Executive Insights

How COVID-19 Is Reinforcing Demand for Electric Vehicles

Author: Sameer Pagnis, President, Global Automotive, TE Connectivity

I believe that every crisis presents an opportunity. At the peak of the pandemic, we saw factories shutter and supply chains stall. It was a blindside, but we found silver linings. In the past year, we witnessed the wonder of the natural world healing, the adoption of five years’ worth of consumer and business digital innovation in just the first two months of the pandemic, and companies continuing to innovate amid crisis.

 

Fast forward and ask: Where has the past year brought us, technologically and culturally? Early in the pandemic, conventional wisdom held that sustainable initiatives like electrification might take a back seat to immediate, short-term economic priorities. But in reality, we’ve witnessed continued adoption of electric powertrains, spurred by a combination of regulatory action and a swift rebound in retail sales. In fact, sales of electric cars actually rose by 43% overall last year, and at TE, we saw a 12% increase in electric car manufacturing among our customers despite the economic challenges we faced.

 

As the President of Global Automotive for TE Connectivity, a global leader in connectivity and hybrid electric mobility solutions (HEMS), I can say with confidence that COVID-19 has reinforced an already-growing market conviction in electric vehicles (EVs) as the future of automaking. Despite the disruptions brought on by COVID-19, we are on the verge of significant acceleration in this industry.

The signals from the market have never been clearer. The bet is safe, and the time is now.

A Bridge to the New Era of EVs

We are currently crossing the bridge somewhere between a predominantly internal combustion engine (ICE) fleet and a predominantly electric fleet. No one knows exactly how long this bridge will be—especially when you consider the uneven pace of change by region in the global market—but I can say definitively that that bridge is getting shorter, fast.

 

The key reason for this is that—for the first time—policy, consumer demand, and technology are now converging, leading us to what is looking like a sharp “S-curve of adoption in the years to come.

 

Until just recently, the transition to EVs felt like an uncertain bet to many, or perhaps something off in the distance. Policies were burdensome to OEMs, technology was expensive, revenue returns were low, and consumer sentiment toward EVs was lukewarm.

 

Today, we are seeing a significant mindset shift in our customers. Across the board, they are investing in EVs, diverting their future plans away from ICE vehicles, and making groundbreaking public financial commitments to electrification.

 

In conversations with customers, whether its Volkswagen, GM, BMW, Geely Group, and others, the message is the same: The signals from the market have never been clearer. The bet is safe, and the time is now.

White electric SUV atop a hill, with windmills in the background
Across the board, our customers are investing in EVs, diverting their future plans away from ICE vehicles, and making groundbreaking public financial commitments to electrification.

With regulators, consumers, and OEMs all aligned, the speed of this transition will only accelerate. Today, EVs are on the cusp of accounting for around 10% of total global auto production. But considering that we anticipate a 50% year-over-year increase in EVs next year alone and consistent double-digit annual increases over the next decade, the potential pace of change in EV adoption is staggering.

 

But OEMs cannot chart this path alone. With so much to do and so little time to do it, OEMs need strategic partners who bring an innovative mindset, a deep understanding of their challenges and opportunities, solutions to obstacles, and confidence in the long-term potential of EV technology. Suppliers must deliver products and expertise in a nimble and agile way, in concert with fast-moving research and development taking place with OEMs.

 

TE is already supporting customers through this transition. Over the past decade, we have steadfastly built a diverse portfolio of products and—critically—capabilities that differentiate us from the competition. We are ready for this exciting challenge with a diverse, flexible portfolio of connectivity solutions and deep bench of engineering experts who are co-creating solutions with our customers.

EV Bullishness: Accelerated by Connectivity

This long-awaited and dynamic inflection point in the automotive industry is due, in large part, to the innovations happening at the connector level.  Research and development happening behind the scenes over the past decade has gotten us to a place where mass adoption of EVs is not only possible—it’s happening.

 

Take, for example, how connectivity solutions are already addressing a major concern in EV adoption worldwide: range anxiety. One consideration is the energy density of the battery. OEMs need flexible connectivity solutions to connect cells and modules so that they can advance their platforms without having to make continued investments in re-adapting their engineering processes to contend with regulation and rapidly changing consumer sentiment. Connectivity solves that. For example, Chinese EV startup NIO Inc., a TE customer, created a battery that can last up to 1000 kilometers on a single charge.

 

However, range anxiety isn’t simply about battery density. Efficient power distribution from the charging inlet to the battery to the e-motor, as well as thermal management, are significant factors where connectivity plays a key role. TE is addressing this with our high-power charging (HPC) inlet solution. HPC can involve 350kW of DC charging power at currents of up to 500 amps, which represents the highest load state for the entire electrical system in an EV. Facilitating a peak load of 350 kW charging power requires a different approach to designing the electrical components. We are developing a new methodology that can dynamically determine the temperature increase caused by components and the heat dissipation in the system at all times.

TE’s automotive division leaders have invested significantly in anticipation of this moment. We simulate our products’ ability to thrive in harsh environments and have rigorously tested our solutions in situations of high thermal stress. This testing instills confidence in our solutions and allows our OEM customers to dream even bigger when it comes to designing and commercializing the world’s next innovative EV technology. With one of the widest portfolios of products in the market today, we are enabling electrification and allowing customers to innovate new applications and products, all at unmatched breadth and scale.

 

At TE, we pride ourselves on innovating alongside our customers. We understand the unique challenges of OEMs today, including tight budgets and even tighter timelines—that don’t allow for re-engineering vehicles in perpetuity. Companies have to make decisions about where to dedicate resources. We are global in scale, and architecture agnostic, meaning that—unlike other suppliers in the space—we have a unique flexibility to create bespoke solutions that directly match customer needs.

 

Now, with the automotive industry at a historic inflection point, our differentiated approach is paying dividends. TE Connectivity’s global scale and commitment to truly strategic partnerships enable us to capitalize on the step change toward an electric future.

 

If you are an investor interested in more information about TE Connectivity, please email our Investor Relations team.

About the Author

Sameer Pagnis, President, Global Automotive

Sameer Pagnis

Sameer Pagnis is president of TE’s global automotive business. He is responsible for the auto team’s productivity, quality, portfolio management, global pricing and new go-to-market strategies. Sameer has been with TE for 20 years and previously led our Automotive Americas organization, served as TE’s Chief Strategy Officer, and General Manager for our Industrial & Commercial Transportation and Application Tooling businesses.