OEMs face an unprecedented challenge in 2020. The COVID-19 outbreak demands precautions and social distancing which will deeply affect the automotive industry. Our global customers are experiencing difficulties that influence their daily operations as well as their long-term business strategies.

In 2020, electric vehicles (EVs) are mainstream, thanks to the likes of Tesla and Nissan, and with environmental concerns at the forefront of people’s minds, they’re here to stay. The protection of air quality and reduction in greenhouse gas emissions is a priority for many global government bodies. As a result, emission reduction targets are placing pressure on manufacturers to speed up their responses.

However, in the transition to a more eco-friendly way of driving, it’s expected that the industry will see a significant increase in the number of electric propulsion technology vehicles, including hybrids, plug-in hybrids and fuel-cell operated EVs. This will increase the complexity of warranty management significantly. For this period, OEMs could expect to see an increase in the number of warranty claims being handled.

While more and more consumers have started thinking about buying an EV, the industry is still finding it difficult to convince people to make the leap towards EV-ownership. Research carried out by McKinsey & Co demonstrates that improving dealer sales techniques is critical if OEMs are to meet their sales targets.

But there’s still a lot of work to do. McKinsey’s 2019 EV mystery shopping survey revealed product knowledge is still lacking – many dealers across regions could list only a single EV benefit from the broad spectrum of possibilities available. And dealer knowledge about total cost of EV ownership in some markets lacked detail on key maintenance-related questions, such as battery life and charging.

The automotive industry is unquestionably anxious about the transition to electric vehicles (EVs), especially because of its impact on manufacturers’ highly lucrative parts businesses. EVs have fewer mechanical parts to repair or service, so OEMs are bracing for a considerable loss in revenue. While there are some new components, such as plugs and sockets, inverters and powerpack coolers, that don’t appear on conventional cars, profits from parts and routine maintenance are still expected to suffer. MSX research suggests the value of ordinary service maintenance and parts repair will fall by around 60% with EVs compared to traditional internal combustion engines (ICEs).

The automotive industry has prepared for considerable change for some years, but 2020 marks the beginning of a new era. Stricter CO2 regulations mean manufacturers must adapt their sales and aftersales processes to meet electrical vehicle (EV) requirements and respond to the evolving expectations of business customers and consumers.

Information reported by the media, retail networks and dealers, reveals that subjective ideas and myths continue to surround EVs. These are affecting manufacturers’ responses and impeding the implementation of clear, coherent sales processes.

It’s imperative to understand the concerns of consumers which are rarely based on personal experience. Opinions vary from one market to the next, but in Germany, it’s thought that most consumers see EVs as too expensive, that they take too long to charge, their coverage is too small, and that the batteries pose a serious problem. If retail networks don’t address these likely doubts, EV sales will almost certainly suffer.

The changes in consumer behavior and technology breakthroughs are creating a fundamental shift in the automotive customer journey. New insight from McKinsey & Co revealed that these changes are giving rise to disruptive technology-driven trends including alternative forms of mobility, autonomous driving, electrification and connectivity.

Digitalization, paired with an increasing end-customer affinity with e-commerce, has led to the emergence of new touchpoints throughout the customer lifecycle. By digitalizing their traditional business processes, OEMs and their dealer networks can engage and interact with their customers in many new ways.

As they do with most other retail experiences, consumers demand online platforms that enable product searches and comparisons, and ultimately enable them to finalize the buying decision online. Interestingly, so far the automotive industry has not adopted e-commerce to the level that other industries have achieved.

The automotive industry is adjusting to a period of accelerated change. Increasing competition has already influenced the development and design of vehicles, and more in-car technology is being introduced with each new model. Meanwhile government regulations are dictating fuel efficiency and lower emissions, placing a greater focus on the development of electric vehicles.

Complex maintenance is among the most common concerns that affect the adoption of electric vehicles (EVs). But in reality, the intervals between each service on an EV remains roughly the same as with a regular vehicle, and the services themselves are usually far less complex. Regular vehicles contain hundreds of mechanical and moving parts, whereas an EV contains far fewer. The parts on an EV are also generally easier to replace and don’t wear out as quickly.

The only big “ potential“ cost when it comes to EV maintenance is replacing the battery. A battery may have lost up to 20% of its range by the time the vehicle reaches 100,000 miles. Some batteries have been designed in such a way that modules can be replaced, as opposed to the entire battery itself, however, this is highly dependent on the way the vehicle has been manufactured.

While a service on an EV can take significantly less time to perform, there are other differences in the service process which can have an impact on the aftersales business for an OEM.

Norway is, without question, the biggest success story to date when it comes to the transition to zero-emission transportation. The country has gradually introduced incentives since 1990 and has now set a target for 2025 – for 100% of vehicles sold to be ‘zero-emission’.

EVs currently represent a large financial and technological leap for consumers, whereas hybrid vehicles may be considered a more attainable compromise. Because of this, it’s likely that before the battery electric vehicle (BEV) comes of age, the industry will see a proliferation of hybrid electric vehicles (HEVs) and plug-in hybrid electric vehicles (PHEVs). While BEVs have far fewer components and are less complicated than internal combustion engine (ICE) vehicles, HEVs and PHEVs are more complex. This rise in hybrid vehicles will mean OEMs need to invest in more technical training to ensure dealership technicians can service and repair them.

 Sales in the Chinese electric vehicle (EV) market rose 78.3% year-on-year from 2017 to 2018. EVs are highly popular in China, and numbers are expected to grow even further by 2025.

China’s government has played a key role in the growing numbers of consumers buying EVs through the introduction of incentive schemes. These incentives vary by region but include tax deductions on EV purchases as well as free registration for new vehicles. The government has also offered incentives to OEMs in different regions to develop their charging infrastructures, including the installation of personal charging points in residential areas.

With electric vehicles (EVs) accounting for just 1.8% of the 17 million vehicles sold in the US in 2019, it seems America is adopting the transition to EV mobility at a much slower rate than other markets. A number of factors contribute to this:

Regulatory affairs  – Several US states offer incentives for the purchase and operation of EVs, but the regulatory push towards electrification is still not enough to encourage a large number of consumers to make the jump.