Study: Auto Execs Are Becoming Less Optimistic About EV Adoption

Matt Posky
by Matt Posky

Automotive executives are reportedly scaling back their expectations for EV adoption, according to an annual survey conducted by KPMG International. Last year, professionals working at the top of the industry reported that they believed (on average) that over half of all new vehicles sold in the United States by 2030 would be battery-electric. But their faith in electrification appears to be evaporating, with most respondents suggesting that particular goal is no longer achievable. 

In its 2021 survey, KPGM stated that executives had grown more bullish on EV acceptance due to the Biden administration committing the United States toward having a 50/50 sales split for electric and gasoline-powered vehicles by 2030. It’s something the European Union had already proposed, with similar goals being adopted by countries like Canada, Australia, and the United Kingdom. 

Though it needs to be said that estimates varied widely, with KPMG only offering an industry average that was still loaded up with outliers on both sides of the spectrum when viewed more carefully. Ultimately, the group believed that a 52 percent EV take rate was achievable by 2030. However, that figure was the result of over 1,000 top-ranking automotive officials giving their opinion – with many assuming the number could be much higher or lower. 

The 2022 survey is less optimistic overall. According to CNBC, the median expectation for EV sales in the United States was 35 percent of the new vehicle market by 2030. That’s down 65 percent from a year earlier and represents one of the largest declines on the entire planet. While the U.S. was always assumed to be the big holdout, due to the fact that drivers tend to cover longer distances in varying climates and generally prefer liquid-fueled vehicles, it was assumed that a change in government would drive up EV adoption as government policy shifted to be more like what was taking place in Europe. 

Of the 900-plus automotive executives surveyed for 2022, 76 percent expressed concerns that inflation and high-interest rates would adversely affect auto sales generally going into 2023. But EVs (which tend to cost substantially more than their combustion-driven counterparts) are presumed to have it the worst going forward. 

“There’s still a sense of optimism long term, and yet, most importantly, there’s a sense of realism in the near term. You see this realism throughout the entire survey,” Gary Silberg, KPMG global head of automotive, told CNBC.

There are some curious angles to the matter that need to be explored, however. 

With Congress passing the Inflation Reduction Act (which included billions in incentives for electric vehicles) over the summer, there’s theoretically more government money on the table for EV manufacturers than ever before. But, to take full advantage, automakers do need to swiftly rejigger their supply chains to incorporate more labor and materials stemming from North America. Unfortunately for the industry, it seems as though some automakers either don’t think they can do so quickly enough to enjoy those incentives within the next couple of years and that the price of shifting production and supply lines may not be worth it in the long run. But this is a secondary issue to the general apprehension created by today’s hectic economy. 

There was also the now-standard anti-Tesla rhetoric taking place within the survey, with KPGM downplaying the manufacturer's former position as the obvious choice in EV leadership. This may have been the result of Tesla receiving so much negative press following Elon Musk’s decision to purchase Twitter or perhaps the result of some of the company’s shortcomings ( FSD, quality assurance, etc.) finally reaching the public consciousness. Whatever the reason, it seriously tweaked the study, with respondents now assuming there will be a more level playing field. 

While Tesla remained the top pick as the industry leader in electrification, it lost serious ground to its rivals. Though some of them seem a little nonsensical. For example, Apple was seen as a major player in the 2022 survey. The iPhone purveyor ended up in fourth place (after Tesla, BMW, and Audi) among those taking the survey, despite never having produced a single EV for public consumption. Apple may be a contender in the years ahead, but assuming it’s going to eclipse Tesla by 2024 seems ridiculous. 

Which begs the question of how seriously we should even be taking the KPMG survey – especially considering how far off its 2022 results seem to be from 2021. 

Considering that KPMG is one of the largest multinational professional services networks on the planet, it might be wise to at least consider what’s being offered here. The company is one of those massive global business networks that have to use an acronym due to how many separate entities have been incorporated into the name over the years. While it probably would have been subject to antitrust scrutiny back in the day – and has certainly been the subject of controversy over the past two decades – it’s so massive that any information it offers up has serious potential to move markets. 

Its far-reaching business ties also mean it is in a unique position to take the pulse of other industries to get a sense of where they’re at. For this year’s survey, KPMG contacted 915 automotive executives in October. More than 200 respondents were said to be CEOs and 209 were other C-level executives. More than 300 respondents were from North America, including 252 people from the United States. 

And the general sentiment was that the industry doesn’t see EV adoption happening as quickly as assumed in 2021. Though, curiously, almost everyone seems to feel that the industry will become more profitable than was assumed in 2021. A whopping 83 percent of automotive executives who took part in the survey globally said they were “confident” in higher profits over the next five years — a figure that’s up from the 52 percent reported in last year’s results.

Considering the number of automakers that claimed to be banking on making EVs their mainstay products over the past several years, this result is a little confusing. If the industry was as serious about electrification as claimed, one would assume that leadership losing confidence in adoption rates would negatively impact their bottom line. Auto sales forecasting from outlets like Cox Automotive has also been moving in the wrong direction, with 2022 volumes in the U.S. expected to be down 9 percent against the 15 million vehicles sold in 2021. Though a more relevant comparison would be against the 17.1 million vehicles sold in 2019 – before expansive lockdowns and supply chain restrictions came into play. 

That scarcity has been the pillar that’s been propping up pricing for the last few years and the automotive industry has managed to spin the issue into something profitable. By stating that there’s an insufficient number of vehicles being produced due to a lack of component supply dealerships have engaged in some of the worst price gouging witnessed in modern history. But manufacturers have also been raising prices to help pad their own profitability, often using the scarcity excuse much in the same way we’ve seen energy companies doing since late 2020. 

Your author is under the assumption that auto executives broadly believe that alternative revenue streams (e.g. data harvesting, micro-transactions, OTA updates, etc) are about to yield dividends and that they can ride the inflation wave a little longer without shooting themselves in the foot. But this seems to ignore any prior assertion that EVs will make up a meaningful portion of sales in the years to come. While that might have something to do with consumer-based studies likewise showing EV acceptance dwindling from past years, there may also be some influence from studies suggesting that there aren’t enough raw materials to sustain widespread EV use or increased reporting about some of the human rights abuses associated with battery manufacturing. Meanwhile, it sounds like nobody is expecting the production rates of electric or combustion vehicles to rebound next year due to alleged supply chain constraints nobody seems capable of (or perhaps even all that interested in) remedying.

Whether wholly organic or stacked for effect by corporate media, this is the narrative the industry looks to be running with now.

[Image: JWCohen/Shutterstock]

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Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • Zerofoo Zerofoo on Dec 31, 2022

    We have two adults in our household that work from home (mostly) and a new driver. We bought ICE powered car for the new driver due to uncertainties about future driving patterns and charging availability.

    Everyone I know that evaluates an electric car comes to the same conclusion. Range and charging availability are the pain points and they are not changing fast enough to convince buyers to make the switch.

    Changing 100 years of habits and infrastructure will not happen in a few short years.

  • El scotto El scotto on Jan 01, 2023

    28-Cars-Later; Sir, no worries and as always the data you supply us is always greatly appreciated. The rubber truly meets the road in those auction lines.

  • Jeff Corey, Thanks again for this series on the Eldorado.
  • AZFelix If I ever buy a GM product, this will be the one.
  • IBx1 Everyone in the working class (if you’re not in the obscenely wealthy capital class and you perform work for money you’re working class) should unionize.
  • Jrhurren Legend
  • Ltcmgm78 Imagine the feeling of fulfillment he must have when he looks upon all the improvements to the Corvette over time!