Electic Vehicle Industry

As the electric vehicle industry transitions into the growth stage of its life cycle, it faces several challenges that impede its ability to prosper. One key factor currently limiting growth in the EV industry is the abundance of substitutes in the market. As growing demand for environmentally conscious products and pressure from government regulations remain strong, auto manufacturers are consistently producing better fuel efficient ICE cars. It is very likely that this competition will persist in the near future as governments worldwide are enforcing stricter regulations on ICE car manufacturers to regulate the miles per gallon allowance for vehicles.

Diesel cars and cars run by biofuel engines are also becoming an increasingly attractive substitutes. As technologies evolve and companies search for cheaper alternatives for more environmentally friendly vehicles, competitors remain strong and consistent in the foreseeable future.

Another constraint within the EV industry is the high costs associated with producing inputs, particularly batteries and energy sources. As a relatively new technology, batteries account for a significant portion of the cost of EVs. With a limited number of battery manufacturers worldwide, and the EV industry’s intense dependency on batteries for their own production, battery producers have a great deal of power. At the same time, energy suppliers have a great deal of bargaining power as EV companies depend greatly on them in creating their infrastructure for EV charging stations. Until increased production and technological advancements can create economies of scale, car manufacturers will rely heavily on expensive inputs, which add large costs to already price sensitive consumers.

Customers in the EV industry are extremely sensitive to price and are not willing to pay more for a car if there is a suitable substitute. In the case of the EV market, there are several substitute products, in addition to the substitute