Why Automakers Should Embrace the Transition to Electric

In an article for Automotive World, Guidehouse Insights discusses why automakers need to make the inevitable shift to electric despite the challenges

In 2018, the plug-in vehicle (PEV) market saw a 70% growth rate, with industry heavyweight Tesla accounting for the majority share of the increase. However, some experts warn that going forward the sales and growth rate will be less gainful than initially expected — despite the call for more traditional automakers to begin producing PEVs.

In an article for Automotive World, Scott Shepard, senior research analyst at Guidehouse Insights, examined the current PEV industry, noting the issues it may face as the market continues its inevitable expansion. 

Shepard drew on Tesla and noted that the company was profitable last year; however, concerns about its future success have been raised. While Tesla continues to push the envelope in terms of innovation and development, “some of these activities come with high risks,” he said. This is evidenced by internal challenges, including the recent departure of the company's chief financial officer and questions about the financial health of the company as a debt payment of almost $1 billion draws near.

According to the article, the expectation for the electric vehicle industry may have been set too high, to the point where reality cannot keep pace. However, Shepard said that the future for the auto industry is still expected to be electric, and that small and large automakers around the world are realizing that they need to make the transition to survive.

"The industry must lower expectations, prepare for the long-haul, and embrace the struggle," he said.

Note: Content is available to Automotive World subscribers only.

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