COVID-19 pandemic plays role in surge of EVs

Get ready to see just what the electric vehicle segment can do.

Sales of EVs began to pick up in earnest last year, a significant fact considering the low gas and oil prices, which historically would curb sales of EVs.

But 2020—the year in which EV sales were up about 4.7 percent overall because of strong sales in the last two months of the year—may have been the beginning of something bigger for the segment. It could be on the cusp of really breaking out. Just look at the month of January.

According to the Center for Automotive Research, EV sales in January 2021 were 31 percent higher than sales of EVs in the same month last year.

"That really is outstanding growth for EVs," said Kristin Dziczek vice president of industry, labor and economics at the Center for Automotive Research. "It really is an incredible thing."

One main factor driving the EV boom is consumer demand.

Consumers are increasingly more focused on sustainability—and not just the sustainability of the product itself, be it a car or tire—but also from the raw materials procurement side.

Matthew Portu, president of Freudenberg NOK Sealing Technologies, believes the pandemic may have played a factor in encouraging consumers to think more critically about their mobility. He recalls reading about a young man in India who, for the first time in his life, could see the mountains from his hometown because the air pollution had dwindled when travel trailed off, a result of country-wide lockdowns.

"He can't be the only one who went through this 'oh my gosh' moment," Portu said. "I can't help but think it is going to increase the push globally to move in a direction where we (move away from) ICE vehicles toward electric."

Dziczek said a number of factors are pushing the auto industry and consumers toward the adoption of EVs, and the pandemic certainly had a role. But the surge of EVs on roadways will begin with the number of electrified models auto makers are preparing to introduce.

Last year, in North America, 67 EV models were available across all segments, including the most popular pickup, SUV and CUV segments. But by 2024, more than 200 electric vehicle models will be in showrooms across the continent, offering more choices for consumers, Dziczek said.

Additionally, the technology around EVs is increasing the range of the automobiles even as pushes for charging infrastructure move forward and global regulations continue to align. Add in consumer awareness of environmental impacts of travel and the increasing financial incentives for the purchase of EVs and you have a recipe for significant segment growth.

But it's not just the preferences of new-car buyers that will drive electric vehicle demand; there are a number of factors at play.

The rise of e-commerce, propelled by the pandemic, is spurring growth in the EV segment because it has redefined the needs of fleet customers. For instance, rental car services didn't fare well during the pandemic, Dziczek said. But delivery services did, especially as consumers became more comfortable with and reliant on online ordering and home delivery.

"Amazon is on my street six times a day," Dziczek said. "The post-pandemic reality of online ordering and delivery has pushed a lot more fleets into the delivery and last-mile (spheres)."

Because delivery vehicles travel far fewer miles than a single charge allows, and because they are most likely to begin and end their days at the same location, charging infrastructure isn't a big concern. The vans can charge overnight, conduct their deliveries and return to the facility to recharge before setting out the next day for deliveries. This makes EVs a practical choice for last-mile delivery fleets.

Additionally, the U.S. government, an enormous fleet operator, is driving change now that the Biden administration has signaled the government's purchasing power will be used to bolster EV technology.

With the signing of the Made in America executive order on Jan. 25, President Biden pledged to completely transition the U.S.' vehicle fleet to EVs, a significant move considering the government's fleet comprises 650,000 vehicles. How many of those are light vehicles is hard to tell, but the potential impact of an investment like the one Biden proposed is substantial.

Another factor driving the industry toward the adoption of EV technology is the financial backing of Wall Street, which increasingly is looking to reward companies that focus on sustainability.

"There is a big push amongst investors on Wall Street to have companies that have sustainable operations from an environmental, social and governance perspective," Dziczek said.

Auto makers like Tesla and GM, she noted, were rewarded when they took big, bold steps toward embracing new technology and leading the industry toward electrification. She expects those trends to continue.

In the end, all of these factors are coming together to position the EV segment for significant growth, and that presents great opportunities for auto suppliers post-pandemic.

"If I consider that, globally, the automobile industry is on the cusp of the largest revolution ever, we believe that the tire has a great role to play here," said Alexis Garcin, Michelin North America Inc. chairman and president. "And we are proud to be part of its journey."