What does the transition to electric cars actually mean for the automotive industry? ( Part II)

April 7, 2024
9 minutes

Strategy | Business Models | Tech

By 2030, electric vehicles (EVs) are projected to account for over 60% of global vehicle sales, necessitating a significant increase in the installation of charging stations within buildings and basically everywhere, as reported by the International Energy Agency. The trend is already here, as can be seen in Figure 1 below:

Electric car sales, 2016-2023 (Sources: IEA analysis based on EV Volumes)

Figure 1: Electric car sales, 2016-2023 (Sources: IEA analysis based on EV Volumes)
Notes: 2023 sales are estimated based on market trends through the first quarter of 2023.


Summarizing from Part I of my EV series, we are experiencing a once-in-century paradigm and platform shift that will bring (probably) new winners. The classic car with an internal combustion engine (ICE) was developed and perfected over at least 100 years. The traditional automaker’s competitive advantage lies in advanced proprietary engines, manufacturing, design, and (sometimes) distribution.

Transitioning to making electric vehicles (EVs) the competitive advance moves to manufacturing (ie. gigafactory), design, and distribution, BUT you have 5-10x less spare parts and need a totally new skillset: software. The Chinese EVs will take probably 25% of the European market in 2024 as seen in Figure 2, according to Financial Times:

Figure 2: China-made electric vehicles set to reach a quarter of EU sales (source: Financial Times)

Figure 2: China-made electric vehicles set to reach a quarter of EU sales (source: Financial Times)


“In the three years of developing this car, my biggest realization is that making cars is extremely difficult. Even a giant like Apple gave up on it” – Lei Jun, Xiaomi’s CEO


Let’s assume you have the money (ie. $5-10 billion), the design, and distribution. What you’ll need to make the EV will focus on 5 key areas: e-motor, battery, hypercasting, autopilot, and multimedia:

  1. The e-motor

Electric motors in electric vehicles are leading the way in powering the future of transportation. Their ability to provide power instantly is a fundamental aspect of the EV revolution. The ability to generate instant torque in electric vehicles (EVs) not only enhances their acceleration and driving comfort but also distinguishes them from conventional internal combustion engine vehicles. This unique feature is reshaping consumer expectations and preferences in the automotive industry.

Recent developments in electric motor technology have focused on enhancing the efficiency and power capacity of these motors while simultaneously decreasing their weight. A broad range of innovations has been implemented, including the creation of sophisticated cooling systems and the use of permanent magnets. These advancements have played a crucial role in expanding the capabilities of electric motors. The deliberate incorporation of motor components into smaller designs has both saved space inside the vehicle and greatly improved the car’s overall performance and driving range, representing a notable advancement in EV technology.

Nevertheless, the dependence on scarce earth components for the magnets used in these motors poses a significant obstacle, specifically regarding expenses and the long-term viability of the supply chain. The industry has taken aggressive measures to tackle these concerns, including conducting continuous research and development activities aimed at developing substitute materials and motor designs. These projects have the objective of either diminishing the need for these limited resources or completely eradicating reliance on them, to achieve a more sustainable and economically efficient approach in the manufacturing of electric motors for electric vehicles. This strategy demonstrates a wider dedication within the automotive industry to address the challenges related to the shift towards electric mobility, guaranteeing that the future of transport is not only environmentally friendly and effective but also easily attainable and environmentally conscious.

  1. The battery

Batteries are the central component of EVs, serving as their main power source and basically influencing their range and general effectiveness on the road. The present dominance of lithium-ion batteries in the EV industry may be due to their high energy density and extended lifespan, which are crucial attributes for the practicality and attractiveness of electric cars. Nevertheless, it is crucial to acknowledge that batteries constitute a substantial proportion of an electric vehicle’s expense, including as much as 50% of the whole cost. The significant cost issue emphasizes the crucial importance of battery technology in the wider acceptance and economic feasibility of electric vehicles.

