The tire business has historically been characterized by intense competition, low growth and slow margins.
The total market value has remained around $50 billion for the past few years, and the overall market is growing at a rate of about 2% annually, according to consulting firm AlixPartners.
But electric cars offer a whole new set of opportunities.
Due to their heavy weight and rapid acceleration, electric vehicles tend to burn out their tires 20% faster than internal combustion vehicles, according to AlixPartners. And tires cost about 50% more. a
Other technical challenges include reducing tire noise, which is more noticeable in a silent electric car cabin, and improving the electric car's range. Michelin research shows that tire choice can affect an electric vehicle's range by 10% to 15%.
The extent to which tire companies are able to distinguish themselves as innovators in these areas can determine whether or how often customers ask for their products by name. Currently, only about half of buyers do so, according to Northcoast Research estimates.
“If electric vehicles develop and spread among cars as some believe, it could lead to what I call a gold rush for tire manufacturers,” said John Healey, an analyst at Northcoast Research.
Watch the video to learn more.
