Volvo joins a growing group of automakers that are planning to eliminate traditional cars from their line-up in the coming years.
Photo by Pixabay
Author: Brayden Gerrard
Source: Medium
Leading automakers are increasingly taking note of the disruptive potential of electric vehicles. Lately, some automakers have started to admit they don’t see a future for their traditional gas-powered cars. Volvo recently announced their intentions to turn their entire line-up electric by 2030, a sign of optimism about the future of electric vehicles. While this remains a bold move, Volvo isn’t the first to make an announcement of this type.
Jaguar was actually more aggressive, announcing their intention to go all-electric by 2025. But the highest profile announcement came from General Motors, one of the largest automakers in the world. While GM is the least aggressive in their timeline (they plan on being all-electric by 2035), they also have the biggest ship to turn. GM plans to invest $27 billion into electric and autonomous vehicles over the next five years. By 2025, they plan on 40 percent of their US models to be electric.
Other Automakers Joining The Fray
While other automakers have yet to formally commit a deadline to their transition, they’re still investing heavily in bringing electric vehicles (EVs) into their line-up.
VW Group has been among the most aggressive. After their Diesel-gate scandal, the new head of the company — Herbert Diess — pushed hard for investment in electric vehicles. At one point, Diess warned his managers that VW risked becoming Nokia if they didn’t react fast enough to the shift to electric vehicles. VW has quickly shifted large portions of their budget towards electric vehicles and other futuristic technologies.
The results of VW’s investments into electrification have begun to bear fruit — in 2020, VW was the second largest manufacturer of electric cars globally, behind only Tesla.
Other automakers such as the Hyundai-Kia, Daimler (Mercedes), Ford, and BMW are also piling money into electrification efforts.
A Bright Future for EVs
Electric vehicle sales remain a small portion of global sales, but the fast pace of change has forced automakers to plan for change. In 2020, electric cars made up just over 4% of global sales, up from under 1% in 2016.
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All signs are pointing to even higher sales in the future. The European Union implemented strict fuel efficiency regulations, and the market for EVs exploded in response. Sales grew 137% despite the pandemic, and market share cracked 10%. 2021 is showing another year of strong growth so far.
Many forecasts predict that in the coming years, EVs will form the majority of the market.
Governments are also increasingly entertaining future bans of petrol vehicles. The possibility of even some of these countries following through is a major risk for gas cars.
A Hole in the Market
In the early days of electric cars, large automakers often failed to take them seriously. As a result, new entrants filled the space instead.
The most obvious is Tesla. While Tesla still produces far fewer vehicles than leading automakers (about 500,000 in 2020), their market cap has soared above that of all their competitors, highlighting the market’s belief in the future of electric cars. New startups like Rivian have earned a value that approaches that of some established automakers, such as Ford.
New automakers are a major threat in an industry that has remained largely entrenched for decades. In a couple decades, automakers could wake up to a situation where new companies have stolen a sizable portion of the automobile market. So traditional automakers may be hoping to fill this space before upstart competitors can.
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