Electric Vehicle News Update – March 2022

The electric vehicle (EV) space is constantly changing, powered by developments, innovations, and policy shifts worldwide. This news update brought to you by Ideal Power offers a round-up of just some of the most eye-catching headlines around electric vehicles and the market opportunities associated with them.

This month, we examine how surging fuel and nickel prices may impact the EV industry, while GM tests a new use case for its electric vehicles and the auto industry at large prepares for a big direct-to-consumer shake-up. 

Soaring Fuel Prices Spur EVs, But Nickel Rises As Well

Oil prices were already steadily rising prior to Russia’s invasion of Ukraine and the subsequent sanctions levied by Western nations against the major oil-producing country. Additionally, an agreement with Iran, another major oil producer, regarding its nuclear program remains in the balance as well, as the price of oil surges unchecked.

Typically, rising fuel costs would represent an opportunity for electric vehicle manufacturers. Despite the still-high upfront costs of EVs, the long-term savings in fuel costs are often thought of as a major incentive for motorists to buy more electric vehicles. However, another natural resource subject to the woes of inflation, nickel, is hindering the EV industry’s ability to take advantage of this new opportunity.

Nickel is used in the development of EV batteries and, much like oil, a large share of the precious metal comes from Russia. As a result, nickel prices have surged to more than $100,000 per metric ton, forcing automakers to take a closer look at their balance sheets when it comes to EV production – especially as sales remain below mass adoption levels.

GM Tests EVs As Backup Power for Homes

General Motors (GM) is testing a new potential use case for electric vehicles – powering households – promoting its Chevrolet Silverado EV as the guinea pig along with Pacific Gas & Electric (PG&E). The pilot program is slated to begin this summer, offering consumers an electric vehicle that would double as a generator, a use case that is powered by the type of bidirectional charging enabled by semiconductor devices like the bidirectional bipolar junction transistor (B-TRANTM).

"Not only is this a huge advancement for electric reliability and climate resiliency, it's yet another advantage of clean-powered EVs, which are so important in our collective battle against climate change," PG&E CEO Patti Poppe told NPR.

"Our teams are working to rapidly scale this pilot and bring bidirectional charging technology to our customers," GM Chair and CEO Mary Barra told NPR.

The announcement by GM recalls a previous attempt by Ford to do the same thing with its 2022 Ford F-150 Lightning. That EV is able to connect to a home’s grid and automatically power it should the lights go out, offering homeowners an alternative source of energy in a blackout.

Direct to Consumer Might Not Be Inevitable for Auto Industry

A common theme in the auto industry has been that the dealership networks that historically supported auto sales could be nearing their end — though it seems their demise may have been greatly exaggerated. Despite the boom in direct-to-consumer auto sales, championed by manufacturers like Tesla and sales platforms like Carvana, dealers are rapidly consolidating to the tune of $8 billion in mergers and acquisitions last year alone, and the biggest are snapping up real estate left and right. This big bet by the largest auto dealers suggests that the end might not be nigh, at least not from their perspective. 

"As far as the public goes, it looks like the same number of dealers are out there," Urban Science Global Director of Data Mitch Phillips told Reuters.

"If you know the world is going to be electric ... you don’t need stores to be as big as they are. Maybe a small showroom ... and smaller service centers [in more locations]”, Asbury Automotive Chief Executive David Hult told Reuters. "You’ll have fewer owners, owning more stores."

Still, there is mounting tension between manufacturers and dealers. As auto dealers are raising prices, manufacturers have some incentive to consider direct-to-consumer sales instead. For example, Ford and GM have both threatened to pull their vehicles from dealers if they don’t stop selling them above MSRP, a practice that is commonplace but also reflects poorly on the manufacturers’ brands. If that tension continues, the manufacturer exit from the traditional dealership model could be hastened, and new EVs may never make their way to the local car lot.

Opportunities Abound, But Headwinds Gather

Between the seismic shifts in the global economy, technological innovation in the EV space, and new trends in the auto industry, there are a lot of question marks around what comes next for electric vehicles. However, the space remains poised for one of its biggest years on record in terms of sales — could we be nearing mass adoption ever so gradually?

For investors, the market opportunity in electric vehicles remains immense. With more sales than ever slated for 2022 and a growing market expected to reach $1 trillion in value by 2026 (up from $260 billion in 2020), EVs are here to stay, especially as technological innovation strengthens the industry’s value propositions. However, as inflation, supply chain issues, and geopolitical conflict impact the broader economy, the EV industry will have some obstacles to overcome in the coming months.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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