Lots of roadblocks for car manufacturers seeking EV success

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Jessica Caldwell, chief executive of Insights for auto research firm Edmonds, said automakers know they “will have to figure out how to bring cars to market.”

“We used to say that the challenges facing electric cars are consumer acceptance and prices,” she added.

With car buyers becoming increasingly concerned about the environment and the woes of climate change, selling the concept of electric cars is no longer an issue.

In the US, General Motors says it has more than 150,000 pre-orders for the electric version of its Silverado pickup truck, which will be available next year. The waiting time for a Tesla these days is several months.

For Caldwell, the bigger issue now is whether automakers can “obtain the raw materials” they need to make cars.

rare raw materials

Carl Brauer, executive analyst for used-car search engine iseecars.com, agrees, saying that regardless of government incentives for potential buyers of electric cars, the scarce items needed may simply be out of stock.

“Right now, we have a shortage of palladium, nickel and lithium. Everything you need to build an electric car is much more difficult to get than it was six or 12 months ago,” he told AFP.

The supply problem is partly related to the Russian invasion of Ukraine six months ago.

But Brauer said that “no one expected, a year ago, the kind of high prices for those raw materials, the difficulty of getting them.”

He added that the situation “could change radically” at any moment.

Automakers are determined to leave as little chance as possible.

They are building their own factories for the production of car batteries, setting up joint ventures with specialized parts makers and closing partnerships with mining companies.

German carmakers Volkswagen and Mercedes-Benz on Monday signed memoranda of understanding with the Canadian government to ensure access to rare metals such as lithium, nickel and cobalt.

But, as with oil, the market for these raw materials is a global one, and the normal rules of economics apply, Brauer noted.

“If there is a certain amount of global demand for raw materials, and if there is a certain amount of global supply of them, someone will always pay the price,” he said.

For Brauer, shifting production lines to accommodate the components of an electric vehicle is all too easy, compared to the automakers’ “controlling it.”

Help but with conditions

Local regulations can make things more complicated for automakers.

In the United States, new legislation endorsed by the administration of President Joe Biden allocates up to $7,500 in tax credits to every American who buys an electric car.

But there are conditions: for example, the final assembly of those cars must take place within the borders of the United States.

The Alliance for Automotive Innovation, a US lobbying group, estimates that about 70 percent of the 72 electric, hybrid, electric, or hydrogen-powered vehicles now on the market will not qualify for a tax credit.

For Garrett Nelson, an analyst at CFRA Research, the new law would clearly give Tesla, GM and Ford an advantage in the United States over their European and Asian competitors.

After the California announcement, the Alliance for Automotive Innovation said it would be “extremely difficult” to meet sales demands due to external factors such as inflation, supply chains and shipping infrastructure.

It said in a statement that the ongoing shortage of semiconductors would also play a role.

“These are complex, intertwined and global issues that are beyond the control of the authorities in California or the auto industry,” he warned.