Electric vehicles are driving the chemical industry – Here’s why

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Electric vehicles (EV) represent less than 1% of vehicles on American roads, but their numbers continue to increase. In 2021, the EV market broke records with an estimate 607,600 units sold in the United States, accounting for 3.4% of new car sales. By 2030, sales in the United States are expected to reach approximately 29.5% of all new car sales.

Globally, electric vehicles are expected to represent more than 55% of new vehicle production by 2030, i.e. 47 million units.

What is holding back the adoption of electric vehicles?

These projections spell good news for the electric vehicle market, but two key factors are holding back the widespread adoption of electric vehicles.

1. Cost

Cost is probably the main barrier to the adoption of electric vehicles. The average cost of an EV is $67,000 from June 2022, which is a significantly higher price than the average gasoline car. Although advances in battery technology and a focus on supply chain efficiency have made batteries cheaper and electric vehicles more accessible to a wider audience, this remains a huge challenge for automakers. automobiles.

2. Availability

The desire to live more sustainably, coupled with concerns about ever-rising fuel prices, is certainly driving consumer enthusiasm for electric vehicles. But these vehicles are still relatively rare, and automakers are struggling to keep up with demand and stay competitive due to various supply chain challenges.

For example, few vendors are capable of manufacturing semiconductors, with only one company in Taiwan having close to 60% market share. Automakers are also facing a shortage of batteries. Current global cell production is estimated to be less than 10% of what will be needed in a decade.

How are electric vehicles boosting the chemical industry?

Some of the challenges facing automakers present huge opportunities for OEMs in the chemical industry. These companies can improve the energy efficiency of electric vehicles through wide bandgap electronics, ensure the safety of high-voltage systems, boost competitiveness and reduce battery costs.

Broad bandgap electronics

At present, a BEV powertrain, consisting of a battery, an inverter and an electric motor, costs about $10,000 — far more than the cost of their equivalent parts in a combustion engine vehicle.

By using the right thermal and insulating materials in a vehicle’s powertrain, OEMs in the chemical industry could lead the way in lowering vehicle system costs. For example, using silicon carbide (SiC) in the inverter instead of silicon oxide (Si) could result in savings of around $200 per vehicle. This is thanks to the energy efficiency of SiC and its optimal cooling profile, which reduces battery and thermal management costs.

Security

A higher voltage system (more than 800 volts) equates to a more electrically efficient EV. To maintain system safety, some chemical companies are investing in more reliable connection materials and better insulation.

Battery

The chemical industry has long focused on improving battery safety and efficiency. But the most innovative companies are exploring how to design plastics, silicones, mica and other thermal materials to reduce vehicle system costs.

How can chemical companies stand out?

To capitalize on the growth opportunities presented by the electric vehicle industry, chemical companies should do the following:

  • Take a system value-based approach – Automotive chemicals are generally considered on a unit cost basis. But forward-thinking OEMs in the chemical industry will take a value-based approach to systems.
  • Identify areas with high added value – Companies in the chemical industry must be ready and willing to adapt their business models and product portfolios as the materials and automotive markets evolve. As the market for electric vehicles grows, the demand for certain materials will change. For example, electric vehicles require fewer super-engineered plastics and do not require engine-related chemicals such as emission catalysts, fuel additives and lubricants.
  • Capacity development – Organizations must also consider the capabilities they need now and in the future. It makes sense to assign a specific team to the development of products for the electric vehicle market.
  • Partnerships with car manufacturers – Several players in the electric vehicle industry are investing in partnerships with chemical companies. We saw joint ventures between Tesla and Panasonic, Volkswagen and Northvolt, as well as GM and LG Chem. Chemical companies should explore these opportunities and seek to expand their reach across regions. New marketing and sales strategies may be needed.
  • Focus on interiors – A good way for EV manufacturers to differentiate themselves is to create uniquely designed interiors. More than 70% of executives believe custom interiors are important. Chemical companies should exploit this opportunity.

If chemical industry organizations played their cards right, they could enjoy a market share of more than $20 billion by 2030.

Image Credit: buffaloboy/Shutterstock.com

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