EV adoption is being tested from both sides of the market

The race to electrification is no longer just about producing enough cars. The automotive industry is under pressure on two fronts: battery shortages disrupt supply, while shifting policies—from tax credits to California’s decision to revoke carpool privileges—shake consumer demand.

For customers, the result is frustration. Pre-orders stretch into long waits, and vehicles often arrive months later than promised. At the same time, once-powerful incentives that helped buyers justify the switch to electric—like access to faster lanes during long commutes—can disappear overnight. An EV once seen as a smart, time-saving choice suddenly feels less compelling.

For automakers, this double squeeze raises the stakes. A shortage of essential materials can disrupt entire production lines, while missed demand signals can leave inventory stranded in the wrong markets. Yet most leaders still treat these issues in silos: the battery bottleneck as a procurement problem, the incentive decline as a marketing concern. That fragmented view misses the larger point.

What feels like separate challenges is one unified business problem. To sustain EV momentum, the automotive industry must connect operational realities with market signals, anticipate change, and deliver consistently on promises to customers—even in times of uncertainty.

Optimized operations: Building reliability into every step

Issues with EV battery manufacturing ripple through the entire automotive value chain. A procurement delay quickly becomes a production slowdown, which ultimately leaves customers waiting months longer for vehicles they were promised. At the same time, adapting to shifting incentives requires the flexibility to adjust model mix and pricing strategies in real time. Automotive dealers, caught in the middle, face frustrated buyers and fewer units to move. Even a small disruption in one link of the supply chain can cascade into lost revenue, delayed launches, and damage to brand loyalty.

Automotive IT solutions from SAP can help create a digital thread that links design, production, logistics, and delivery into one connected system. By breaking down silos and embedding resilience into core processes, companies can adapt more confidently to market volatility. The result is not only greater efficiency but also a stronger foundation for trust—the most powerful incentive an automaker can offer.

Action-ready insights: Sensing shifts in real time

In today’s automotive market, the speed of insight often determines the speed of response. Without a clear view across both supply and demand, automakers risk overcommitting to buyers or missing opportunities when incentives create sudden spikes in interest.

Consider the impact of policy changes. As California phases out EV carpool lane access on October 1, 2025—a move triggered by a federal sunset provision—automakers may see demand ease, especially in regions where incentives strongly influence buying behavior. Without integrated data, manufacturers may struggle to anticipate the decline, leaving them exposed with unsold inventory.

With SAP Integrated Business Planning, leaders can unify supply chain metrics, customer behavior data, and external policy signals into one connected decision layer. That foundation gives them the ability to track bottlenecks, run scenario models, and pivot quickly when disruptions occur.

Advanced analytics also help organizations go beyond hindsight. With automotive software from SAP, companies can run carbon footprint calculations up to 50 times faster than with manual approaches, enabling them to test the compliance impact of different sourcing strategies in hours rather than weeks. Predictive models based on curated automotive data can flag supplier risks early or forecast shifts in consumer demand before they become crises.

For executives, these insights have the potential to transform decision-making. Instead of relying on instinct or delayed reporting, leaders can act with confidence—balancing short-term shocks with long-term strategy while protecting both margins and brand reputation.

Transformative impact: Turning volatility into advantage

Volatility in the EV market is not a temporary condition. New regulations, shifting incentives, and evolving customer expectations will continue to reshape the industry for years to come. Automakers who treat each disruption as an isolated issue will always be on the defensive.

The opportunity lies in building an enterprise that doesn’t just absorb shocks but turns them into a competitive advantage. SAP Business Technology Platform enables this with AI-driven orchestration and agentic automation, integrating across design, manufacturing, supply chain, and customer channels.

This level of orchestration allows leaders to forecast disruptions, automate responses, and foster collaboration across ecosystems. For example, connected AI agents can detect delays with automotive suppliers, recommend alternatives, and trigger new logistics plans—all before customers even notice a disruption. Embedded IoT signals can highlight performance issues in the field, enabling proactive service and strengthening customer trust.

The road ahead: Resilience as the differentiator

Battery shortages and policy shifts may seem like separate disruptions, but together they underscore a single truth: resilience wins the EV race. Companies that rely on automotive solutions to connect operations, insights, and transformation into a unified strategy will not only sustain adoption—they’ll define success in the era of electrification.

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