How vehicle electrification is transforming the automotive industry

An image of an electric vehicle fast charging in a city, an example of vehicle electrification.

Vehicle electrification is one of the biggest trends in the automotive industry today.

Driven by policy shifts in countries targeting bans on gasoline and diesel vehicles and continued growing consumer demand for more sustainable vehicles, every automaker is working to electrify its vehicle portfolio.

And due to falling battery prices, electric vehicle (EV) sales will outpace traditional vehicle sales in the next decade, creating fierce competition for gaining market share in the electric vehicle space.

4 disruptive automotive trends driving vehicle electrification

1. Disruptive innovations force automakers to embrace the latest technologies

Automakers have mastered the art of designing, validating, and building vehicles with internal combustion engines (ICEs) over the last century.

Bringing these to market today requires a complicated process with handoffs between design, engineering, validation, and manufacturing teams working sequentially. This approach has succeeded in delivering safe, attractive products to consumers and can drive profits.

However, automakers and suppliers face many challenges to achieve the same success with the development of electric vehicles. They struggle with embracing the latest technologies while maintaining the same levels of quality and efficiency.

Infographic showing vehicle electrification data around global passenger vehicle fleet outlook by drivetrain.
By 2027, the fleet of internal combustion vehicles will begin declining steadily in favor of electric powertrains.

2. Technology startups increase the pace of EV development

Today’s electric vehicle manufacturers show that EV technology can be developed rapidly and profitably by focusing on innovation and smart manufacturing.

Startups have disrupted the automotive industry by innovating new technologies at lightning speed, reducing battery prices, and opening up the possibility of commercializing electric vehicles with mass-market appeal.

However, electric vehicle manufacturers are struggling to scale up production more than they might expect as they need to be more aware of the challenges of scaling up production. Otherwise, they risk high costs due to delayed product introductions or the downright failure of innovative product designs.

Infographic showing vehicle electrification data around EV production timeline for multiple OEMs.
Speed-to-market is critical for automakers to compete in the vehicle electrification space.

3. Vehicle connectivity has evolved from luxury to necessity

In addition to new competition in the market, OEMs are facing a steep rise in engineering complexity due to growing consumer demand for vehicle connectivity. Customers expect more than just transportation; they want fast charging, extended driving, and a personalized experience.

Compared with ICE vehicles, EVs require a significant increase in electronics content, a more complex electrical architecture, multiple voltage systems, and additional software. Even engineers working on designing a single EV power electronics component need to consider more implications than ever before.

Infographic showing vehicle electrification data around connectivity and the connected car.
25% of cars will be connected by 2023. 94% of cars will be connected to 5G by 2028.

4. Governments continue to tighten regulations on CO2 emissions

Climate change prompts government mandates to phase out gasoline and diesel engines by 2050 or earlier, driving automakers to electrify their vehicle portfolio. At the same time, consumer awareness and demand for more sustainable and eco-friendly vehicles continues to grow.

Soon, EV development will favorably shift economics, reducing the gap between electric vehicles and internal combustion engine vehicles.

Infographic showing vehicle electrification data around sustainability.
A single electric car reduces CO2 by an average of 1.6 tons per year over an internal combustion engine (ICE) vehicle.

The shift to vehicle electrification is imperative and inevitable. The automotive industry must make changes that will protect the environment and the bottom line in order to overcome these disruptive market automotive trends.

Want to learn more about how to overcome vehicle electrification challenges?

Why vehicle electrification is vital for automakers and suppliers for their survival

Faced with stricter environmental regulations and consumer demands for sustainability, connectivity, and affordability, automakers and suppliers are discovering that rapid vehicle electrification is vital to their survival.

In the last decade, the electric vehicle industry has grown from just a few models with virtually nonexistent market share to more than 2.1 million vehicles sold globally in 2019. 

Infographic showing vehicle electrification data around global passenger vehicle sales outlook by drivetrain.
Due to falling battery prices, EV sales will outpace traditional vehicle sales in the next decade.

Countries, cities, and organizations worldwide have announced various types of mandates for developing electric vehicles.

With 40 million electric vehicles expected in Europe by 2030, the EV market is about to explode. One in two cars passing you on the road could be fully electric by 2050.

Infographic showing vehicle electrification data around global competition and the outlook for EV market share by major region.
Climate change is prompting government mandates that phase out gasoline and diesel engines by 2050 or earlier.

Although technology-driven market players have found ways to develop electric vehicles at more competitive price points and achieve improved performance with every new introduction, traditional automakers have trouble following that trend.

Automotive OEMs must realize they need to make a fundamental change in incorporating vehicle electrification into their portfolio to stay competitive. This will be costly upfront but essential if they want to stay relevant as a market player.

But how can you possibly deliver these connected, secure, sustainable, and reliable electric vehicles fast enough to compete in today’s complex automotive industry? Discover how by watching the video below.

The most direct and comprehensive path to faster innovation and successful mass production is an end-to-end digital transformation with Siemens Vehicle Electrification solutions.

Siemens Vehicle Electrification offers a comprehensive set of digital solutions to slash development time, increase manufacturing adaptability, improve energy efficiency, and deliver high-quality electric vehicles on time and on budget.

Want to learn more on how to simplify the electric vehicle manufacturing process?

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