Germany remains the forerunner in electric vehicle technology while China is set to become the world's largest electric vehicle market. Cities are a key driver as the world moves towards more sustainable, clean and efficient forms of transportation, while supply issues for key battery materials remains a potential issue for the industry.
As the effects of pollution, from climate change to negative health outcomes, become more acute, transformations of key sectors away from fuels with extensive negative externalities continues apace.
One industry seeing increased focus is the automotive industry. In total, the industry produces around a quarter of all global carbon emissions, while exhaust fumes are implicated in the premature deaths of more than 40,000 people each year across the UK. One way forward is the electrification of vehicles.
In a new report from Roland Berger, in association with Forshungsgesellschaft Kraftfahrwesen, current market conditions are indexed. The report, titled ‘E-Mobility Index’, in addition, considers trends going forward – from potential supply bottlenecks to wider market developments.
The index finds that while Germany remains the electric vehicle technology forerunner, yet its industrial capacity lags considerably behind Japan, the US and China. China is by far the forerunner in industrial capacity, while Japan is the most well rounded ranked. Italy is the furthest behind in both segments.
In terms of absolute sales figures for electric vehicles and plug-in hybrid electric vehicle in the major countries forming part of the survey, China and the US were found to be well ahead at 276,000 and 125,000 respectively. France saw sales of around 33,000 while Japan came in at 28,000. In terms of sales as a % of total market share, China came in second at 1.25%, with France on top at 1.68%. The US took third spot on 0.85%, while Germany came in fourth at 0.76%.
In terms of research and development in the e-mobility segment, China continues to invest the most in absolute terms, at €4.4 billion, or around 0.045% of GDP. Germany takes second spot in absolute terms, with investments of around €1 billion, while France, also with investments of around €1 billion, comes in first in terms of % of GDP at 0.046%. Korea, Japan and the US invest mere fractions of their GDP into R&D for the sector.
Batteries remain a key component in the value chain of electric vehicles. The technology has in recent decades settled on a lithium-ion type. In terms of global market share for production, Japan remains out ahead, with Panasonic producing around a third of global cell supply. China has, however, in recent years sought to catch up – BYD is set to produces around 18% of global supply by 2018. Korea too, through LG Chem and Samsung, will play a key role in total cell production by 2018 at around 26% market share.
While lithium-ion technology remains the forerunner in the battery space, concerns have been raised around supply of key precursors. While lithium, in the near term remains relatively abundant in terms of ease of market access, cobalt is more precarious with around 50% of supply stemming from the Congo – where political instability, among others, threatens access. Further concerns for trace precursor requirements, particularly graphite, mean that disruption to global markets may affect market transformation in the near term.
With global compacts in place to significantly reduce carbon emissions, the move toward electrification of the transportation fleet continues apace. The production of electric vehicles is, thereby, projected to continue to rise. China is to see the biggest leap, with production hitting 1.2 million units by 2017 – the country will see even faster increases as legislation requiring up to 15% of all sales are electric by 2025 transforms the market. The US too is shifting further from ICE, as propositions from Tesla, among others, support transformation of the wider industry.
According to the report, one of the key concerns for the market remains consumer sentiment. Their sentiment is affected, in particular, by concerns around charging stations, charging time and range. New, and advancing charging technologies, are likely to make charging more convenient. Technologies include inductive and fast charging options. The infrastructure for these technologies are, according to the report, set to be rolled out in the near future – particularly by cities seeking to reduce pollution and meet climate goals. The range of vehicles too is projected, the report notes, to increase as more efficient battery technologies are developed and mature.