Auto execs less optimistic about EV adoption amid economic fears: KPMG

A NYC charging station in the Yorkville neighborhood of New York City.

Adam Jeffrey | CNBC

DETROIT — Global auto industry executives are less optimistic about the adoption rate of electric vehicles than they were a year ago amid supply chain issues and rising economic concerns, according to a survey released Tuesday.

Of the more than 900 automotive industry executives who took part in KPMG’s annual global automotive survey, 76% report to the international consulting and accounting firm that they are concerned that inflation and high interest rates will negatively impact their business over the next year. In the US alone it was 84%.

Amid these concerns, KPMG reports that auto industry executives are less optimistic about the adoption of pure electric vehicles in the US and globally by 2030. Estimates that new vehicles sold worldwide by then will be sold as electric vehicles ranged from 10% to 40% in this year’s survey, down from 20% to 70% a year earlier.

For the U.S., the median expectation for EV sales was 35% of the new-vehicle market — up from 65% a year ago and well below the 50% target by 2030 announced by the Biden administration late last year.

“There is still a sense of optimism over the long term, and more importantly there is a sense of realism in the short term. You see that realism throughout the survey,” Gary Silberg, global head of automotive at KPMG, told CNBC.

Declining optimism about EV adoption comes with tighter requirements for government incentives for the vehicles; growing concerns about raw materials for batteries; and record vehicle prices. Such concerns come on top of other supply chain issues and recession fears.

“You can be optimistic in the long term, but you have to be very realistic in the short term,” Silberg said. “It’s not about rainbows and butterflies and euphoria anymore, it goes on.”

Tesla vs Apple?

Executives who took part in the survey expect Tesla to remain a global leader in electric vehicles, but by a much narrower margin.

Perhaps most surprisingly, executives also said they believe in the tech giant Applewhich has been rumored to be developing a vehicle for years, will be among the market leaders in electric vehicles.

Apple received 133 votes in the EV leadership poll. That is the fourth highest number of votes behind Tesla (223 votes), Audi (206) and BMW (196). Apple had 91 votes a year earlier, although the company had never publicly confirmed plans for a vehicle.

Silberg said sentiment around Apple is based on its brand, mass production experience and Foxconn, which is currently making its iPhones. The contract manufacturer recently entered the auto industry, building an electric pickup truck in Ohio, with executives expressing plans for continued growth in the segment.

Rounding out the top 10 brands after Apple were Ford, Honda, BYD, Hyundai-Kia, Mercedes-Benz and Toyota. An unexpected omission was General Motors. None of the automaker’s brands cracked the top 12. And this despite the fact that the automaker is investing billions of dollars in the technologies and has a goal of selling only electric vehicles by 2035.

KPMG left the term “leadership” open to respondents.

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recession fears

KPMG didn’t use the term recession in its published results, but Silberg said it was reflected in economic concerns about inflation and high interest rates.

Such fears are linked to ongoing supply chain issues for automakers — from EV raw materials to semiconductor chips. In a separate study looking at semiconductors, the automotive industry is seen as the most important sector to grow sales next year. According to KPMG, this is a first in the 18-year survey, which predicts automotive semiconductor sales will surpass $250 billion by 2040.

Despite the concerns, 83% of global auto industry executives who took part in the survey said they were “confident” about higher profits over the next five years — up from 53% in last year’s results.

In the US, 82% of executives said they are “confident” of profitable growth over the next five years, compared to 67% in 2021.

KPMG conducted the survey in October among 915 executives. More than 200 respondents were CEOs and 209 were other C-level executives. More than 300 respondents were from North America, including 252 from the United States

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