Ahead of the Curve: Electric Vehicles and the Automotive Aftermarket

More realistically, the U.S. Energy Information Administration (EIA) projects that plug-in electric vehicles will account for approximately 14% of the light-duty vehicle fleet in 2040.²

That means the large majority of global, light-duty vehicles will remain reliant on traditional technologies for several decades. And the small percentage of electric vehicles on the road will still require a wide range of aftermarket products and services. 

However, those products and services may change over time, creating new market opportunities that come with the benefit of advance notice, says Conner: “If an OEM launches a new technology today, the aftermarket has five years to get ready. As long as you pay attention to what’s happening with the OEMs, you should be able to stay ahead of the curve.”

With new technology comes added complexity, so the increasing presence of electric vehicles on the road may actually boost demand for aftermarket products and services. “Electric vehicles are complex, which benefits the aftermarket,” says Kidd. “Not many consumers are able to service an electric vehicle themselves. And the fact that these vehicles are electric doesn’t mean they won’t need repairs.”

Conner notes that battery servicing and change-outs are good examples of near-term opportunities for the aftermarket. An increasing number of batteries in vehicles, more complex electrical systems and harder-to-reach battery placement are making these once-simple procedures more difficult. “Most electric vehicles are still being serviced by dealerships, and not many independent shops are doing this now,” says Conner. “As these cars age and naturally fall out of the dealership channel, that creates an opportunity for the independent aftermarket.”

According to Conner, the most rapid and widespread adoption of electric vehicle technology in the near term will likely be in specific niches. For instance, the majority of current and near-term electric vehicle platforms in the U.S. are compact cars, subcompact cars, luxury vehicles and crossovers. In comparison, adoption of electric propulsion has been very low in full-size pickup trucks and SUVs, two large and growing product segments. Traditional activities in this vehicle segment, like towing a boat, dramatically decrease the range of an electric vehicle, blunting the adoption of electric vehicle technology. Conversely, certain types of commercial vehicles may be more likely to adopt electrification due to the type of work for which they are used.

“I think it’s possible we’ll see more adoption in areas like last-mile logistics and municipal transportation,” says Conner. “In those applications, you have predetermined routes, can plan around battery usage, and utilize a central charging location to optimize a network.”

In comparison, adds Conner, over-the-road trucking is less suited for current electric vehicle technology. “The variability in payload weight is significant from load to load, which impacts vehicle range, and the time required for charging would increase overall transit time. Those factors combined with the need for significant charging infrastructure to be built across the country make widespread adoption in the near term seem unlikely.”

In summary, Conner and Kidd say that electrification is just one of several emerging trends likely to gradually reshape the automotive aftermarket, along with smaller-displacement, turbocharged engines; autonomous technology; and greater use of lightweight materials like aluminum.

“These are real trends, and they’ll have an impact,” says Conner. “Companies should be paying attention and looking for opportunities, but not losing sleep.”

Published July 2018

^Sources

^{1. Goldman Sachs, IEA, OICA, PIRA, Macquarie}

^{2. EIA International Energy Outlook 2017}