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The EV market is expanding significantly due to new government policy measures and significant investments from automakers. Software upgrades, tax incentives, and an expanded charging infrastructure should result from these developments, and dealers must prepare now for the expected influx of new makes and models.
However, the best preparation requires understanding these and other 2023 EV market predictions that will influence production. This article discusses five expected developments of which dealers should be aware.
2023 EV Market Predictions: 5 Developments to Watch
1. Advancing Software Will Mean More Personalization
As automakers push harder and harder to customize cars to suit the needs of the individual, ever-advancing software is becoming a staple in modern vehicles, especially EVs.
End-to-end vehicle platforms will soon provide wireless software updates, tech-to-tech communication, and cloud connectivity, and drivers can buy services, features, and apps. In-car payments, where customers keep a credit card in their smartphone to pay for everything automotive-related, should remain in high demand.
These elevated levels of personalization will likely result in a rise in subscription-based services in the car.
2. A Delay in Tax Regulations Could Mean a Q1 Surge
As automakers attempt to bring supply chains and plants back to the U.S., the Inflation Reduction Act, signed in August of 2022 by the Biden administration, has significantly impacted the EV market. However, since some IRA EV tax credit regulations are only effective in March this year, analysts expect a surge in EV sales in the year’s first quarter.
For instance, suppose a qualifying EV complies with the bill’s conditions for manufacturing in North America and securing the necessary battery parts from the U.S. or other free trade agreement nations. In that case, the EV may qualify for a $7,500 tax credit. The Treasury Department has delayed guidance on this rule for essential materials until March, even though the regulations were originally to take effect on January 1.
This delay is a positive move for manufacturers who rushed to open domestic facilities in 2022 but still rely on essential materials originating in China. It may take years for those automakers to establish new supply chains, but the delay means more domestic vehicles will now qualify for full reimbursement, at least for the first few months of the year.
3. Manufacturers Will Introduce More EVs to a Wider Consumer Base
As new factories begin production, manufacturers can soon introduce a wave of new EVs. And while most existing models target premium shoppers, the market should see an influx of reasonably priced models that will compete with luxury brands for market share.
Analysts anticipate Tesla to maintain its majority control, but the likes of Kia, Hyundai, and Ford might close the gap as they expand their product lines.
4. New Battery Supply Chain Methods Might Dictate Domestic Production
Investors believe advancements in battery supply chains and manufacturing will aid EV progress, particularly in the US. They predict various battery-related business opportunities for automakers, especially as the industry rethinks how it has traditionally done business.
However, how manufacturers elect to create onshore battery supply chains will be critical over the next decade, particularly as they pertain to mineral discovery. The chosen methods to process the necessary raw materials will dictate the success of battery creation.
Along with supply-side opportunities, analysts expect advancements in battery technology. Automakers are researching various battery types to gain an advantage over competitors, and the market expects the introduction of higher-energy-density, faster-charging batteries.
5. Charging Infrastructure Will Prove a Safer Investment
Up until now, charging has yet to be a profitable endeavor for automakers. They have partnered with one another, completed mergers and acquisitions, and taken other tactical (i.e., non-profitable) decisions to encourage early EV adoption. However, that strategy will likely change as the market does.
Infrastructure capital is rising, signaling investors no longer view EV charging infrastructure as risky. A primary ongoing concern was pinpointing the best location for charging stations. Still, as more people purchase and use EVs, companies better understand where charging stations would be most beneficial to drivers.
Preparing for an EV Surge Requires the Best Technolgy and Insight
The market expects established and upstart manufacturers to introduce hundreds of new EV models in the next couple of years, fueled by advanced technology, tax incentives, aggressive supply chain initiatives, and growing infrastructure investments.
Increased EV availability means more selling opportunities, but dealers must understand how the market is changing, adapt to increased electrification, and identify new ways to attract first-time buyers. Doing all this requires integrating the industry’s premier end-to-end, data-driven technologies and receiving valuable insights from industry experts.
All | November 17, 2023