The last few years have been a noteworthy one for the EV industry indeed! Year 2019 will prove to be a landmark year as global sales surpassed a million EV units for the first time in a span of six months in 2019. It is quite possible that in the remaining half of the year, the sales of units will be doubled or more. There has been a sea change in attitude towards EVs as the market is now driven by two factors; policy & regulations and customer demand.In response to the growing demand for EV’s, automotive OEMs are pursuing electric strategies with varying degrees of success. As the competition in the market grows, the gap in expectation is emerging between manufacturer capacity, projections and demand from customers. In my view, the following critical areas will help determine company’s existence and achieving success; Recognisable EV brand, customer experience, production partnership strategies, multi skilled talent and innovative business model. Companies need to develop a strategy around each of these areas to remain competitive in an industry that is seeing a fundamental shift towards a new competitive landscape.
1) Build a dedicated EV brand – Understanding brand positioning is critical for EV players and to create excitement with their target customers. There are some players fortunate enough to have built up a strong brand image and reputation in other industries, putting the customer at ease and building trust quickly. For those lacking such credentials, focussing on core selling points of EV’s such as environment sustainability, technology innovation and safety will be the key to building a successful brand.
2) Customer experience – Capitalise on the credentials as customer delight continues to be a differentiator in the automotive market. Apart from it, an area that will be keenly fought over and offers a challenge unique to EVs is the aftermarket. One strategy for new entrants, who may not have the experience, capability to setup dealerships, could include partnering with existing third party mechanics or garages. But even third parties may struggle with the cost and complexities of servicing future EVs, leaving existing OEMs with large dealer networks at a clear advantage.
3) Build Powerful Partnerships– EV production requires strong and advantageous partnerships with manufacturers of – electric, electronic components and batteries – the most expensive part of vehicle. Else OEMs will be forced to accept the ‘off the shelf’ specifications for their vehicle battery thus facing the opposite challenge of having to decide whether to invest in the manufacture and design of vehicles body and interiors or whether to accept an off the shelf solution. This could impact critical elements of the EV design and performance and ultimately their market offerings.
4) Invest in expertise – The shift to EVs means that multi-skilled engineers, who are as comfortable with chemistry as they are with electrical and mechanical engineering, are required. This is a challenge as multi-skilled engineers are scarce. OEMs looking for more control over the design of their batteries will have to invest in talent capable of designing, building and integrating battery cells or of working with partners to specify bespoke designs.
5) Expanding the ecosystem- Innovative customer focussed business models will be the key to success in the EV market. There is an opportunity for both – existing OEMs, if they are agile and new startups once they gain market credibility, to create an advantage by acknowledging specific customer ‘pain points’ and offering innovative solutions.
To thrive in this rapidly changing market, OEMs need to adjust their strategies from time to time. To meet forecasting capacity demands for next 10 years, organizations need to invest now in factories, tooling, design, innovation and talent. Manufacturers need to be realistic about their capabilities and gaps, and focus on building strategic partnerships or alliances as part of an integrated, innovative and agile approach to the changing automotive market.
EVs is such a dynamically chaining market currently. With this said most of the OEMs are importing 80% of the cost viz. cells, BMS, motors and controllers. We may say to the outside that it’s made in India, but deep down everyone knows that it’s either made elsewhere or partially made elsewhere. I am not saying that this is wrong, but what needs to be addressed is understanding how things work, how it works with varied conditions and how do we optimize it for varied conditions. This needs to be the mindset if anyone needs to survive this competitive space. We clearly need to move from a trading bent of mind to creating bent of mind. It’s fine if you need to import in the initial few days , that is how most of the IC OEMs were built, but that shouldn’t be the only play. Invest in R&D now ! The results may take time, but be patient. We as a company have spent close to 4 years to get our batteries right. Nowadays I see companies which think making one trip to a foreign country gets them started on EVs and mind you these are companies with at least a minimum of 150M USD in their bank accounts. This is absolutely wrong as it’s going to set a wrong precedent in the market since safety and operational liability would be of grave concern. This is only going to yield to how the mobile market played out. Even in the mobile space if we would have spent time on technology or design the results would have been a lot lot different than what we see today. Also a point that most OEMs need to realize is that what works in one country will not necessarily work in ours. There is visibility of the runway instead of flooding into the market invest in R&D.