The rise of electric vehicles in the United States is by no means a fad, temporary trend or mistake. From my perspective, leading an electrical components manufacturer for nearly a decade, I have seen the rapid growth of the EV space firsthand. At the outset, I was optimistic about the growth potential of the EV sector. Today, I’m ecstatic. Just look at some of the numbers:
In the first half of 2022, the electric vehicle sector saw a 62% increase in global sales over the same period in 2021. The U.S. electric vehicle market is projected to grow to $137.43 billion by 2028, for a compound annual growth rate of 25.4%, while the worldwide market will grow to an estimated $858 billion by 2027.
Consulting leaders McKinsey & Co. say EVs will largely dominate the truck market by 2035, and Mordor Intelligence forecasts that the commercial EV market will grow to roughly $258 billion by 2027 (compared to around $67 billion in 2021). In response, almost every major manufacturer is retooling production lines for a largely EV future.
Those trends have many suppliers eager to break into the electrification scene, but few know how to effectively penetrate the market. When we committed to breaking into the electric vehicle market in 2015, we were well positioned for the space because of our experience in designing and manufacturing for safety-critical sectors such as aerospace, defense and medical devices. We also did extensive research on the electric vehicle industry.
Today, I often hear from executives in the manufacturing or services sector considering the same questions we faced then. The first is whether to move toward the EV market in the first place. I recommend they start by asking themselves a simple question: Do you believe that vehicle electrification is the future? Once you are committed to this rapid transformation, you can begin to discover ways in which your business can contribute to the industry.
Next, they want to know, “How do I break into the EV space, especially when my core expertise is in other segments?” or “How am I going to get customers in this space?” Some want to know how they apply their previous expertise to the EV space, while others are seeking ways to set their business apart from all the other players. I advise the following steps:
1. Do your homework.
I advise company leaders to spend substantial time researching the current services and products that are in demand within the EV space. Great ways to conduct said research include attending conferences, listening to industry discussions on a variety of topics and learning about electric vehicles and their architecture. I would recommend absorbing everything from how the vehicles are made to the individual players involved to gain a true understanding of the industry.
Go beyond your comfort level when it comes to complex subject matters. Everybody knows electric vehicles have batteries and that they run on an electric motor. But how does everything connect? How does it all work as one, cohesive piece of technology? How do the operators of these vehicles use them and what requirements are they looking for? These are the questions I encourage newcomers to answer themselves.
2. Identify industry needs.
At this stage, the line of questioning changes a bit. This is where I believe business owners should be asking themselves, “Which companies are manufacturing products for the space? What are the goals of these manufacturers, and why do they have these goals?”
This is an opportune time to reflect on the current value that your business brings to customers. Once you have done so, this is a great time to ask the next question: Given my existing value proposition, what can we contribute to this space?
For example, maybe you lead a metal fabrication business and you have years of experience fabricating high-precision metal parts for aerospace. You need to identify how to leverage these competencies in an electric platform. You could look at which high-precision parts are needed to power electric vehicles, and let’s say it turns out that there is one very high-precision part that is always included in electric vehicle battery packs. Because you understand both the architecture of the EV and are well aware of the major manufacturers in the space, you can now identify the value of the battery pack opportunity.
3. Supply the demand.
Continuing with our high-precision metal parts example above, upon delving into the internal structure of said battery packs, you realize that the development of this product would relate to a core competency of your existing business. You can now begin to take the steps necessary to identify customers, determine value proposition, produce prototypes and hopefully produce these items at a high volume to meet the growing demand of the EV industry.
4. Speak up.
This tip is very important: In my experience, you should never be afraid to reach out to companies that have already achieved success within the EV space (that are not competitors of course!). As I mentioned, the sector is still very much expanding. I am constantly talking to industry newcomers about what roles their existing businesses could play within the market and am happy to provide them with realistic resources and investment guidance that is required to get their new operation off the ground.
5. Embrace change.
Internal changes are necessary. There is no way around this. You will need to onboard more teams, enhance your engineering efforts and increase the number of hands you have working in sales, quality control, manufacturing and any other department within your business that will help you work with these types of products and build out the new segment of your business.
Breaking into a new-to-you industry may seem daunting, but it’s an exciting time in the electric vehicle industry. Apply these tips and remember: Without risk, there is no reward!
Jarred Knecht is president of ProEV™ and Promark Electronics, divisions of ECI, designing and manufacturing components for EV sector OEMs.
Source: How To Break Into The Growing Electric Vehicle Industry
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