Though EVs are a major component of future strategy for OEMs, electric vehicles still represent a small fraction of current new vehicle sales. This means they represent an even smaller fraction of Units in Operation (UIO). In aftersales, we focus almost exclusively on UIO – that’s the full pool of vehicles that may return to the dealer for service and thus purchase genuine parts.
We project the growth of hybrid and electric vehicles and apply their respective parts sales per UIO accordingly from Carlisle’s NAPB Databook. This is the market size for part sales in the future. Then we adjust based on the volume of service that hybrid and electric vehicles require (service need) as well as the number of vehicles retained (service retention).
This document analyzes the impact that electric and hybrid vehicles will have on the parts logistics network as they become a larger portion of the U.S. car parc overtime. The impacts are driven by changes in service frequency, parts needed per repair, and service retention performance for alternative vehicles compared to traditional ICE vehicles.
To estimate the magnitude of the problem (or opportunity), the first step is to size the market. After synthesizing Experion UIO data and electric vehicle forecasts from JP Morgan, we see alternative fuel vehicles growing from about 2% of total UIO in 2018 to 19% in 2030 – with the majority becoming electric vehicles:
We conducted a Consumer Sentiment Survey, where we received over 2,000 user-reported survey responses on the number of service visits customers made within the last twelve months. Users report about 9% fewer service visits per year for overall alternative fuel vehicles – with electric vehicle customers reporting an even more magnified difference of 30%. The baseline here is ICE customers.
Service volume is affected by vehicle age, so we also normalized our results accordingly. Even though electric vehicles are very new (i.e. most of them are within the 0-3-year-old UIO bracket), older electric vehicles hold the same trend.
After synthesizing both hybrid and electric vehicle service frequency declines with the projected UIO car parc mix (EV, hybrid, ICE), service frequencies are estimated to decline by 2.5% by 2030. The impact is mitigated due to ICE vehicles still representing a large percentage of 5-10 year UIO in 2030.
Part Count Required
To tackle the parts question, we used Factory Scheduled Maintenance guides for vehicles that have an ICE model, a hybrid model, and an electric model (either out currently, or soon to release). We analyze all three vehicles separately because parts consumption is different for maintenance. Some examples:
- Timing Belts: Exist and are replaced at a roughly similar frequency on ICE and hybrid vehicles, but do not exist at all on electric vehicles.
- Brake pads and rotors: Exist on all three fuel types, but last far longer on hybrid and electric vehicles, which almost all have regenerative braking (which reduces friction brake wear).
This analysis only affects Factory Scheduled Maintenance, which is just a portion of the total parts consumption. We relied on Total Cost of Ownership estimates from sources such as (but not exclusively) Edmunds to estimate the rest of the parts consumption.
We found hybrids and EVs require 8% and 36% fewer service parts respectively. After synthesizing UIO, service frequency, and service part count projections, we project service need to decrease by 9.5% by 2030.
From the same Consumer Sentiment Survey, we learned that hybrid and EV customers are far more likely to come to the dealer for service than ICE customers. We believe the primary driver of this heightened service retention is the income level of the customer (~15% higher income reported).
We first plotted our survey retention results against our Carlisle NAPB Databook retention figures to validate survey representation – a strong correlation followed:
|Year||Benchmark Data||Survey: ICE Customers|
|11 -19 year||0.126||0.088|
We then plotted our alternative fuel survey results against the same Carlisle NAPB Databook figures:
|Year||Benchmark Data||Survey: Alt Fuel Customers|
|11 -19 year||0.126||0.384|
We found that on average, alternative fuel customers are 45% more likely to go to the dealer for service. After synthesizing with the aforementioned UIO projections, we estimate service retention to increase by 8.9% by 2030. The impact is larger within the 0-7 year UIO segment.
When we combine the 9.5% decline in service need with the 8.9% increase in service retention, we estimate a 2.1% decline in parts volume by 2030. Note, these figures do not account for UIO growth – we’ve simply compared the 2030 future “with hybrid and electric vehicles” to the 2030 future “without an increase in the hybrid and electric population.”