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Electric Vehicle (EV) Production Forecasted to Increase ~7-Fold Within 5 Years

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ARK Invest is bullish on the future of Electric Vehicles (EVs).  If its projections prove to be correct, the popular investment fund manager anticipates that production of such vehicles will rise, “…from 7.8 million to 60 million during the next five years”.

Source: ARK Invest – Big Ideas 2023: Electric Vehicles

Barring any unforeseen supply chain issues which prevent said production levels, such a prediction also underscores the inevitable cannibalization of the internal combustion engine (ICE).

Manufacturers and Innovators

Before we dive in to what will allow for such an increase in adoption, the following are a few key, publicly traded, players involved with EVs.

Tesla (TSLA)

Without a doubt, Tesla is the most well-known name when it comes to EVs.  Its rise over the past twenty years has been astounding, as the company went from a promising upstart to fleshing out an entire lineup of practical and luxury products.

Lucid Group (LCID)

As it looks to make a name for itself, Lucid Motors opted to go the luxury route with its offering known as the Lucid ‘Air'.  These premium offerings showcase the future of what EVs will look like, boasting astounding performance metrics without sacrificing range.

Rivian Automotive (RIVN)

With backers like Amazon and Ford, Rivian was able to generate massive interest in its fully electric truck known as the ‘R1T', and its SUV counterpart the ‘R1S'.  While units shipped by the company failed to impress in 2022, its future still looks bright, as it still has a winning product on its hands without any real competition to be found.

How Will Manufacturers Achieve This?

While different investors have different outlooks on the expected production rates of EVs in the near future, you will be hard pressed to find one that doesn't foresee a future in which such vehicles become the norm.  How exactly will manufacturers manage to achieve such a lofty goal though?

Banking on Nostalgia

Prior to manufacturers needing to worry about how to produce EVs in such numbers, there is a key issue which must first be addressed – demand.

Currently, there are, for the most part, three major groups within the automotive sector that manufacturers must appeal to.

  • Those that view EVs as the future, and drive them to have the latest cool tech, help the Earth, etc.  These are the early adopters that can be counted on to provide a foundation for future industry growth.
  • Those that are largely ambivalent towards vehicles, and largely do not care how their cars are powered.  These are consumers that won't necessarily buy-in early, but also will not work to fight the trend.
  • Then there are those that are actively working to delay the demise of the ICE, as they are not convinced of their merits.

With manufacturers already able to count on the first two groups for future sales, we are now seeing various attempts at swaying those remaining holdouts in the last group.  Of course there are always exceptions to each group, and consumers that don't fit any one mold.  However, those that firmly fall into the ‘holdout' camp are typically of older generations that have only ever known and driven ICE based vehicles.  They know how to work on them, they know they are reliable, and they don't require change – something we have proven humans fear.  To this end, manufacturers have begun to double down on a long-standing approach to the introduction of new vehicles – banking on nostalgia.

For any car enthusiast, there are always a select few vehicles that they look back in time upon with favour.  By creating EVs under monikers looked fondly upon from the youth of these holdouts, manufacturers are hoping for greater demand and ease of transition towards the future of motoring.

While examples of banking on nostalgia, like the return of the Delorean, are greatly anticipated, they are often quite niche and cost prohibitive.  To fully leverage this approach, models more accessible and functional need to be on offer.  With this in mind, arguably the most exciting EV on the horizon, being built to leverage nostalgia, comes from the newly formed Scout Motors.

Originally manufactured by International Harvester, the Scout remains an iconic nameplate within the automotive industry.  Although utilitarian 4x4s existed prior to the introduction of the Scout in the 1960's, these vehicles are largely credited with being the first SUV – a vehicle which combined the capabilities of an off-roader with the amenities of their road faring counterparts.  Its success was so great, that competitors like Ford began making the Bronco in an attempt to compete.

1977 International Harvester Scout II

Now, after its demise in 1980, the Scout is set to make its return in 2026 as an EV that looks to do what its original was able to – combine modern amenities without sacrificing capabilities.  When the original Scouts were rolling off the line, this meant features like cruise control, air conditioning, and a plethora of customization options.  Now it means an electrified drivetrain boasting intelligent 4×4 functionality, and enough torque to embarrass the original.

At the end of the day, if manufacturers are going boast production numbers like ARK Invest expects them to, a balancing act between appealing to new and old drivers must be navigated.  If endeavours such as the upcoming Scout are successful in boasting modern tech, while remaining appealing to their original customer base, it may just be nostalgia that provides the boost EVs need to one day oust the ICE.

Modular Platforms

Due to government regulation that will eventually kick-in, demand for EVs will continue to rise – nostalgic or not.  One of the ways that manufacturers are working to meet this anticipated demand/production volume, is through the development of modular platforms.

Modular platforms allow for manufacturers to simplify not only the research and development process of designing an EV, but also the manufacturing itself.  Each of which save money, and time to market.

Modularity among vehicles is nothing new.  For decades, manufacturers have used shared platforms within vehicles across their lineups.  In 2020, General Motors was one of the first to announce this continued approach towards its operations.  At the time, it had the following to say.

“The heart of GM’s strategy is a modular propulsion system and a highly flexible, third-generation global EV platform powered by proprietary Ultium batteries. They will allow the company to compete for nearly every customer in the market today, whether they are looking for affordable transportation, a luxury experience, work trucks or a high-performance machine.”

In the years since, competitors such as Hyundai, Volkswagen, and various others have each done the same.

Reduce, Reuse, Recycle

The concept of helping the Earth by driving an EV is an admirable one.  However, it does not come without its share of issues.  One of which is the use of scarce metals in the batteries that make such vehicles possible.

If manufacturers expect to meet forecasted production numbers in the coming years, each must take the phrase ‘reduce, reuse, recycle' to heart.

  • We need to develop more efficient battery technologies that reduce the amount of scarce metals needed.
  • We need to develop the ability to reuse spent battery cells.

By working towards these goals, we can diminish the scale at which we need to expand Lithium mining practices, while simultaneously increasing the amount of vehicles coming off-the-line, and keep our impact on the environment in check.

Although not necessarily related to production capabilities, another key consideration being raised surrounds human rights issues (working conditions, child labour, health issues, etc.) and the reliance of EV battery technology on Cobalt, which is predominantly mined in the Democratic Republic of Congo.  By increasing our ability to reduce, reuse, and recycle, we limit our reliance on such practices.

Final Word

Between establishing demand, developing modular platforms, regulations, and even continued advancements in battery technology, the ~7-fold anticipated increase in EV production by 2027 shared by ARK Invest is not as crazy as it sounds.

If these predictions do come to fruition, future transportation will no doubt be an exciting sector.  Next thing you know, and we will begin seeing installations leveraging wireless charging technology, like that being developed by companies like Electreon.