When will EVs replace internal combustion engines? Maybe sooner than you think.
I've been a little skeptical about how quickly electric vehicles would take big market share from internal combustion engines until very recently. Actually, I can pinpoint the date: June 2, when I attended an automotive conference in Novi, Mich., organized by injection molding machinery maker Engel Group.
Before hearing from experts firsthand, I was an EV skeptic. Why would people buy an expensive car that takes all night to "refuel"? How could we take a weekend trip to Wisconsin, or a holiday drive to South Carolina, in a vehicle that can't make the whole trip on a single charge?
Honestly, I still have lingering concerns about those issues. But I'm not sure that consumers will have to worry about them for much longer because the pace of innovation is picking up quickly. And the bottom line is that global automakers are in a race toward carbon neutrality — just like plastics makers.
My favorite presentation was by Hinrich Woebcken, the former president and CEO of Volkswagen Group of America Inc. He explained the global auto market has reached a tipping point because automakers can't afford to continue to invest in internal combustion engine (ICE) technology when there's so much investment that is needed in EVs.
"The carmakers, the OEMs, cannot afford over a long period to serve two ecosystems: ICE and EVs. It's tearing them apart; there is no chance that the OEMs will stay profitable if they try to serve two powertrain systems," Woebcken said.
While some people may believe that the push to electrification is only a reaction to the current Democratic party control in Washington, Woebcken said that's not true. Even if Donald Trump is reelected president in 2024, automakers will not reverse their commitment to EVs.
"So anybody who still believes that ICE will sustain maybe longer if regulations … ease up? No, it's my firm belief that it's done. And this is a great opportunity for these people in this room."
The "people in this room" that he was speaking to were injection molders serving the automotive industry. And Woebcken knows something about that end of the business.
You see, before he joined the auto industry, Woebcken started his professional career in 1985 as a production engineer and assembly section manager in the injection molding machinery division of KraussMaffei AG. Later, he became head of the company's standard machinery division, then global head of sales and marketing.
He left plastics in 1998 for Dürr AG, then he moved to BMW, and finally VW. In 2016, when he was named president of VW's America operation, he was tasked with winning back "the hearts and minds of American buyers" following the scandal over diesel engines.
I joked with Woebcken after his presentation at the Engel conference in June, because I remembered that when he first won the VW America job, our sister publication Automotive News called him VW's "new secret weapon — emphasis on secret." They treated him like a mystery man, noting that he had kept "a remarkably low profile throughout his career." He remembered too, so we had a good laugh. His profile is quite a bit higher these days. Today he's a venture partner with Blue Lagoon Capital.
"I see it from the investor side. I'm working a lot with private equity. And the big dollars, the big investment money, are really more and more channeled only into companies, into investments, where the management, the technology, stands behind sustainability," Woebcken said.
Think about the explosion in new EV nameplates and you'll see he's right; that is where most of the investment is headed these days. According to LMC Automotive, there are about 60 EV nameplates in the U.S. market now, but there will be 300 by 2030.
With all those new vehicles in the pipeline, it would be hard to overestimate the impact of the changes happening in the global automotive market. But some experts are still pumping the brakes, at least a bit.
At the Center for Automotive Research's annual Management Briefing Seminars earlier this month in Traverse City, Mich., some economists and analysts noted that they're having a hard time forecasting exactly how quickly EVs will replace ICE vehicles.
Automotive News noted that automakers don't know how many EVs they will be able to sell in the next seven to eight years. They also don't know what to tell suppliers to plan for on new EV programs vs. legacy ICE vehicles.
"We know the tipping point is coming," said Eric Wilds, chief sales and marketing officer at Magna International, North America's largest auto supplier. "We're making lots of scenarios just so we can be flexible."
EV programs currently represent 70 percent of the projects that Magna is engaged in, AN reported. "Electrification is a big piece of what we're building our future portfolio to be," Wilds said. "But which year? We'll have to be flexible and adjust."
With all this uncertainty, it's clearly a scary time to be a plastics company that depends on the automotive supply chain. To some degree, of course, it's going to be up to consumers. But if you're unsure whether to bet on an EV-heavy future, remember that decarbonization is going to keep pushing the industry in that direction.
Don Loepp is editor of Plastics News and author of the Plastics Blog. Follow him on Twitter @donloepp.