DETROIT—In case you hadn't noticed, what with the steady background thrum of the U.S. auto industry having just wrapped up its fourth-strongest sales year on record—while at the same time stressing over whether sales are facing a pending drop—the global auto industry has taken a big shine to electric vehicles.
And the shockwave is hitting auto makers, materials companies and parts suppliers at nearly every tier level.
It's a rapid outlook shift for the electric drivetrain, which just a year or so ago was seen as something of a niche player, relegated for use in megacities and a few key markets such as California. The internal combustion engine (ICE), market watchers had said, was here to stay—at least for the foreseeable future. But in 2018, despite falling gas prices, battery-electric vehicle sales rose 199 percent, according to the Automotive News Data Center.
Now, though, some of those same industry watchers are taking a 90 degree turn and predicting that not only are electric cars a viable alternative for the near future but also they are increasingly about to displace the reliable gasoline engine.
"The auto industry is facing the most profound transformation since its inception, going from traditional internal combustion engine vehicles, with human drivers, to electric motors replacing ICEs and autonomous vehicles replacing drivers," Jeff Schuster, president of Americas operation and global vehicle forecasting for LMC Automotive said in a December report on General Motors Co.'s restructuring.
The pace of expected change is only accelerating, but not at a rate it will be easy to recoup the costs of research and development needed now, Schuster noted.
"This transformation requires an immense amount of investment capital that will likely not produce a return for quite some time," he said.
Schuster, a longtime industry watcher who urged caution when it came to big changes in the powertrain in the past, isn't alone in seeing a shift—regardless of what any federal fuel and environment policies state.
In May 2016, Bloomberg New Energy Finance published a report stating that electric vehicles would make up 35 percent of the global light vehicle sales in 2040. In November 2017, BNEF updated those numbers, now saying that it expects electric vehicles to make up more 54 percent of global sales - a jump of nearly 20 percentage points in just 17 months.
BNEF's 2018 report bumped that percentage slightly higher, to 55 percent by 2040, noting that there were nearly 1.6 million electric vehicles sold in 2018, up from 289,000 just four years earlier.
"The past tells us a very clear lesson, and that is that we have underestimated the pace of the energy transition," BNEF analyst Kobad Bhavnagri said.
Even OPEC, the Organization of Petroleum Exporting Countries, agrees that cars are about to change. In its World of Oil Outlook 2040 released in October 2017, OPEC researchers noted "strong trends" in both the growth of electric vehicles as a replacement for ICEs, as well as the growth of composites such as carbon fiber in replacing traditional metal-based material use.
Limited growth in U.S.
That's a pretty big shift in a short period. After all, it was only 13 years ago that the documentary film "Who Killed the Electric Car?" made some waves. (The filmmakers' follow-up, "Revenge of the Electric Car," in 2011 didn't make the same splash.)
And to be clear, EVs are still a niche in North America, accounting for less than 1 percent of U.S. sales in 2018.
For mainstream auto makers, especially, electric cars are just a small number. General Motors sold about 18,000 of its Volt sedans, out of nearly 3 million vehicles sold for the year. A refreshed Nissan Leaf saw a 31 percent climb in sales to 14,000 units, but compare that to 410,000 of its Rogue crossover vehicles.