Vehicle electrification has been and still is one of the key automotive megatrends. Thanks to pioneers such as Tesla and many OEMs offering an increasing number of electric vehicles (EVs), the customer perspective has changed: EVs are possible – and can sometimes be a fun ride.
However, the ambitious sales targets – often laid out by regulators and politicians – are far from being reached. For example, German legislation still stands by its target of having 1 million electric cars on German roads by 2020, but at the start of 2015, there were only around 20,000 registered EVs on the country’s roads. In addition, manufacturers are working hard to further improve internal combustion engine (ICE) and hybrid powertrains to decrease fuel consumption and emissions.
Will the EV be buried alongside various other hypes? Five key points need to be discussed.
The customer perspective on electric mobility
First, the bad news: in the new 2015 Global Automotive Mobility Study, Arthur D. Little industry experts shed light on the three megatrends of car sharing, autonomous driving, and electric mobility. 6,500 end consumers from ten automotive core markets have drawn a clear but not surprising picture of the EV situation: the main obstacles are the still-high prices (64% of respondents), limited operating range (53%) and insufficient availability of charging stations (41%). And many end customers say they “miss the fun of the ride” – without ever having tested one. The market will not accept electric vehicles until these key barriers are solved – and the market is always right.
Diesel discussion will impact the powertrain mix
The current emissions scandal highlights diesel technology and today’s regulations and testing standards. Public attention is currently focused on diesel technology. Predictions regarding the future of diesel vary, but in the short term a diesel volume loss will increase sales of gasoline-based ICEs and hybrid vehicles – not EVs. Nevertheless, the ongoing dispute on emissions and testing standards will have a significant impact on the mid-term powertrain mix, since tougher testing standards and legislation will increase costs to achieve cleaner ICE-based vehicles. This will drive their prices up and reduce the price difference between ICE and electric vehicles, which is one of the key barriers to end customers buying EVs.
Battery technology development speeds up
For years, advances in battery technology lagged expectations. Even now, battery capacity and price prevent an EV operating reach comparable to ICE propulsion concepts at competitive costs, which is what the end customer wants – and that’s without even considering the charging problem, which needs to be solved in parallel. Nonetheless, energy storage and battery technology will be the key determinants for the success of EVs. Many players are therefore working on the cost side, such as Tesla designing a battery mega factory. Bosch and many more players are working on highly advanced battery concepts, and progress on lithium-ion batteries has been recently propelled. Battery performance may improve much faster during the coming years, but progress and timing are not clear.
Solving the battery problem is the dominant challenge – will it be solved before 2020? Some manufacturers are already placing their bets, and others are holding their cards: already, in 2012, Hyundai introduced its fuel cell-powered ix35 FCEV. Toyota recently brought the Mirai into series production – a 4.89 metre long, mature and serious car with 500km (310 miles) operating reach. Daimler and BMW have increased their efforts too (the latter based on Toyota fuel cells), among others. But if battery development continues to progress at its current speed, it will be challenging for fuel cell technology. In any case, depending on battery or fuel cell and whoever wins the bet, EV concepts will overcome the big purchase barrier of operating reach.
The well-to-wheel discussion is on
There is another strong argument: global vehicle sales are increasing – and most increases will happen in non-OECD countries in Asia. EVs may beat ICE emissions from tank-to-wheel, but what happens when calculating well-to-wheel for those countries? The share of electric power generation emitting CO2 for selected countries in 2012 is: China and India, more than 80%, and Thailand and Malaysia, more than 90%. Increasing the share of EVs in these countries will inevitably drive power generation emitting CO2. In other words, the CO2 advantage of EVs can be low to non-existent, depending on vehicle type and regional power generation mix. This discussion has not yet reached the broad public. Manufacturers such as Mazda have already presented roadmaps for their respective ICE powertrain strategies, moving towards a further 25% fuel consumption decrease connected with hybrid concepts – and bringing them on a par with EVs on a global average CO2 power generation share.
Electric vehicles are a key enabler for new automotive business models
The Arthur D. Little study revealed that when autonomous driving becomes available, it will have a massive effect on annual mileage driven: on long distances, 30% of end customers globally would substitute train travel for journeys in autonomous cars, and a further 13% would use autonomous cars instead of air travel. On short distances, a global 22% of end customers would substitute autonomous cars for taxis, and 31% would no longer use public transport, opting instead to use autonomous cars.
The use of passenger cars and the annual distance driven will thus drastically increase when autonomous driving becomes available. As a consequence, emissions and pollution, especially in large cities, which are growing worldwide, and metropolitan areas, would reach a limit that is no longer acceptable without EVs. Autonomous driving without electric propulsion increases a problem, but with a clean electric drivetrain (in terms of power generation), it will contribute to the solution of many of today’s traffic problems.
Legislation in countries worldwide will act differently, but it is likely to favour EVs. China recently decided that 30% of government cars need to be electric. Inner-city toll concepts have been introduced or are planned for many cities worldwide, and further tax subsidies for EVs contribute as well. So will EVs replace ICE-based powertrains and gain the majority in the powertrain mix? Probably not as fast as many have predicted. Will the EV be just another hype? Definitely not. The EV is the enabler for disruptive business models based on autonomous driving; the EV offers a solution for cleaner (especially urban) traffic, and will ultimately account for a significant part of the powertrain mix. And – maybe – customers can be persuaded that EVs can also be fun to drive.
