COVID-19 pandemic: EV charging industry wrestles with a new magnitude of underutilization
With EV sales expected to drop significantly in the near future because of the coronavirus disease 2019 (COVID-19) pandemic, the charging industry is preparing for a more subdued market environment in the next couple of years. While some charging service providers are already reporting falls of nearly 80% in the utilization of operational chargers, IHS Markit also expects the COVID-19 pandemic to impact demand for new charging infrastructure installations until at least 2023, with the industry remaining in the recovery mode until 2025.
As several countries around the world impose complete lockdowns because of the coronavirus disease 2019 (COVID-19) pandemic, global light vehicle sales are expected to witness a fall of more than 22% year on year (y/y) in demand to 70.3 million units in 2020, according to April IHS Markit forecasts. This level represents a downgrade of around 18.8 million units compared with the pre-COVID-19 period, when the IHS Markit forecasts were made in January 2020. Further significant revisions could be required should the severity of the humanitarian and economic crisis worsen.
According to a global survey conducted by IHS Markit on the impact of the COVID-19 pandemic on automotive suppliers, nearly 45% of the respondents believe their impacted plants would return to full-scale production in less than two months, and nearly 15% of respondents believe it would take more than three months for impacted plants to return to full-scale production. Although the automotive industry has weathered earlier crises of global magnitude, and is expected to do so again, concerns have emerged about the long-term impact on some developing segments of the industry, with electromobility being one of them.
IHS Markit has also developed a "COVID-19 Automotive Manufacturing Disruption (AMD) Index" to measure the disruption to manufacturing at the OEM and tier-1 supplier level in each of the 62 countries where research and forecast automotive manufacturing activity is conducted at the model level.
Immediate impact on the EV segment
The electric vehicle (EV) segment is still taking tentative steps towards mainstream proliferation in the global context. Unfortunately, the industry is now coming face-to-face with an additional challenge in the shape of the COVID-19 pandemic. It seems almost inevitable that along with the wider automotive industry, sales of EVs are going to be significantly affected. Although this is clear, the lockdown is also showing immediate impacts on the supporting industry of EV charging services, affecting the charging service and the related supply chain for charging station deployment.
The development of EV charging infrastructure and higher EV adoption are heavily codependent. While poor reach of EV charging infrastructure discourages people from opting for EVs, fewer EVs on the road will undoubtedly influence service providers' investment plans, thus delaying less strategic installations. In light of this scenario, IHS Markit has developed a short-term revision of the Supply Chain & Technology team's EV Charging Infrastructure Forecast. Vehicle-supplied electric vehicle supply equipment (EVSE) to support largely domestic and occasional public/semipublic AC charging is affected in line with EV sales. Company statements have already emerged regarding EV charging infrastructure investments being halted, with most EVSE manufacturers across the globe being affected by government restrictions, which has resulted in the suspension of manufacturing operations and has caused delays in the supply chain of up to five weeks. In the United Kingdom, ubitricity and Pod Point have stopped setting up new charging stations, as per the directive from the government. "We'll be pausing the installation of new charge points under the second phase of the Go Ultra Low City Scheme, but we will still be maintaining and conducting repairs and finishing any works which are currently underway," ubitricity's managing director, Daniel Bentham, was quoted as saying by news website Current News.
Rolec Services, another leading EV charging services provider, has announced it will temporarily suspend its manufacturing operations in the UK because of the COVID-19 pandemic. Rolec said production is on hold until the government announces it is safe for employees to return.
Another example comes from Fastned, the charge point operator that is mainly active in the Netherlands and Germany, which has communicated delays in the construction of new stations and the upgrading of existing ones.
Immediate impact on the EVSE market
According to our forecast we expect demand for charging infrastructure installations to be negatively affected until at least 2023 and then remaining in recovery mode until 2025. Naturally, the most affected year will be 2020, with the highest losses in term of deployed infrastructure, comprising public and semipublic AC and DC charging stations, reaching 10% globally on average. The accompanying graph depicts the expected trend of the market until 2023.
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The above article is from AutoTechInsight by IHS Markit. AutoTechInsight provides a wealth of original thought leadership, data, and analysis on a broad spectrum of automotive industry topics and sectors. Content includes news and analysis, topical reports, supplier profiles, and an automaker-supplier relations database across 12 domains. Visit AutoTechInsight to view all our offerings.