Covid-19 may have pushed back world's move towards electric energy by years

Car analysts mostly agree that manufacturers would look at cutting losses and return to focus on cars running on conventional fuels.It is expected that development of EVs could be pushed back owing to economic challenges emerging from Covid-19 pandemic.
By : Shubhodeep Chakravarty
| Updated on: 11 Apr 2020, 09:36 AM
File photo for representational purpose: A Volkswagen AG (VW) ID.3 electric automobile hangs from a cradle on the assembly line at the automaker's factory in Zwickau, Germany. (Bloomberg)
File photo for representational purpose: A Volkswagen AG (VW) ID.3 electric automobile hangs from a cradle on the assembly line at the automaker's factory in Zwickau, Germany. (Bloomberg)
File photo for representational purpose: A Volkswagen AG (VW) ID.3 electric automobile hangs from a cradle on the assembly line at the automaker's factory in Zwickau, Germany. (Bloomberg)
File photo for representational purpose: A Volkswagen AG (VW) ID.3 electric automobile hangs from a cradle on the assembly line at the automaker's factory in Zwickau, Germany.

Some of the biggest names in the global automotive industry had been making sweeping changes in recent times in order to ramp up their electric portfolio and bring down the almost singular dominance of Tesla in the electric vehicle (EV) space. With the outbreak of Covid-19 pandemic, however, the plans may now have to be pushed back as the same companies look to cut losses and tackle the more pressing concern of crashing demands - for both EVs and fossil fuel cars (FFCs) - across countries.

(Related reads: Japan auto industry makes a vow | Spain’s car industry risks isolation | German auto industry goes into huddle)

The Covid-19 pandemic has delivered a massive blow to the world economy with the International Monetary Fund stating that it will trigger the worst recession since the Great Depression in the 1930s. "Just three months ago, we expected positive per capita income growth in over 160 of our member countries in 2020," IMF Managing Director Kristalina Georgieva was quoted as saying by Al Jazeera. "Today, that number has been turned on its head: we now project that over 170 countries will experience negative per capita income growth this year."

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While the economic ramifications are indeed threatening to be outright brutal, the global automotive industry is expected to bear a more painful brunt. Supply lines for many were already affected in the weeks since the first outbreak was reported in China. The world's largest car market and car-producing country went into emergency mode and it is only now that its automotive industry is trickling back to life. Elsewhere, factories remain silent as production plants across the US, Europe and India remain temporarily shut.

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Experts predict that while the current situation is grim, the upcoming months could force established players in the automotive industry to bank on their more reliable FFCs to rake in money. Even that would be an uphill task because, as spiraling demand for crude oil has shown, people are just not buying cars.

HT Auto Infographic
HT Auto Infographic
HT Auto Infographic
HT Auto Infographic

Several analysts also feel that the current situation could create a much larger gap between Tesla, a company that already has a mammoth lead in EV space, and other rivals. "The further along other competitive EV programs get pushed out, the more Tesla will, in our view, be able to extend its competitive edge in electrification from the perspective of the consumer," Adam Jonas, Morgan Stanley auto analyst, reportedly said in a note to clients, according to Electrek. "We believe budgets will prioritize projects with near-term impact on regulatory costs and payback periods (EVs) rather than longer-term ‘moon shots’ with a more uncertain path to revenues (AVs)."

And that is just it, isn't it?

At a time when car companies are looking at massive hauls of stimulus and incentives, and are reportedly also considering pay cuts and job cuts, it would boil down to tried and tested strategies to lessen the shock rather than taking bold steps with high-risk factors. After all, companies like GM (Bolt EV), Audi (e-tron) and Nissan (Leaf) - among several others - have thus far been unable to go to the masses the way Tesla has. And with most expected not to buy anything at all, it could be a long and winding road for EVs from here on.

First Published Date: 11 Apr 2020, 09:23 AM IST
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