Why Tire Companies Love EVs
CNBC・2 minutes read
The tire industry faces slow growth and low margins but sees potential growth opportunities with the rise of electric vehicles (EVs), as EV tires cost more and need more frequent replacement. Manufacturers are adapting to produce more sophisticated and longer-lasting tires to meet the changing demands of the market, focusing on EV products to stay competitive in a rapidly evolving industry.
Insights
- Electric vehicles (EVs) are driving changes in the tire industry, with EV-specific tires costing 50% more, needing more frequent replacement, and impacting an EV's range by up to 15%, prompting tire manufacturers to focus on developing longer-lasting and more efficient tires for this growing market segment.
- The tire industry, historically characterized by slow growth and low margins, is adapting to the challenges and opportunities presented by EVs, leading to the development of more sophisticated, larger, and longer-lasting tires tailored to meet the demands of electric vehicles, which are reshaping the market landscape and pushing manufacturers to make strategic decisions in response to this evolving trend.
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Recent questions
How is the tire industry evolving?
The tire industry is rapidly evolving to meet the demands of electric vehicles (EVs), which present new opportunities and challenges for manufacturers. With the rise of EVs, tire companies are focusing on developing longer-lasting, more efficient tires that can handle the heavier weight and quick acceleration of EVs. Additionally, there is a trend towards larger tire diameters, especially in EVs, which is increasing the demand for larger and more expensive tires. The industry is also incorporating tire intelligence, such as sensors measuring temperature and pressure, to enhance tire development and performance.
What impact do electric vehicles have on tire replacement?
Electric vehicles (EVs) have a higher demand for tire replacement compared to internal combustion engine (ICE) vehicles. EV tires are 50% more expensive and need replacement 20% more often due to the heavier weight and quick acceleration of EVs. Additionally, EV tires can impact an EV's range by up to 15%, leading tire companies to focus on developing longer-lasting and more efficient tires specifically designed for EVs.
Why are electric vehicle tires more expensive?
Electric vehicle (EV) tires are more expensive compared to traditional tires due to the unique requirements of EVs. EV tires need to handle the heavier weight and quick acceleration of EVs, which necessitates higher quality materials and construction. Additionally, EV tires need to be more durable and efficient to withstand the demands of electric vehicles, leading to a higher price point compared to regular tires.
What challenges do electric vehicles pose for tire makers?
Electric vehicles (EVs) pose several challenges for tire makers, including the need to develop tires that can handle the weight, acceleration, and noise reduction requirements of EVs. EV tires are 50% more expensive and need replacement 20% more often than traditional tires, which puts pressure on manufacturers to create longer-lasting and more efficient tires. Additionally, EV tires can impact an EV's range by up to 15%, requiring tire companies to focus on developing innovative solutions to meet the demands of the evolving EV market.
How is the US tire and rubber market performing?
The US tire and rubber market experienced a 9% growth from 2017 to 2022, with the top three tire makers accounting for over half of all sales. Despite slow growth and low margins in the tire industry overall, the US market has shown positive growth in recent years. The industry is highly competitive, with buyers often treating tires as commodities differentiated mainly by price. The market value is around $50 billion and is not expected to increase significantly in the coming years, highlighting the challenges and opportunities present in the tire and rubber market in the US.
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Summary
00:00
Evolving tire industry meets EV demands
- The tire industry has slow growth and low margins, with a market value around $50 billion that is not expected to increase significantly in the coming years.
- The industry is highly competitive, with buyers often treating tires as commodities differentiated mainly by price.
- The rise of electric vehicles (EVs) presents a new opportunity for tire manufacturers, as EV tires cost 50% more and need more frequent replacement due to heavier weight and quick acceleration.
- The US tire and rubber market grew by 9% from 2017 to 2022, with the top three tire makers accounting for over half of all sales.
- EVs pose challenges for tire makers due to their weight, acceleration, and the need for quieter tires to reduce noise.
- EVs have a higher demand for tire replacement compared to ICE vehicles, with EV tires being 50% more expensive and needing replacement 20% more often.
- EV tires can impact an EV's range by up to 15%, with tire companies focusing on developing longer-lasting and more efficient tires for EVs.
- Tire intelligence, such as sensors measuring temperature and pressure, is a growing trend in tire development.
- The trend towards larger tire diameters, especially in EVs, is increasing demand for larger and more expensive tires.
- The tire industry is evolving to meet the demands of EVs, with manufacturers aiming to create more sophisticated and longer-lasting tires to adapt to the changing market.
12:58
Evolving Industry Faces Budget Strain and Growth
- The industry is evolving rapidly with the introduction of larger 23 and 24-inch rim diameter tires, heavier vehicles with more torque, and advanced onboard sensors, creating growth opportunities but also straining the budgets of companies accustomed to narrow profit margins. This necessitates strategic decisions on which market segments to prioritize, potentially leaving older vehicles without the latest technology as focus shifts towards developing EV products to meet market demands.
