The recipe behind the EV hype

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A number of automotive aftermarket professionals have posed the question: Why the rush to electrify vehicles?

It’s been asked to Auto Service World by readers in person or in the comment section of stories. It’s also been posed to Paul McCarthy, president of MEMA Aftermarket Suppliers, the newly formed group made up of several member associations of the Motor & Equipment Manufacturers Association.

He answered this question during the recent MEMA Global Summit in Miami. Long story short, it’s a combination of a number of ingredients — there are a lot of interested players, a lot of money is being invested, consumers are showing an interest and governments are backing the plan.

He pointed out that one out of every 10 cars bought in Europe is electric. In China, it’s one out of every five. In Canada, battery electrics made up 7 per cent of the share of new vehicle registrations, according to S&P Global Mobility. When including hybrids and plug-in hybrids — zero-emission vehicles, collectively — the share bumps up to 8.9 per cent.

“Now, obviously this outcome is very much driven by government actions,” McCarthy said, referring to purchase incentives and rebates offered at various government levels. “This is why this market is creating and why it’s growing this way — but it doesn’t change the reality.”

Indeed, S&P noted that for this country specifically, “these figures demonstrate a clear demand for electric and sustainable transportation in Canada.”

MEMA Aftermarket Suppliers president Paul McCarthy speaks at the 2023 MEMA Global Summit in Florida

Automakers are responding. McCarthy reported that the North American market will see 135 models of electric vehicles between 2022 and 2025. “That is just a tremendous amount of investment,” he observed.

Globally, in the SUV market alone, there will be eventually be 500 electric models available to consumers. “So big bet being placed here,” McCarthy said.

Not to mention, money talks. Investors are putting their money behind companies that are showing development in electric vehicles. Hence why automakers are going in the direction they are.

“We’ve seen so much automaker investment in EVs partly because that’s what Wall Street says they want to see,” McCarthy explained.

There’s a direct correlation, he added. The chief executive officer of an automaker has an easy decision. The more money invested in EVs means the company’s stock price goes up. And that’s they job — they’re supposed to grow their market cap. And that drives their bonus. Naturally, that’s the route they take.

“So it’s become a little bit of an echo chamber,” McCarthy said.