The Winding Road Ahead for Electric Vehicles Post COVID-19

The COVID-19 crisis has hit the electric vehicle (EV) market in two body-blows: supply and demand. 

Under mandatory quarantine orders, many consumers aren't buying much of anything, let alone new cars. In times like these, it’s common for people to stick with what they know, and that’s gasoline-powered cars—a choice supported by dropping gas prices.

While much of these supply chain issues concern EV decision-makers, it's important for engineers to keep an eye on these trends to be aware of new design directives that will be handed them from the top down.

 

And Then There's the Supply Chain

Future Market Insights (FMI) reports that on the supply side, the EV industry in China scaled back massively at the heart of the epidemic and is only beginning to recover now. Production goals have slipped for EV parts, including EV batteries. FMI predicts a 3% to 4% decrease in EV sales this year over last. Other outlets, like Utility Dive, predict more drastic effects—citing a predicted 43% drop in sales this year.

Analysts at FMI point out that this pandemic may push leading car makers to diversify from what they describe as the "Chinese hegemony" for EV auto components and lithium-ion batteries.

 

The Uncertain Road Ahead

Forbes analyst Ariel Cohen describes that the EV industry is experiencing a “battery-supply bottleneck," causing both Audi and Jaguar to miss EV production goals.

In Jaguar’s case, the main shortage was lithium and cobalt. Cohen says that, surprisingly, lithium is becoming less of a sourcing issue; instead, it is the problems with cobalt mining that persist. Mining for this metal is centralized in the Democratic Republic of the Congo, which experiences significant limitations in the cobalt value chain.

Because EV manufacturers can't ensure a continuous flow of lithium and cobalt, the Forbes article reports that Tesla is instead turning to an alternative, lithium phosphate batteries, for its Model 3 cars in China.

 

A Tesla Model 3 that includes lithium phosphate batteries. Image used courtesy of Reuters

 

Reuters adds, "The use of LFP batteries will also help Chief Executive Elon Musk meet a 2018 promise that Tesla would cut the use of cobalt—which costs some $33,500 a tonne—to 'almost nothing.'"

 

The Promise of EV Smart Charging

Sudip Saha, a research director at FMI explains that one saving grace for the EV market in the wake of COVID-19 could be EV smart charging. He elaborates, "The advent of smart EV chargers can remedy the standby power drain of standing EVs by keeping the EV plugged into the charger at a stable 70-80 percent state of charge."

The benefit for consumers is clear: they can maintain the same battery for longer stretches of time, mitigating the cost of frequent replacements.

"Clean energy alternatives will become the new revenue stream for EV battery manufacturers. Manufacturers of EVs can leverage smart charging through wind and solar inverters in the interim," Saha says.

Smart charging refers to a system whereby an EV and a charging station are monitored by cloud-based systems. How much power is delivered to the battery depends partially on maintaining the health and longevity of the battery. Billing is automatic.

Virta, an EV charging company, explains a system in which EVs are, in essence, an integral part of a new grid. The company offers a cloud-based system, that gives incentives to drivers that charge up during periods where electricity is cheaper.

 

Virta's smart charging solution. Image used courtesy of Virta

 

A decisive factor in the cost of electricity is the availability of solar energy. One fortunate happenstance is that people tend to “gas up” during daylight hours—just when solar energy availability is at its peak.

The Australian government reports that “Some electric vehicle makers are looking at making their car charging devices ‘bi-directional.’ This means the electric car’s battery charger is also a grid-interactive inverter, so energy stored in the battery can be used in the home or sent to the grid.”

 

A Future Focused on Recovery

While FMI predicted that the EV market would rise 11.5% before the COVID-19 crisis, they have now adjust their forecast to a 7.7% increase in EV sales once the COVID-19 pandemic has passed its peak.

Cohen says the short-term success of EVs will depend on the global recovery. But he predicts the long-term success of the market will hinge on manufacturers and governments adapting "to sustain the battery component of the transition towards electrification."

 

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Do you work on designs that affect the EV industry? How has your work been influenced by COVID-19? Share your experiences in the comments below.