New impetus in the drive to establish E-mobility across the continents will come from the world’s major conurbations according to experts from Roland Berger and the renowned German automotive research institute fka in their new joint study Electromobility Index Q1 2017. The world’s major cities have already announced plans to introduce regulatory instruments reducing emissions with cities such as London, Paris and Mexico City planning to ban diesel and petrol engines. China has announced a quota for electric vehicles and Norway is discussing a blanket ban on internal combustion engines from 2025. According to Roland Berger Partner and Co-author Thomas Schlick, “Governments must continue to invest in the technology mix. This extends from funding research to subsidizing the expansion of charging infrastructure and sales promotion via customer subsidies.”
The study regularly compares the positions of the seven automotive producing nations China, France, Germany, Italy, Japan, South Korea and USA relative to one another based on the three indicators technology, industry and market. While the market share of electrically driven vehicles continues to grow in all markets, the overall figure remains low. Europe plays a key role in moving the technology goalposts with France and Germany sharing first place in the study’s technology indicator ahead of Japan and South Korea. Roland Berger Partner and study co-author Wolfgang Bernhart comments on the European dominance in this key segment, “Germany’s pole position in the technology indicator is largely down to the rise in the numbers of vehicles available to customers as well as the increased range of vehicles offered by German manufacturers. They have significantly increased the numbers of part- and full-time electrical powertrains within their car lines while maintaining relatively stable prices.” French OEMs for their part have a smaller range of vehicles on offer, choosing instead to focus on affordable electric cars in the compact segment. That said, in terms of price/performance over value for money the French remain frontrunners.
Falling battery prices are stimulating E-mobility
Fka Consultant Alexander Busse confirms that along with the regulatory measures being introduced by the bigger cities, the drop in battery costs will make a significant difference to the acceptance of E-mobility adding, "our market analysis shows that all countries are working intensively to electrify the car, albeit with differing focus. The drop in prices for lithium-ion batteries along with the introduction of new generations of cells are leading to vehicle manufacturers introducing electric cars with greater range and, in the medium term, moving their model mix in this direction.”
Dependence on raw materials is potentially the catalyst for future political crisis
One problem facing manufacturers is their dependence on particular raw materials – lithium, nickel, manganese, cobalt and graphite – and the countries supplying them. 95 per cent of the world’s graphite reserves are found in China and almost half of the global demand for cobalt is satisfied by the Congo. Steel refinement requires manganese and a quarter of the world’s supply comes from South Africa. Chile and Australia each supply a third of the world’s lithium. A further bottleneck is in the supply of refined graphite, which is largely undertaken by South Korea and Japan.
Both the delivery of raw materials and the production of battery cells are consequently factors at the mercy of the swing of politics. Roland Berger Partner Wolfgang Bernhart highlights the situation in China, “Over 90 percent of the lithium-ion cells for the Chinese E-Mobility market are produced locally. The fact that local production benefits from state subsidies while foreign cell manufacturers are unable even to acquire the license to produce cells locally has had a huge effect. This is why Chinese cell manufacturers occupy the top slots, and that goes for global cell production too." This also explains why China has moved to the top of the industry indicator in front of the US and Japan.
Compared to last year, sales of electric vehicles in China have more than doubled explaining why the country has also jumped ahead in the market indicator to take second place behind France, which still has a higher market share of E-vehicles. In addition, sales have increased in France and Germany, too, by around 50 per cent compared to the previous year.
In total however, the market share of semi- or completely electrified vehicles in 2016 broke one per cent in only two countries, China and France. This is unsatisfactory, according to Roland Berger expert Schick, who commented, “in order to meet vehicle fleet emissions targets coming into force from 2021, this figure needs to see considerable movement upwards.” For this to happen manufacturers need to significantly improve the appeal of electric vehicles to the customer. As Schlick rounds up, “The range of vehicles currently on offer is already very good. The ease of charging and the charging time are what need to be improved; for that we require a comprehensive fast-charging network.”
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In terms of technology, German OEMs have regained their leading position, now on a par with France. China has taken over the lead in the industry due to its higher levels of production and value creation. In terms of markets, all seven leading automotive nations are increasingly on the same level.
