WHAT WE LEARNED IN PART I
If you missed Part I, check it out at
AT THE CENTER OF OUR CASE STUDY: LARGE US AUTO DEALERS
If there is a major move to the adoption of EVs, the largest contributor to an auto dealer’s operating income, service, will be substantially reduced (at least 50%).
We have taken the 23 key issues we identified in Part I, looked at them through the eyes of an auto dealer and determined if we know the outcome is predetermined (P), uncertain (U), or really uncertain (RU).
A. RATING LEVEL OF UNCERTAINTY
- The purchase price of an EV will be less than its equivalent ICE powered vehicle by 2021. U
- Consumers have range anxiety, especially in Europe – what has to happen, by when, to reduce this? U
- Innovators and Early Adopters readily accept EVs have lower fuel & maintenance costs than ICEs. The Early and Late Majorities do not. U
- Early and Late Majorities believe that hybrids are a better choice than EVs. U
- Have concerns about driverless car accidents. P
- Their installed investment in the production and testing of ICE powered cars P
- Relationships with auto dealers will be increasingly strained as they shift from ICEs to EVs RU
- Members of the UAW have concerns that adoption of EVs mean job loss U
- Auto dealers see a serious erosion of their most profitable business, service and push back on the adoption of EVs U
- Auto Dealers aggressively fight the sale of cars Online U
- Quick oil change stations see their business dying U
- Will charger stations replace gas stations? P
- Are heavily invested in upstream oil production and downstream distribution and sale of gasoline. P
- Do not understand, and are skeptical about, renewables – They are not their core business. P
- Will do all they can do, as they have in the past, to stand in the way of the acceptance of EVs. U
- Will the Paris “Clean Air Accord” survive? RU
- Development and enactment of regulations for EVs and AVs will move slowly. P
- Will Norway adopt a law banning the use of ICE powered cars in Norway to be in effect in 2025? U
- Will Germany by successful in enacting legislation across the European Union banning the sale of new vehicles powered by an ICE starting in 2030? RU
- What will the Trump administration do to influence all of this? U
- The production of Li-on batteries will improve and drive battery cost to <$100/Kwh no later than 2025. P
- Technology advances will yield energy density improvements of at least 2X by 2030 RU
Tier 1 and 2 Auto Parts Manufacturers:
- Sales of replacement parts that are integral to the maintenance and repair of ICEs will start to decline in 2030. The rate of decline will accelerate in later years. The average # of replacement parts will decline from 1,800 in an ICE, drivetrain and transmission to 18 in an electric motor P
- The need for engineers and machinists will decline and be replaced by a need for programmers and software designers U
B. RANK ORDERING THE KEY ISSUES CLASSIFIED RU (REALLY UNCERTAIN):
We took the four Key Issues rated RU and used the Analytical Hierarchy Process (AHP) to rank order them (see the results below):
Key Issue rated Really Uncertain AHP Relative Order of Importance (%)
Contrary to popular opinion, we do not see Li-on battery technology on the critical path.
C. AXES OF CRITICAL UNCERTAINTY:
If the Germans are successful in getting the EU to adopt this legislation, all major European auto manufacturers will stop producing autos powered by ICEs and only sell EVs starting with the 2030 model year.
D. FOUR FUTURE SCENARIOS BASED ON THESE UNCERTAINTIES:
*Each scenario has a headline. Working with a client, we would have them write the text for at least one of these articles, and possibly, all four.
Stay tuned, we plan to share “Visualizing the Future – Part III” in our next Blog.
Would you like to learn more? Contact:
Dick Lee, +1-720-291-0758, email@example.com
Pent Penton, +1-770-364-2006, firstname.lastname@example.org