5 Key Implications of COVID-19 for the U.S. EV Industry

COVID-19 has claimed its first official EV casualty – the planned all-electric SUV collaboration between Lincoln and Rivian (which have also pushed back production of their first two vehicles to early 2021, driven in part by the pandemic). GM has also delayed a scheduled refresh of its flagship EV, the Chevy Bolt  – which will now be released in 2021 as a MY2022. The reveal of the GM’s resurrection of the new all-electric Hummer has similarly been pushed back.

Rumors have also swirled around the delay of 2020’s most anticipated electric vehicle – the Ford Mustang Mach-E. However, Ford has announced that reservations will soon convert to orders and a new contactless test drive program will be used to attract prospective buyers.

Amidst this continued uncertainty, I wanted to share my “hot takes” on the current state of EV affairs:

1. Tesla’s dominance in EVs will entrench as traditional automakers shy away from the additional R&D and CapEx needed to launch new EV models. (TSLA delivered a record number of vehicle deliveries along with $895mm of negative free cash flow in Q1 2020).
2. The opportunity (and need) for policy intervention is now paramount. Proposals like LA’s Transportation Electrification Partnership’s plan for $150 billion in funding can help stimulate the economy through a rapid transformation of the transport sector.
3. Despite the immediate impact on EV sales (WoodMac sees a 43% drop in 2020) a supportive policy push, pent up demand, and expedited economic recovery should bring purchases back to their upward trajectory in 2021.
4. In a cheap gas environment, EV marketers should emphasize how EV ownership can help maintain the significant emissions reduction from COVID-19 – playing to a continually-growing consumer sentiment.
5. Charging network operators will experience significant near-term challenges – with already low station utilization rates (the key operational metric that shows the path to favorable unit economics) dropping to record lows on a per-asset basis.

These trying times present both challenge and opportunity to an industry that seemed poised for mainstream success at the end of 2019. Churchill’s now infamous (and recently overused) quote is appropriate for the US EV industry to heed – we should “never let a good crisis go to waste.”

The world is changing quickly in response to the current pandemic. Learn what comes next at our upcoming CoMotion LIVE webinar: Heaven or Hell for Electric Mobility? Plotting the Prospects for EVs in a Post-COVID World. Register today.

By: Alex Pischalnikov

Alex is an energy industry adviser specializing in emerging technologies, commercial due-diligence, growth strategy, and operational performance improvement. He advises private equity and energy infrastructure investors in evaluating investments in companies and assets amidst uncertain regulatory and economic conditions. He also helps utility clients define business and regulatory strategies around transportation electrification, distributed energy resources, and new business models.