The tire industry has long been characterized by fierce competition, modest growth, and slim profit margins.
According to AlixPartners, the market value has stagnated at approximately $50 billion over recent years, with an overall annual growth rate of around 2%.
However, the emergence of electric vehicles (EVs) is ushering in a wave of new opportunities.
AlixPartners highlights that due to their substantial weight and rapid acceleration, EVs typically wear out tires about 20% faster than traditional internal combustion vehicles, while also incurring a 50% higher cost.
Moreover, EVs introduce unique technical challenges such as mitigating tire noise, which becomes more noticeable in the otherwise quiet cabins of electric vehicles and enhancing the vehicle’s range.
Research by Michelin indicates that tire selection can impact an EV’s range by 10% to 15%.
The ability of tire manufacturers to distinguish themselves as innovators in these areas could significantly influence whether customers specifically request their products. Currently, only an estimated half of buyers do so, according to Northcoast Research.
John Healy, an analyst at Northcoast Research, suggests that if EVs become more widespread as some anticipate, it could trigger what he terms a “gold rush” for tire manufacturers.
