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Electric Vehicles and their Impact on Automotive Warranty Management

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The falling costs of the lithium-ion battery pack, coupled with the rising concern of climate change, in addition to policy incentives, rising incomes, and technological advancements have pushed the adoption and sales of electric vehicles (EV) this last decade.

The Growth of the EV Segment
Bloomberg NEF’s Electric Vehicle Outlook study forecasts that EVs will hit 10% of global passenger vehicle sales by 2025, growing to nearly 28% in 2030 and 58% in 2040. In the US alone, the number of brands offering EV options will grow from 16 now to at least 40 in 2025, with electric vehicles offering consumers a wide range of segments and price points.
In addition to climatic awareness, governments are also driving change. US President Biden began his term with an order to electrify the federal fleet of about 650,000 vehicles, investing in over 550,000 public charging points, and taking initiatives to bolster the domestic supply chain for critical technologies and raw materials.
The Impact of EVs on the Automotive Industry
All of this indicates that the next decade will see a major shakeup in the automotive industry.
One example is an estimation by Ford, which believes that the simplification in the assembly of EVs could lead to a 50% reduction in capital investments and a 30% reduction in labor hours, as opposed to internal combustion engine (ICE) manufacturing.
Similarly, as the number of electric vehicle consumers grows, other aspects of the automotive industry including automotive design, supply chains and production processes will undergo a transformation as well.
As vehicles become more computer-dependent and less combustion engine related, learning gaps are expanding for technicians and even drivers, as they learn to handle what is essentially a new operational vehicle.
EV Trends and Future of Warranty Management
The automotive industry is already bracing for a shake-up when it comes to repair and parts management. With the surge in Electric Vehicles across the world, we can expect the OEMs to face an increase in the volume of technical warranty requests from their dealers. And because every vehicle is different, there will be a significant shift in how to handle these claims initially.
The service and maintenance of an electric vehicle are likely to be highly different from a typical combustion engine, to which the industry has so far been geared. Not only do EVs have fewer mechanical parts, but some components also (such as plugs and sockets, inverters and powerpack coolers), aren’t part of the existing automotive warranty service.
How Connected EVs Change the Repair Game
There are also several different types of EVs, such as hybrid and connected vehicles, which could further add more complexity to the issue of long-term service and maintenance.
IoT devices are also enabling vehicles to stay connected and detect vehicle failures even before they physically reach the service center. That means connected EVs ​will offer vehicle owners the ability to self-service and distinguish between actual car failure and driver solvable issues. This will impact automotive servicing to a greater extent as manufacturers may need to include ability to educate the driver if vehicles are brought in with no actual failure.
There are also likely to be more auto repairs in the field, as the parts get smaller and more computer-like. This could have a significant cost and operational impact on manufacturer warranties as mechanics (with computerized knowledge) travel to the customer rather than the other way around.
Smarter Cars, Smarter Warranty Management
To manage this transition, OEMs will need to become smarter about their warranty management processes. By using technology to examine warranty claims, OEMs can bring increased efficiency and transparency into a complex process. This will, in turn, enable OEMs to offer superior customer-centric service.
The next generation warranty management software solution leverages artificial intelligence and machine learning capabilities in order to identify and understand patterns in warranty claims. Additionally, software solutions such as end-to-end warranty lifecycle management can help OEMs reduce costs in warranty management, increase supplier recovery, and improve aftermarket sales support.
Warranty management solutions can also be used to handle increased volumes in claims processing easily. Through machine learning and image recognition, the system can be trained to recognize parts and models automatically, or even detect fraud claims, saving manufacturers a tremendous amount of time and money.
Shifting Gears to Stay Ahead
The transition to smarter electric vehicles and the potential phasing out of combustion engines is likely to be a game-changer for many.  Automotive manufacturers and suppliers are making key investment and technology decisions about the next generation of vehicle and components manufacturing, already.
Forward-thinking OEMs will need to tackle their challenges by using technology solutions to enable transparent cooperation with partners to offer sourcing, supply, and maintenance benefits and future proof their business.
SOURCES:
The future of cars is electric – but how soon is this future?
The Auto Industry and EVs: Where We Are and What’s Coming Next, After Years of Crying Wolf?
Plugging Into The Future: The Electric Vehicle Market Outlook

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