The increasing popularity of electric vehicles (EVs) and hybrid cars is displacing the demand for traditional vehicles equipped with internal combustion engines (ICE). The widespread adoption of EVs and hybrids is already creating a long-lasting impact on the supply-chain of automobiles—but not without problems.
The COVID-19 pandemic put a bad dent in the auto industry and car sales dropped by 15% in 2020 alone. The problem is now further exacerbated by steep inflation rates across the globe, rising interest rates, and a general tendency to avoid traveling in the aftermath of the coronavirus.
The pandemic also caused several original equipment manufacturers (OEMs) and relevant vendors in the automobile industry to shut down their operations—causing a void in the supply-chain of vehicle accessories and distribution.
The slump in production and sales has caused automakers to incur heavy financial losses and be at the mercy of their respective governments for economic support and assistance.
But the biggest setback for automobile manufacturers is the fast-changing customer behavior. The economic slowdown, sharp inflation rates, and the spread of new technologies especially in the EV sector have led consumers to look for more affordable but smarter and environment-friendly vehicles.
