The tire industry has historically been characterized by fierce competition, slow growth, and low profit margins.
According to data from consulting firm AlixPartners, the total market value has remained at around US$50 billion in the past few years, and the overall market has grown at an annual rate of about 2%.
But electric vehicles bring a whole new set of opportunities.
AlixPartners said that because electric vehicles are heavy and accelerate quickly, their tires tend to burn about 20% faster than internal combustion vehicles. And the cost of tires is about 50% higher.
Other technical challenges include suppressing tire noise, which is more noticeable inside the cabin of quiet electric vehicles, and increasing the range of electric vehicles. Michelin research shows that tire choice can have a 10% to 15% impact on the driving range of electric vehicles.
The extent to which tire companies are able to differentiate themselves as innovators in these areas can determine whether or how often customers ask for the name of their products. Only about half of buyers currently do so, North Coast Research estimates.
Northcoast Research analyst John Healy said: “If electric vehicles do continue to develop and proliferate in the automotive market as some think, it could bring about what I call tire manufacturing. Business Gold Rush.”
Watch the video to learn more.
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