”Watch what we do, not what we say.”
That was Attorney General John Mitchell talking to reporters at the start of the Nixon administration in 1969. The quotation comes to mind as auto manufacturers say electric car buying will reach 25% of the global market by 2025, egged on by governments with climate change agendas. But talk to the practical supplier side of the industry, preparing for the future based on concrete orders and reality, and you get a different story.
Manufacturers like Volkswagen and BMW say that by 2025, up to 25% of their vehicles will be powered by batteries alone; Mercedes-Benz estimates 15 to 25%. But as the Frankfurt Auto Show clears the decks for action next week, big global suppliers paint a radically different picture, calculating 2% to 5% will be electric-only between 2023 and 2025.
BMI Research
EV Timeline
That is a stunning divergence, but some experts say that this is really just a matter of timing and that, by the middle of the next decade, the electric revolution will have swung into serious action.
According to supplier giant BorgWarner, last year, 0.6% of the global auto market consisted of battery-only electric vehicles (EVs), and that’s not surprising given the woeful state of the product on offer in the mass market. The bigger-selling electric cars like the Renault Zoe in Europe are great around the city but fail alarmingly when they accelerate on to the highway. Renault claims a headline range of 250 miles for the Zoe, but this is in “ideal” conditions. The normal capacity is 180 miles, and that is only attainable in perfect climatic conditions, with no hills or air conditioning; one friendless, thin passenger; and an empty trunk. Renault concedes winter range is only 124 miles.
Renault’s alliance partner Nissan unveiled the new Leaf EV on Wednesday and shockingly, after much brouhaha, announced it will have only 150 miles of range. (You can almost hear would-be buyers saying, “How far in the real world?”) Nissan does say that a new version next year will go 300 miles. (Ditto.)
The price of even humdrum little Zoes and Leafs is way too expensive to gain buyers on their merits, so government subsidies currently help to prop them up. The recharging experience also leaves much to be desired here in the U.K., with websites like Zap-Map providing a list of available charging stations often way out of date.
So why should we expect an imminent surge in EV sales?
The short answer is that governments have mandated this, so it will happen, like it or not. Recently, the British and French governments said that by 2040, new internal-combustion-engine-powered autos won’t be allowed, only electric ones. Chancellor Angela Merkel has hinted Germany might follow.
Peter Fuss, automotive expert at the Ernst & Young GmbH consultancy in Germany, agrees that governments, charging infrastructure development and range improvement will dictate the pace of adoption.
“The speed of the penetration of electric cars globally will very much depend on three things,” he said.
- “Are there governments who need to push for electrification for climate reasons and to become independent from fossils (fuels), like China? It will be different in the U.S. or even Europe.”
- “How fast will the charging infrastructure for electric cars be developed? The still unresolved chicken-egg-dilemma.”
- “Range anxiety needs to be resolved by improved battery technology. All of this will not be resolved overnight but will take time.”
Fuss added: “It is obvious that we need to change to electric cars charged with renewable energy. The time frame is depending on many aspects and factors as mentioned above. It may be the biggest bet for all OEMs (manufacturers) since more than 130 years ago the first car entered the street.”
Renault Zoe e-sport electric car (Photo by Harold Cunningham/Getty Images)
Frederic Lissalde, vice president of BorgWarner Inc, agrees that the shift away from internal combustion engines (ICE) to hybrids and battery power is inevitable, but his idea of the pace of change shows this will be gradual, and not an overnight, revolution.
“By 2023, the global market share of electric vehicles will be a bit more than 2%, up from 0.6% in 2016. ICE power will still be huge – 80% in 2023 compared with 96% now –while hybrids will accelerate ahead to 17%, compared to 3.3% in 2016,” Lissalde said.
Magna International said in August that it sees a global EV share of between 3% and 6% by 2025. At the same time, Delphi Automotive went for 5%.
BorgWarner’s Lissalde reckons hybrids will lead the way.
“I think hybridization and battery electric power is going to be big, with a strong penetration of mild hybrids to thwart range anxiety. Constraints on electric vehicles focus on energy supply and the recharging infrastructure,” he said.
Professor Stefan Bratzel from the Center of Automotive Management in Bergisch Gladbach, Germany, thinks the BorgWarner projection masks the reality of a huge amount of work going on now behind the scenes but worries about charging.
“I would say 2% is a bit low. My projection would be between 10 and 25% by 2025 because looking at the plans of manufacturers, between 2022 and 2023, there will be a big increase in electric cars. Then of course there will be a big question mark over the (charging) infrastructure,” Bratzel said.
Professor David Bailey of the Aston Business School in Birmingham, England, said, “2025 will be the tipping point, 2023 at the earliest, if battery prices come down.”
Whether it’s fast or slow, it’s time to face the reality that the electric revolution is upon us, Bernstein Research analyst Max Warburton said.
“Just do it,” he said.
Picture from the company
Tesla Model 3
“The sand is shifting fast on electrification. The manufacturers still have huge concerns about cost, range, infrastructure and product usefulness, but they can’t sit on their hands for much longer. Policy makers have decided EVs are the future and are going to force the industry towards them,” Warburton said.
“Investors have also decided EVs are the future, bidding Tesla’s market cap to a stratospheric level while de-rating the traditional manufacturers. If the policymakers and the capital providers are both telling you to do it, then you better get on and just do it. So what if the consumer doesn’t appear to be on board yet? We’ll worry about that later.”
Warburton offers five key decisions that need to be made now:
- Overturn the concerns of your market researchers and just build a Tesla Model 3 rival.
- Secure battery supply.
- Start building a charging network to match Tesla’s superchargers.
- Accept diesel is going away and plan your interim powertrain strategy around gasoline-hybrid and EV.
- Accept that EVs will be priced higher than ICE cars and begin an offsetting program of corporate restructuring very soon.
That’s easy to say, and visitors to the Frankfurt Show, which is open to the public from Sept. 14 through Sept. 24 at the Messe Frankfurt, will be searching for evidence of this revolution in the form of new cars ready for the road. They won’t find many.
see http://www.wintonsworld.com for my analysis of movers and shakers in the global auto industry, plus road tests and video of the latest cars and SUVs. Follow me on @wintonsauto
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