“China’s influence over materials for battery technology is greater than OPEC’s influence over oil,” – Mattias Gromark, Atlant Fonder AB

More than 80% of battery cells used in electric vehicles (EVs) are sourced from Chinese providers. These suppliers are backed by a supply chain that is progressively consolidating the mining and processing of essential minerals such as lithium, cobalt, manganese, and rare earth metals inside China. This leads to a full domination of the battery supply chain as detailed by the IEA in in Figure 3 below:


Figure 3: China dominates the entire downstream EV battery supply chain (source: IEA)
Figure 3: China dominates the entire downstream EV battery supply chain (source: IEA)


At the same time, Chinese companies are developing a new generation of batteries that use sodium, a material that is more abundant than lithium, which is presently used in electric vehicle batteries, and has a reduced danger of catching fire.

Concurrently, the ecological consequences of electric vehicles emphasize the need for sustainability and battery recycling. With the increasing number of electric cars in circulation, it becomes more crucial to establish appropriate methods for battery manufacturing and handling at the end of their lifespan. Efforts are being focused on enhancing the recyclability of battery materials and investigating potential uses for old electric vehicle (EV) batteries, such as in energy storage systems. These aims are vital in reducing the environmental impact of electric vehicles and guaranteeing the sustainable development of the electric vehicle sector. They demonstrate a dedication to overcoming the economic and ecological obstacles associated with our shift toward electric mobility.


  1. Hypercasting


Hypercasting is a new technique in EV production that has been developed and introduced by Idra Group (from Italy) for Tesla, where large hydraulic presses are used to create bigger parts of the chassis, making production quicker and more straightforward.

This cutting-edge procedure entails pouring liquefied aluminum alloy into molds to shape the car’s frame, resulting in a significant improvement in the efficiency of electric vehicle production. Xiaomi too plans to use hypercasting to lower manufacturing costs and boost productivity, following the example of Tesla’s Giga Casting, which resulted in a cost reduction of around 30%. In Figure 4  we can see the Tesla Model Y Giga Die-Cast machines at Gigafactory Shanghai, China.


Figure 4: Tesla Model Y Giga Die-Cast machines at Gigafactory Shanghai, China. (source: Tesla Q4 2020 results report PDF)

Tesla Model Y Giga Die-Cast
Figure 4: Tesla Model Y Giga Die-Cast machines at Gigafactory Shanghai, China. (source: Tesla Q4 2020 results report PDF)

Xiaomi’s approach to manufacturing drew inspiration from Tesla’s innovative gigacasting method. This process uses large hydraulic presses to create bigger sections of the vehicle’s chassis, streamlining production and making it more efficient.

For the time being, Xiaomi has planned to collaborate with the state-owned Beijing Automotive (BAIC) for the production of its first car, the SU7, along with another EV that is in the pipeline.

  1. Autopilot

Autopilot systems within electric vehicles are at the forefront of a transformative shift from offering mere driving assistance to enabling fully autonomous driving capabilities. This evolution marks a significant milestone in automotive technology, leveraging the latest advancements in sensors, artificial intelligence (AI), and machine learning to create vehicles capable of navigating the complexities of real-world driving with little to no human intervention. As these systems become increasingly sophisticated, they not only promise to enhance the driving experience but also to fundamentally change our approach to transportation, steering us towards a future where cars drive themselves.

However, the rapid advancement of autopilot technologies also casts a spotlight on a range of regulatory and ethical challenges: from new legislation to addressing public concerns about safety and reliability and tackling the ethical dilemmas inherent in delegating life-and-death decisions to algorithms. The regulatory landscape is complex, with lawmakers and regulators working to establish frameworks that ensure the safe integration of autonomous vehicles into existing road networks, while ethical considerations revolve around questions of accountability, privacy, and the moral calculus of decision-making in emergencies.

It becomes clear that the journey is about much more than just the technology itself. It’s about how we adapt to and integrate these advancements into our society, addressing the challenges and ethical questions that arise along the way. The development and deployment of autopilot systems in EVs represent a significant step forward in this journey, promising to redefine our relationship with vehicles and the very nature of driving.

