Resiliency in the electric vehicles market despite global pandemic
Prior to the global pandemic, consumer demand for electric vehicles (EV) was very strong, particularly as the EU CO2 emissions regulations took greater effect. Sales of electric cars, which include battery electrics and plug-in hybrids, grew by 81% in Europe in Q4 of 2019 alone. Some experts in the automotive industry even predicted that 2020 would be the ‘year of the electric car’. And perhaps that may still be the case. Despite EV sales falling globally as a short-term result of the pandemic, they are holding up well, especially when compared with sales of standard combustion engine passenger vehicles. The EV market shows signs of being more resilient, which could be attributed to factors like government subsidies direct to consumers and continuing investment in cleaner technologies.
Short-term impact outweighed by long-term outlook
In line with pre-coronavirus growth of EV sales and new-model launches from European manufacturers, players along the battery supply chain were ramping up their capacities to meet demand. While short-term demand for EV batteries has now dropped, the potential battery market continues to be huge. Some industry commentators say the long-term outlook for EVs remains bright as improvements in technology outweigh the short-term impact, so we remain optimistic. XPO already has experience in EV battery logistics, so there is enormous potential to capitalize on this expanding market.
XPO is ready for when EV battery demand ramps up again
It takes specialist expertise to transport and store lithium batteries. That is one of our key strengths – we have specially-trained teams across Europe who are dedicated to the transport and handling of hazardous materials. Our drivers, operators and safety advisers are all ADR-approved and audited. We already work with one major European automotive customer to manage their EV battery supply chain. We manage distribution of the batteries from a central warehouse to all of Europe (including some Scandinavian countries), as well as the storage of batteries and packaging in line with electrical risk certification and ISO 9001. We also take care of reverse logistics, managing the transportation of used and damaged batteries.
Supporting the EV battery supply chain right across Europe
We understand the EV market may continue to be a little bumpy in the short term as an outcome of the pandemic. However, we also know that automakers and EV battery manufacturers remain committed to meeting emissions targets. XPO has been working with customers in the automotive industry for more than 30 years and, in Europe, with a major EV manufacturer since 2013. We are in an excellent position to tap into the expanding battery market to offer our services. While we currently focus on inbound logistics for aftersales, we have the expertise and technology to offer existing and new customers end-to-end services, from inbound logistics between cell manufacturers and battery assemblers to the transportation of used batteries. XPO has the experience and the geographic coverage to support all the players along the battery supply chain across Europe.
These are my initial thoughts on the impact of COVID-19 on the automotive industry, and I’m sure we will see further change.
