as the crush of an economic slump sets in, consumers won’t be reaching for that more expensive option.
The second factor relates to a domino effect that COVID-19 produced. The pandemic led to work-at-home orders worldwide, which meant that fewer people were on the roads. Much fewer. In Minnesota, for example, it only took a week for average traffic to drop by 30 percent (though speeding increased). The sharp drop in demand led to an oversupply of gas, which led to a freefall for oil prices. Gas prices between $1 and $2 doesn’t make consumers lust after an EV, Lang wrote.
Third, Lang said that government-backed financial incentives won’t be as available for buyers in a financial crunch.
“These incentives have been critical to boosting EV sales during the past few years,” Lang said.
ICEs Hold On
Lang has had a sharp eye on the future of internal combustion engines. He previously predicted that the peak of internal combustion-powered vehicles on the road would be in 2035.
Given these new factors, Lang provided an updated prediction.
“The unprecedented and abrupt impact of the 2020 Virus (sic) Black Swan means that peak ICE will not occur before 2035 and could be delayed years beyond that,” Lang wrote. “By 2033, that will add over 40 million more ICE vehicles than there are today on U.S. roads.”
That also means that EV producers already in the market, namely Tesla, might enjoy a slightly longer lead on competitors. With other big automakers paring down developmental plans, Tesla remains the source of three of every four EVs sold in the U.S., according to a CNBC report.