Taking charge of the electric future 

The future of the electric vehicle (EV) market depends on the right economies of scale to make battery and vehicle production cost effective, and lower the sales price of the finished vehicle. It will also depend on greater mergers between the carmakers and the battery makers, and the co-location of battery and car production.

The global demand for EVs is expected to increase significantly over the next few years but there are a number of issues to address from a logistics perspective to meet this demand.

Currently carmakers are tending to operate on a build-to-order model when it comes to EVs, which means more volatility in the inbound supply chain. Knowing which parts are needed when and in what volumes is harder to plan for; logistics providers have to be flexible enough to handle this trend.

Carmakers and their logistics providers are also faced with complex rules and regulations on the supply and storage of lithium-ion batteries. Failure to adhere to these regulations can result in increased safety risks, including thermal runaway, and exposure to heavy fines.

Many companies are pursuing sophisticated strategies to manage the supply of these batteries across international borders but there needs to be greater standardisation on the regulations, at least until more EV assembly facilities have on-site battery production, a development that is still in its infancy.

Given that those batteries retain a significant capacity for second life uses such as energy storage, their recovery and return from service centres is equally as important as their delivery to the assembly plants. Aside from the higher costs of meeting packaging, inspection, skilled labour and certification requirements for these returns, logistics providers must also deal with constantly evolving standards, making it difficult to plan and adequately size-up and allocate investments because standards are constantly evolving. 

Ultimately battery transport regulations cannot remain static and will need to continuously evolve if they are to provide a strong framework for safe transport.

Outbound regulation

There are also regulatory constraints on the movement of the finished EVs between the factories and the dealer or end user. Although the transport of EVs is easier than the movement of their lithium-ion batteries, it is still more complicated than moving conventionally powered vehicles. The market is evolving, and the standards and regulations are evolving at the same time, but there are specific issues relating to vehicle charge and the additional weight of an EV. Greater investment is needed in infrastructure but charging devices are still expensive to both buy and install. 

The fact that EVs are heavier than conventional combustion-powered cars means loading capacity is affected for the road hauliers. That impacts on car transporter fuel consumption, not to mention equipment wear-and-tear, but it also means the overall weight of a given transporter load can exceed the limits set according to the countries in which they operate. The addition of axles on equipment, which can be raised and lowered according to the need and the load, is one way forward now being explored.

In the aftermarket side of the business, servicing and maintaining electric vehicles requires a different approach compared with traditional combustion engine-powered vehicles. The relatively fewer moving parts in an EV is widely expected to mean less servicing of the vehicles will be needed. However, carmakers and their parts suppliers will be challenged to adapt their aftersales businesses to meet the needs of EVs in areas such as parts replacements, logistics and handling of lithium batteries. At the same time, dealers and service centres, and the logistics providers serving them, will be expected to provide parts and services for both EVs and more conventional vehicles for a least the next couple of decades. That means handling a much more extensive product range.

Material sourcing

One long-term question relating to the development of the market for EVs, again relates back to the lithium-ion batteries driving them: is there enough lithium, cobalt and nickel on earth to meet future demand for batteries and will there ever be adequate processing power to extract and process it? The automotive industry is not the only one dealing with these rare mineral resources and their extraction. 

A more immediate problem, however, is tracking accurately from where the existing raw materials are coming. Two-thirds of the world’s cobalt is mined in the Democratic Republic of Congo (DRC), for example, and there are human rights issues associated with its mining. Amnesty International says human rights abuse, including the use of child labour in the extraction of minerals used to make EV batteries, is undermining ethical claims regarding energy consumption and emissions.

There are a number of initiatives related to responsible sourcing traceability, something that is necessary from the moment of extraction along the different stages in the supply chain, but few of these schemes are as effective as they should be.