Jarred Knecht is president of ProEV™ and Promark Electronics, divisions of ECI, which design and manufacture components for OEMs in the EV industry.
The rise of electric vehicles in the United States is by no means a fad, temporary trend or mistake. From my perspective, as the leader of an electrical component manufacturer for nearly a decade, I’ve seen firsthand the rapid growth of the EV space. At first I was optimistic about the growth potential of the EV sector. Today I am ecstatic. Just look at some numbers:
In the first half of 2022, the electric vehicle sector saw a 62% increase in global sales during the same period in 2021. The US electric vehicle market is is expected to grow to $137.43 billion by 2028, for a compound annual growth rate of 25.4%, while the global market will grow to an estimated $858 billion by 2027. Consulting leaders McKinsey & Co. say EVs will largely do that dominate the truck market by 2035, and Mordor Intelligence predictions that the commercial EV market will grow to approximately $258 billion in 2027 (compared to approximately $67 billion in 2021). In response, nearly every major manufacturer is adapting production lines for a largely electric future.
Those trends have many suppliers excited to break into the electrification scene, but few know how to effectively penetrate the market. When we committed to breaking into the electric vehicle market in 2015, we were well positioned for the space due to our experience in designing and manufacturing for safety-critical industries such as aerospace, defense and medical devices. We have also done extensive research on the electric vehicle industry.
Today, I often hear from executives in manufacturing or services who ask the same questions we faced back then. The first is whether we’re moving into the EV market in the first place. I recommend that they ask themselves a simple question first: Do you believe vehicle electrification is the future? Once you commit to this rapid transformation, you can begin to discover ways your company can contribute to the industry.
Then they want to know, “How do I break into the EV space, especially when my core expertise is in other segments?” or “How do I get clients into this space?” Some want to know how they apply their past expertise to the EV space, while others are looking for ways to differentiate their company from all the other players. I recommend the following steps:
1. Do your homework.
I advise business leaders to spend a lot of time researching the current services and products that are in demand within the EV space. Great ways to conduct that research include attending conferences, listening to industry discussions on a variety of topics, and learning about electric vehicles and their architecture. I’d recommend absorbing everything from how the vehicles are made to the individual players involved to get a good understanding of the industry.
Go beyond your comfort level when it comes to complex topics. Everyone knows that electric vehicles have batteries and that they run on an electric motor. But how does everything connect? How does it all work as one cohesive piece of technology? How do the operators of these vehicles use them and what requirements are they looking for? These are the questions I encourage newcomers to answer for themselves.
2. Identify industry needs.
At this stage, the line of questions changes a bit. This is where I think business owners should ask themselves, “Which companies are making products for space? What are the goals of these manufacturers and why do they have these goals?”
Now is an appropriate time to think about the current value your company offers customers. Once you’ve done that, now’s a good time to ask the next question: Given my existing value proposition, what can we contribute to this space?
For example, maybe you run a metal fabrication company and have years of experience manufacturing high-precision metal parts for the aerospace industry. You must determine how to leverage these competencies in an electric platform. You could look at what high-precision parts are needed to power electric vehicles, and let’s say there’s one high-precision part that is always included in battery packs for electric vehicles. Because you both understand the architecture of the EV and are well versed with the major manufacturers in the space, you can now identify the value of the battery opportunity.
3. Meet the demand.
Continuing with our high-precision metal parts example above, you will realize that the development of this product relates to a core competency of your existing business when you delve into the internal structure of said battery packs. You can now begin taking the necessary steps to identify customers, determine the value proposition, produce prototypes, and hopefully mass-produce these items to meet the growing demand of the EV industry.
4. Say it.
This tip is very important: in my experience, you should never be afraid to reach out to companies that have already achieved success within the EV space (who are not competitors, of course!). As I said, the sector is still expanding. I’m constantly talking to new entrants to the industry about the role their existing businesses could play in the marketplace and I’m happy to provide them with realistic resources and investment guidance needed to get their new operation off the ground.
5. Embrace change.
Internal changes are needed. There’s no escaping this. You need to onboard more teams, improve your technical efforts and increase the number of hands you have in sales, quality control, manufacturing and any other department within your company that will help you work with these types of products and build the new segment of your business.
Breaking into an industry that’s new to you may seem daunting, but it’s an exciting time in the electric vehicle industry. Apply these tips and remember: no risk, no reward!