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I was honored to recently attend Northwestern University’s 18th Kellogg Greater China Business Conference as a member of the panel “Future of EV Adoption—China vs. U.S.” with fellow speakers Christian Murrieta, head of mobility concepts at Audi America, and Darren Liu, executive director at Accelera by Cummins. Nancy Qian, the James J. O’Connor Professor of Economics at Kellogg, moderated the panel.
It was a great experience to exchange ideas with other market experts and more than 200 attendees in the Greater Chicago Area. My takeaways from the event:
Opportunities in some regions may not be opportunities in others
Though moderating a bit of late, EV sales are still booming in China, which is viewed as a great opportunity for different industry players as well as for consumers. Just as the old Chinese saying “天时地利人和” goes, things happen at the “right time, right place, and with/for the right people.” The Chinese government has been deeply incentivizing production and encouraging EV adoption for more than 10 years, and Chinese players are starting to lead in a few core technologies globally, including EV batteries.
Chinese consumers welcome new technologies such as EVs and advanced driver assistance systems (ADAS)—which mirrors what we found in the 2023 AlixPartners ADAS Consumer Survey—but the view in the U.S. is not the same. As the recently released 2024 AlixPartners Disruption Index’s automotive industry results revealed, a greater percentage of European and China/Japan-based automotive executives see EVs as an opportunity compared to auto executives in the U.S. The Chinese and Japanese automotive executives think EVs are one of the top three industry opportunities (only after software-defined vehicles and technological advances in materials and processes), while American executives ranked EVs much lower.
Regulation from China seems to be a big driver of EV adoption, while uncertainty in U.S. regulation is preventing growth
According to the 2023 AlixPartners Global Automotive Outlook, China’s government has spent $60 billion since 2009 in taxes and other forms of incentives on EVs. However, due to uncertainties around the impending U.S. presidential election (which is also high on the list of American auto executives’ overall concerns), U.S. execs remain murky on the future of current government incentives for EVs.
On the other hand, per the AlixPartners Disruption Index, 49% of automotive executives in the U.S. and Canada, and 48% in China and Japan, say they think regulation, policy, or geopolitics provide opportunities around EVs regardless of region. Only 22% in the U.S. and Canada and 31% in China and Japan view these as threats to EV growth.
Automakers, suppliers, and other industry players must shift to manage such a dynamic environment
According to our Disruption Index, European automotive executives were the most worried about industry disruptions, followed by American and Canadian executives. Chinese and Japanese executives were the least worried.
To navigate disruptive times, companies must:
- Adopt a more entrepreneur-driven approach
- Change their mindset from “defender” to “usurper”
- Take more risks to be faster to market
For industry executives, I’d like to emphasize my last suggestion from the panel: Disruption can also mean opportunities. Don’t be shy about grabbing the bull by the horns!