SlideShare a Scribd company logo
Electric Cars in
Europe
Amit Agrawal

Sustainable Mobility Management, TU Berlin

18.12.2017
1
Agenda
• What makes the car and its electrification an interesting topic?

• What are the key changes relevant for the automotive industry in current times?

• What is an electric car? Why and how has electrification become important?
How have governments contributed to the same?

• Are Electric cars viable for consumers?

• How is the market being reshaped due to electrification in the medium term
(5-10 year horizon)? How are industry and government action influencing
developments in the market?

• What could be a national near term perspective to these developments? What
are the hinderances for German OEMs to go full steam on EVs? How do the
multiple business models manifest at city/regional level?
2
Image Source : http://www.fantasticmanmagazine.com
3
The Electric car market has seen
increased OEM action recently
Source : Vygon Consulting
2010-
2011
Nissan
Leaf
Chevrolet
Volt
BMW
Active E
Smart
Fortwo
Tesla
Roadster
Mitsubishi
i-MEV
Fisker
Karma
CODA
2012
BYD
e6
Ford Focus
Electri
Tesla
Model S
Toyota
Prius
Plug-in
Hybrid

Toyota
Rav-4 EV
Renault
Zoe
Honda Fit
EV
2013
Fiat
500e
Ford C-
Max Energi
PHEV
Ford
Fusion
Energi
PHEV
Smart ED
Chevrolet
Spart EV
Porsche
Panamera
S-E
Cadillac
ELR
Aston
Martin
DB9 PHEV
2014
BMW
i3
BMW i8
Cadillac
ELR
Honda
Accord
Plug-in
Hybrid
Mercedes
B-Class
ED
Kia Soul
EV
VW e-
Golf
Porsche
Cayenne
S-E
2015
Tesla
Model
X
Mercedes
S550e
BMW X5
xDrive
40e
Hyundai
Sonata
PHV
Mercedes
S550 PHV
Volvo
XC90
Audi A3
E-tron
2016-
2018
Chevro
let Bolt
Volvo
XC90 T8
Volvo
S90 T8
Hyundai
IONIQ
BMW i5
Volkswage
n Tiguan
OTE
PHEV
Citroen
E-Mehari
Aston
Martin
Rapid E
Tesla
Model
3
Audi e-
tron Qattro
Nissan
IDS
Concept
Apple
Titan
9
16
24
32
39
51
4
The OEM launch activity has been met with
exponential off take in demand, though we
are still at very early stages of the market
Source : EVvolumes.com5
Source : Calvin and Hobbes6
Electric cars : We may like them or
hate them but we cannot ignore them!
Image Source : bizpyscho.com7
What are some of the current mega
trends relevant for the automotive
industry?
8
Increased urbanization along with transportation needs,
shifting demographics, new emerging markets and
sustainability concerns are challenging the existing
automotive industry structure
• Global Urbanized population is expected to increase from 54% in 2014 to 66% by
2050. Currently 64% of all travel is made within urban environments and the total
amount of urban kilometers traveled is expected to triple by 2050 (Arthur D. Little and
Futurelab)

• Shifting global population dynamics: In 2013, people aged 55 to 64 became the age
group most likely to buy a new car. At the same time close to 2 billion digital savvy
consumers are exerting new demands on the industry

• Re-alignment of geographical markets: By 2030, an estimated 3 billion people are
expected to enter the middle class, mostly in emerging markets. 90% of overall shift to
urban regions is also expected to happen in emerging markets. The emerging countries
accounted for only 24% of the sales of all automobiles in the world, whereas they
increased their share to more than 50% currently

• Sustainability concerns : CO2 and NOX emission target reductions by EU and the
National governments is creating pressure to improve the efficiency of the existing (ICE
based) technologies or shift to new technologies
Source : Accenture / World Economic Forum Study and others9
Developments in Autonomous driving, Shared
Mobility, Connectivity and Electrification can lead to
multiple future scenarios for automotive industry
Base case for study
[ Disruption to personal mobility]
Commercial introduction of robo-taxis covering
up to 5 percent of passenger miles traveled by
2030
90 percent adoption rate of smartphone ride-
sharing apps by 2030 and Tenfold growth in
reliance on shared mobility, accounting for
about 15 to 20 percent of vehicle miles
traveled in dense cities by 2030
100 percent vehicle connectivity
50 percent of vehicles sold have cost-efficient
electrified powertrains in 2030
10
Source : McKinsey Report : The automotive
revolution is speeding up, Oct 2017
The share of industry revenue from
disruptive business models could increase
from around 1% in 2016 to 25% in 2030
Source : McKinsey Report : The automotive
revolution is speeding up, Oct 2017
11
This digital transformation of the automotive ecosystem
has allowed a number of nontraditional, technology-
based companies to enter at various points along the
automotive value chain
Source : Accenture / WEF Analysis 201312
So far….
Business models and industry structure of automotive industry is being disrupted by many forces
and electrification is just one of them.
Despite lack of initial enthusiasm OEMs have finally embraced electrification as inevitable and lot of it has
to do with government action and industry reaction.

