Auto execs less confident in EV adoption amid economic fears: KPMG

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

Adam Jeffery | CNBC

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

Of the more than 900 automotive executives who took part in the annual global auto survey by KPMG, the international consulting and accounting firm reports 76% are concerned that inflation and high interest rates will adversely affect their business next year. In just the U.S., the figure was 84%.

Amid those concerns, KPMG reports automotive executives are less bullish about the prevalence of all-electric vehicles in the U.S. and globally by 2030. Estimates of new vehicles sold being EVs by then globally 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 — down from 65% a year earlier and significantly lower than the Biden administration’s 50% goal by 2030 that was announced late last year.

“There’s still a sense of optimism long term, and yet, most importantly, there’s a sense of realism in the near term. You see this realism throughout the entire survey,” Gary Silberg, KPMG global head of automotive, told CNBC.

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The declining optimism in EV adoption comes amid stricter requirements for federal incentives for the vehicles; rising concerns about raw materials for batteries; and record vehicle prices. Such concerns are in addition to other supply chain issues and recessionary fears.

“You can be long-term optimistic, but near term, you’ve got to be very realistic,” Silberg said. “It’s not rainbows and butterflies and euphoria anymore, it’s game on.”

Tesla vs. Apple?

Executives who took part in the survey expect Tesla to remain a global leader in EVs but with a far narrower lead.

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

Apple received 133 votes in the survey regarding EV leadership. That’s the fourth-highest number of votes, behind Tesla (223 votes), Audi (206) and BMW (196). Apple had 91 votes a year earlier, despite the company never publicly confirming plans for a vehicle.

Silberg said the sentiment surrounding Apple is based on its brand, experience with mass production and Foxconn, which currently makes its iPhones. The contract manufacturer recently entered the automotive industry and is building an electric pickup in Ohio, with executives expressing plans for further 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. Not one of the automaker’s brands cracked the top 12. That’s despite the automaker investing billions of dollars in the technologies and having a goal to exclusively sell EVs by 2035.

KPMG left the term “leadership” open to interpretation for respondents.

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Recessionary fears

KPMG did not use the term recession in its released findings, but Silberg said it is reflected in the economic concerns about inflation and high interest rates.

Such fears are in conjunction with continued supply chain problems for automakers — ranging from EV raw materials to semiconductor chips. In a separate study that involved semiconductors, automotive is seen as the most important sector for driving revenue over the next year. That’s a first in the 18 years of the survey, according to KPMG, which predicts automotive semiconductor revenue will surpass $250 billion by 2040.

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

In the U.S., 82% of executives said they’re “confident” of profitable growth in the next five years, compared with 67% in 2021.

KPMG conducted the survey of 915 executives in October. 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 U.S.

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