The future of electric vehicles in an increasingly deglobalized world

By Wolfgang Bernhart and Isaac Chan

The outlook for electric vehicles looks brighter than ever, but the challenges on the path to mass adoption are further complicated by a backdrop of rising geopolitical tension. In the first installment in Roland Berger’s new article series, ‘Electrification in the Age of Deglobalization' series, we explore the global dynamics shaping decarbonized transportation.

The automotive industry is hurtling toward an electric future. Just a few years ago, EV adoption was prodded along by emission regulations and early adopters. Progress was slow, skepticism remained high, and industry veterans questioned why this time would be different from past hype cycles.

Yet something decidedly changed over the course of the pandemic. Emissions regulators in Europe, the US, and China turned up the pressure with the passage of net zero and other clean energy targets by 2050. A major EV manufacturer passed USD 1 trillion in market capitalization—more than the next five automakers combined– and the public took notice. Amid the frenzy of SPAC activity, capital markets uniformly rewarded pure play EV stocks while snubbing any company that even dabbled in combustion engines.

Boards and financial institutions reacted, and traditional automotive companies were compelled to launch their own grand electrification plans supported by ambitious investment strategies. Major OEMs are now abandoning ICE programs, electing instead to plunge billions into developing EV platforms and building battery supply chains.

Fueled by the self-fulfilling prophecy of industry investment, regulatory proposals that seemed outlandish just a few years ago now seem almost plausible. In other words, the proverbial (electric) train has left the station. We are now on the path to mass EV adoption. This is the stage in which bold announcements and investment strategies are made manifest by monolithic gigafactories and the ubiquity of charging stations. According to our projections, the global lithium-ion battery market will grow at 34% annually and reach nearly 5.1 TWh by 2030 – roughly equivalent to over 125 full scale gigafactories.

But the story of electric vehicles is still being written, and like any good story, it has its fair share of twists and turns. Events playing out on the global stage will reshape entire industries, reconfigure supply chains, and reshuffle the deck for the decades to come. For the companies, leaders, and nations that are able to navigate the complexity and willing to act boldly, this dynamic environment provides many opportunities to influence how the story unfolds.

Against a backdrop of rising geopolitical tension, the shift towards electrification carries a whole new level of importance for nations. It has transformed into a race to establish energy security, technology leadership, and a renewed industrial base – all of which are key drivers of domestic job creation, export growth, improved standards of living and national security. Furthermore, the geographic distribution of critical resources means no country can succeed alone.

So what’s next for companies in the automotive value chain? In this article, we explore the considerations for a new reality of electrification, and dynamics to consider when navigating the current environment.

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