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COVID-19 pandemic: EV charging industry wrestles with a new magnitude of underutilization
06 May 2020
(Excerpt)
With EV sales expected to drop significantly in the near
future because of the coronavirus disease 2019 (COVID-19) pandemic,
the charging industry is preparing for a more subdued market
environment in the next couple of years. While some charging
service providers are already reporting falls of nearly 80% in the
utilization of operational chargers, IHS Markit also expects the
COVID-19 pandemic to impact demand for new charging infrastructure
installations until at least 2023, with the industry remaining in
the recovery mode until 2025.
As several countries around the world impose complete lockdowns
because of the coronavirus disease 2019 (COVID-19) pandemic, global
light vehicle sales are expected to witness a fall of more than 22%
year on year (y/y) in demand to 70.3 million units in 2020,
according to April IHS Markit forecasts. This level represents a
downgrade of around 18.8 million units compared with the
pre-COVID-19 period, when the IHS Markit forecasts were made in
January 2020. Further significant revisions could be required
should the severity of the humanitarian and economic crisis
worsen.
According to a global survey conducted by IHS Markit on the
impact of the COVID-19 pandemic on automotive suppliers, nearly 45%
of the respondents believe their impacted plants would return to
full-scale production in less than two months, and nearly 15% of
respondents believe it would take more than three months for
impacted plants to return to full-scale production. Although the
automotive industry has weathered earlier crises of global
magnitude, and is expected to do so again, concerns have emerged
about the long-term impact on some developing segments of the
industry, with electromobility being one of them.
IHS Markit has also developed a "COVID-19 Automotive
Manufacturing Disruption (AMD) Index" to measure the disruption to
manufacturing at the OEM and tier-1 supplier level in each of the
62 countries where research and forecast automotive manufacturing
activity is conducted at the model level.
Immediate impact on the EV segment
The electric vehicle (EV) segment is still taking tentative
steps towards mainstream proliferation in the global context.
Unfortunately, the industry is now coming face-to-face with an
additional challenge in the shape of the COVID-19 pandemic. It
seems almost inevitable that along with the wider automotive
industry, sales of EVs are going to be significantly affected.
Although this is clear, the lockdown is also showing immediate
impacts on the supporting industry of EV charging services,
affecting the charging service and the related supply chain for
charging station deployment.
The development of EV charging infrastructure and higher EV
adoption are heavily codependent. While poor reach of EV charging
infrastructure discourages people from opting for EVs, fewer EVs on
the road will undoubtedly influence service providers' investment
plans, thus delaying less strategic installations. In light of this
scenario, IHS Markit has developed a short-term revision of the
Supply Chain & Technology team's EV Charging Infrastructure
Forecast. Vehicle-supplied electric vehicle supply equipment (EVSE)
to support largely domestic and occasional public/semipublic AC
charging is affected in line with EV sales. Company statements have
already emerged regarding EV charging infrastructure investments
being halted, with most EVSE manufacturers across the globe being
affected by government restrictions, which has resulted in the
suspension of manufacturing operations and has caused delays in the
supply chain of up to five weeks. In the United Kingdom, ubitricity
and Pod Point have stopped setting up new charging stations, as per
the directive from the government. "We'll be pausing the
installation of new charge points under the second phase of the Go
Ultra Low City Scheme, but we will still be maintaining and
conducting repairs and finishing any works which are currently
underway," ubitricity's managing director, Daniel Bentham, was
quoted as saying by news website Current News.
Rolec Services, another leading EV charging services provider,
has announced it will temporarily suspend its manufacturing
operations in the UK because of the COVID-19 pandemic. Rolec said
production is on hold until the government announces it is safe for
employees to return.
Another example comes from Fastned, the charge point operator
that is mainly active in the Netherlands and Germany, which has
communicated delays in the construction of new stations and the
upgrading of existing ones.
Immediate impact on the EVSE market
According to our forecast we expect demand for charging
infrastructure installations to be negatively affected until at
least 2023 and then remaining in recovery mode until 2025.
Naturally, the most affected year will be 2020, with the highest
losses in term of deployed infrastructure, comprising public and
semipublic AC and DC charging stations, reaching 10% globally on
average. The accompanying graph depicts the expected trend of the
market until 2023.
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