Example of the Tesla’s autopilot at work:

Tesla’s Autopilot system employs an advanced sensor array to enhance vehicle safety and navigation capabilities. The system includes eight cameras that provide 360-degree visibility around the vehicle, capable of detecting objects up to 250 meters away. This comprehensive coverage is achieved through a combination of cameras positioned to cover different ranges and directions: narrow, main, and wide forward cameras facilitate long-range detection and broad visibility in front, side cameras (both forward and rearward-looking) monitor lane changes and intersection safety, and a rearview camera assists with parking maneuvers. Notably, the forward cameras are distinguished by their maximum detection distances and specialized functions—such as the wide camera’s 120-degree fisheye lens for close-range obstacle detection, and the narrow camera’s focus on long-range visibility for high-speed driving. Please, see Figure 5 below:

Advanced Sensor Coverage of Tesla car
Figure 5: Advanced Sensor Coverage of Tesla car (source: Tesla.com)

Underpinning the Autopilot’s capabilities is Tesla’s Hardware 3 computer, which processes data at a rate 40 times greater than its predecessor. This significant computing power runs Tesla’s proprietary neural net, Tesla Vision, which enhances the car’s understanding of its surroundings beyond human capability. Autopilot features, including lane changes, automatic steering, braking, and acceleration, rely on this sophisticated hardware and software integration. While these features currently require driver supervision and do not render the vehicle autonomous, they represent steps toward full self-driving capability. Future enhancements are expected to enable entirely autonomous driving pending reliability milestones and regulatory approval, with the promise of transforming the driving experience by navigating to destinations autonomously, optimizing routes, and even parking independently.

  1. Multimedia

How fun is it to be in an EV or while driving it?

The field of in-car entertainment and communication is undergoing a fast transformation now with this platform shift. These technological improvements are greatly improving the experience inside the automobile, making trips more fun, instructive, and engaging for everyone inside.

Current EVs not only provide sustainable transportation but also function as centers for sophisticated multimedia systems that cater to both drivers and passengers. The core of these systems is in their capacity to effortlessly provide both entertainment and information. Modern EV multimedia systems are transforming the in-car experience with their high-definition screens that provide crisp graphics, voice control features for hands-free operation and integration with Chat GPT, and augmented reality (AR) capabilities that improve navigation and vehicle management. These features enhance both the pleasure of the ride and the safety of driving by minimizing distractions and enhancing driver vigilance.

When we look forward to the future of in-car entertainment, the incorporation of 5G technology emerges as a significant and transformative development. The introduction of 5G technology in electric vehicles signifies the beginning of a revolutionary period of exceptional connection, allowing for fast streaming of music and video information, as well as providing direct access to a wide range of internet services from the vehicle’s dashboard. This advancement in connection is anticipated to stimulate a surge of creativity in multimedia systems, perhaps bringing characteristics that we have not yet conceived. The possibilities are limitless, ranging from immersive entertainment choices using virtual reality (VR) to complex information systems that can provide real-time data on traffic, weather, and vehicle performance. The future of in-car entertainment in electric vehicles is set to go beyond conventional limits, providing passengers with a more enhanced, interconnected, and immersive experience, as seen in Figure 6 below.

The MBUX Hyperscreen inside the new Mercedes-Benz EQ
Figure 6: The MBUX Hyperscreen inside the new Mercedes-Benz EQ (source: Daimler Global Media Site and LG website)

With ongoing advancements in the automotive industry, the in-car experience in electric vehicles is poised to become more integrated, interactive, and enjoyable. Due to continuous technological improvements and improved connection, the process of traveling is becoming as important as reaching the final destination.


The future of electric cars is vast, offering a period when progress and effectiveness propel the automotive industry forward. As the industry embraces technology like as hypercasting and solid-state batteries, the possibility of lowering manufacturing costs and improving vehicle performance becomes more apparent. Strategic progress in revolutionizing EV production involves partnering with the best in the industry firms and using innovative software, hardware, and manufacturing techniques. These measures demonstrate a dedication to creativity and highlight the crucial need for smart collaborations to attain widespread success.

In the future, the combination of technology and mobility will bring about significant changes in the automobile industry. The integration of autopilot systems and multimedia capabilities is poised to revolutionize the driving experience by seamlessly combining entertainment with unmatched ease. The automotive industry is on the verge of a new age due to the adoption of electric mobility, which is supported by advanced technology and sustainable practices. As automobiles evolve beyond just modes of transportation, the shift towards electrification has the potential to transform our interaction with cars, highlighting a future in which efficiency, sustainability, and connection intersect. And yes, probably our kids won’t know how to drive.

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