Electric future

With governments, OEMs and the global scientific community setting ambitious targets for electric mobility to counter CO2 emissions, the Electric Vehicle (EV) industry is projected to enter an era of rapid growth.

The summer of 2017 was notable for a string of announcements from governments and OEMs. For instance both France and the UK proposed to ban the sale of new petrol and diesel cars by 2040, while Germany hosted a ‘diesel summit’ which discussed the very future of the engine.

OEMs already offer EV models in most segments of the market – from SUVs, executive cars and sports cars through to smaller family and compact models. But most now have plans to significantly up their game. For instance VW is aiming for more than 30 new EV models by 2025, while Volvo Cars says every model from 2019 onwards will have an electric motor. Tesla has also launched its ground-breaking Model 3 as an affordable mass market EV.

Looking ahead, the combination of stricter emission regulations, lower battery costs, more widely available charging stations, and increasing consumer acceptance will create strong momentum and growth in the EV market1. As the chart below shows, exemplary Tier 1 supplier Schaeffler is preparing for 30% BEV (battery electric vehicle) penetration by 2030.

Challenges

The speed of this revolution raises serious concerns for suppliers so reliant on the combustion engine. How do they secure the future of their businesses? And are the timelines being set by politicians and regulators realistic?

A key question is also how quickly consumers will move across to EVs and see it as a credible transport option. At present, issues around cost, user requirements, choice, limited range and technological uncertainty have held back the market.

Global picture

The race for the EV market is hotting up. China has rapidly become the biggest global market as a result of a range of government incentives and its goal of reaching 7 million annual New Energy Vehicle (NEV) sales by 2025.

The market is also being driven by forthcoming rules which would require as much as 8% of the sales of global carmakers in China to be EVs as early as next year, with the figure rising to 12% by 20202.

The move will strongly affect German and US OEMs with major operations in China and carmakers who miss the target will be forced to buy credits from competitors who exceed the percentage.

Europe is also seeing significant investment by both governments and leading automotive players. This growth is part of a much wider electro mobility revolution with increasing numbers of electric trains, trams and bikes in operation.

Supply chain impact

The new EV era heralds huge change for automotive suppliers, many of whom are rapidly re-engineering their businesses as they ask how they fit in to this changing environment and work out what technologies they need to pursue.

For instance last year German technology firm ZF, which opened one of the world’s first electric drive factories almost a decade ago, founded an eMobility division. In doing so it has merged all of its e-mobility activities under one roof and now offers hybrid modules and plug-in hybrid transmissions as well as electric drives for EVs.

Bosch has unveiled new electric drive units to complete its electric powertrain offering to OEMs, with its ‘eAxle’ drive unit flexible for multiple platforms and bringing together Bosch powertrain components into one system. Continental also recently signed a cooperation framework agreement with EV start-up NIO. The two companies will collaborate in the EV field as well as on ‘intelligent’ transportation systems and automated driving. Another supplier Hella has increased production of electronic components and sensors, while automotive and industrial supplier Schaeffler is repositioning itself to be a leader in the EV revolution.

1 McKinsey&Company: Automotive revolution – perspective towards 2030
2 The Chinese government is currently considering an easing of this rule

EV Chart 1

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