By 2030, the market value of the electric vehicle industry is expected to surpass $1.1 trillion but this comes with several challenges that the industry is still mitigating including battery solutions. As batteries constitute efficient 30-40% of an EV’s total cost, they remain a significant obstruction in EV adoption.
The industry’s growing demand for raw materials, efficient infrastructure for recycling, and improving overall performance are clashing with the realistic challenges or limitations of the supply chain. Tackling these issues for the EV industry is an urgent need for OEMs and automakers as it can negatively impact the current surge in EV adoption.
Let us understand the major challenges the EV industry is experiencing and how OEMs are negotiating the same.
What Are The Major Problems With EV Industries?
There are several challenges that the EV industry is navigating through including battery recycling, efficient infrastructure, growing safety concerns, and much more. Let us some of the major challenges and how OEMs can tackle them in the long run.
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Battery Reuse and Recycling
As the EV secondary market is relatively new, data on resale is still under development. Based on the existing data on EV releases, it is determined that EVs do not retain value as well as ICE vehicles. Electric vehicles have a shorter lifespan that ranges from 8 years to 15 years which has resulted in a high volume of waste or dead batteries.
In addition, managing the growing volume is a crucial logistical and environmental challenge. The recycling process involving lithium-ion batteries is costly and requires special infrastructure which is still under development and is not implemented efficiently.
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Thermal Management & Safety
EV OEMs and automotive manufacturers have been constantly dealing with the safety concerns associated with EV batteries. Manufacturers are exploring multiple solutions including immersion cooling, liquid cooling, and robust system design.
OEMs struggle to achieve thermal consistency across large battery packs, especially in high-performance EVs because the heat generated is much higher. The design for a lightweight yet effective thermal system adds engineering complexity, further increasing the EV batteries’ cost.
The battery industry still struggles to balance cost, weight, and thermal efficiency, further proof of the need for continued investment in R&D and collaborative innovation to attack these problems more effectively.
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Safeguarding Quality
EV manufacturers source their batteries from abroad to control production costs. The primary reason for this strategy is that most countries, especially those in Asia, have dominated the battery manufacturing industries owing to lower production costs as well as better access to essential raw materials such as lithium and cobalt.
However, with an emphasis on cost efficiency, sometimes quality and safety are compromised. Low-cost manufacturers may not provide the same quality control for batteries meant for EV applications, resulting in a higher possibility of overheating, shorter lifespans than expected, or even fires.
OEMs who source low-cost imports, risk safety recalls for their brand, thereby affecting customer confidence. With the growing global demand for EVs, battery quality and safety have become essential aspects to maintain long-term competitiveness.
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Charging Speed
China has been leading the industry with 85% of the world’s fast chargers, while other countries are catching up to pace. While this leadership sets a high benchmark, other nations are rapidly advancing their infrastructure to close the gap. For OEMs, however, the focus extends beyond scaling infrastructure to negotiate inherent challenges in rapid charging. These challenges include mitigating long-term battery degradation caused by high charging rates.
Regions like Europe are prioritizing innovation in battery chemistry and thermal management systems to enable faster cooling without compromising safety. Despite these advancements, the fast charging experience remains a bottleneck for EV adoption.
A typical fast charge still takes approximately 20 to 30 minutes—significantly longer than the refueling time of a traditional internal combustion engine (ICE) vehicle. This disparity underscores a critical area where OEMs and automotive companies are directing significant R&D efforts to bridge the gap and enhance customer convenience.
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Battery Warranty
EV batteries contribute 30-40% of the total cost of EVs and as the most expensive part of the component, there are several uncertainties surrounding the same. Battery warranty management, lifespan, range, and performance are some of the gray areas that the industry is currently trying to optimize.
OEMs are struggling with balancing the cost between long-term battery warranties and maintaining a competitive price as batteries most often tend to underperform posing challenges. These challenges include major capacity loss and failures that damage brand reputation.
EV OEMs and automotive companies are struggling with this challenge by integrating their current systems with efficient warranty management software solutions. Integrating a digital warranty management system will help OEMs in analyzing the warranty claims data collected by the software to make informed decisions and improvements in battery quality as well as composition.
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Supply-Demand
The growth of the electric vehicle industry has resulted in a rise in demand for the raw materials used in the production of EV batteries. With current challenges associated with geopolitical laws and geographical issues, consistent mining is limited.
For example, a large share of cobalt production happens in the Republic of Congo whereas lithium refining happens mainly in China. Due to this, the concentration of raw materials is restricted to selected areas exposing OEMs and automakers to the risk of price fluctuations and supply chain disruptions.
To combat these challenges in the long run, OEMs must expand their local sourcing, improve their current technologies, invest in better infrastructure for recycling technology, and diversify their supply chain.
In Conclusion
Challenges related to EV batteries are an urgent concern and must be addressed proactively by EV OEMs and automakers to stay competitive or relevant in the market. The ability of OEMs and automakers to tackle supply chain obstructions, enhance recycling infrastructure, and improve safety features will majorly impact the landscape of the EV industry. While the industry continues to tackle challenges and reach better strategies, the industry will witness a series of transitions and growth to combat the same.