The consumer viability of electric vehicle depends on where you are (which govt regime) and how (much)
the car is used. Milage increase (driven by sharing) can boost economics of a EV and autonomy drive
costs further down.

The speed of EV adoption depends on development in technology, infrastructure, mobility patterns, global
car manufacturing regime, electricity sector and energy and fuel prices. All of these are heavily influenced
by policy and have regional variances. There appears to be increased alignment on EV targets between
OEM strategy and Govt policies. 

Due to path dependence and requirements of transition, the OEM responses vary based on
considerations for protection of balance sheet assets (lease books), orientation to markets (global or
domestic), level of government support and technology leadership

The e-mobility transition will be shaped city by city, it is affected by the infrastructures and transport
systems of each city, and each city will find different e-mobility business models suitable to their needs.
13
What goes inside an Electric car?
Why have they become suddenly important?
14
Major Types of EVs
• BEV : uses chargeable batteries to power electric motors
and motor controllers for propulsion 

• HEV : a hybrid electric vehicle (HEV) combines a
conventional ICE propulsion system with an electric drive
system. The presence of an electric power train increases
fuel efficiency and performance levels. 

• PHEV : Have a externally rechargeable battery in addition
to the HEV. PHEVs essentially operate as electric vehicles
with an ICE back-up facility.
15
Cost Walkthrough Nissan Note (ICE) to
Nissan Leaf (BEV) 2015. PHEV economics
can be less drastic due to lower battery size
16 Source : Vygon Consulting, Bernstein Research
Batteries which constitute bulk of the cost also
determine the range of the electric only car. Very few
“cheap car” experiments in pure electric market.
Source : Next Greencar17
Electric cars have the potential to resolve at least some
of negative externalities of ICE cars, while
simultaneously preserving many social and economic
benefits of the established automobility regime
• Climate protection policies and targets included electric propulsion as a
source of reduction of CO2. FCVs and (especially after2005) BEVs
became an icon for zero-carbon vehicles and efficiency of energy use /
reuse

• The peak oil expectation and unpredictability of future prices has
brought government attention to vehicles that avoid dependence on oil; 

• Thus, the economic recovery programmes in the US and Europe
favoured clean technologies, including EVs giving a positive push to EV
technology

• Further, progress in battery technology spurred by consumer electronic
sector, helped lower the costs of EVs accompanied by developments in
drivetrains, light weight materials
Source : The emergence of an electric mobility
trajectory : 2011, Innoz and others18
The domino effects of state intervention
and industry reaction gave a new lease of
life to EVs (Renault and France)
• Inspired by the commercial success of Toyota Prius (a HEV), automotive OEMs were
following a path of development with more efficient ICE engines and hybridisation. 

• The French state initiatives on demand and supply side to promote HEVs/BEVs
presented similar opportunities to Renault and PSA. The state wanted to establish
France as the leader of a new important sector

• Renault group (which was lagging in hybrid R&D) took advantage of the crisis on 2008-09
and the subsequent state funding to align itself to a new BEV vision. Because of its
alliance with Nissan (access to battery tech), creating demand for BEVs with public
money was cheaper than catching up on hybrids.

• PSA with its sunk investments in hybrid did not follow suit. This has now created a
change in the industry order in France.

• The OEM developments in France and policy developments in EU pushed German
carmakers and govt to consider EVs by 2011/12. The German policy action went largely
towards R&D investments in collaboration with and in a balanced fashion among existing
private industry leaders
Source : Shaping an emergent market for Electric Cars : How politics
in France and Germany transform the European Automotive industry
19
Frame 3 STI Policy Thinking is
evident in government action on EVs
20
Explicitly Addressed Aspect. Expected Follow-through Aspect
Frame 1
Frame 2
Frame 3
Source : Developing and Enacting Transformative Innovation Policy
So far….
The automotive industry is being disrupted by many forces and e-mobility is just one of them.

Despite lack of initial enthusiasm OEMs have finally embraced electrification as inevitable and lot
of it has to do with government action and industry reaction.
The consumer viability of electric vehicle depends on where you are (which govt regime) and how (much)
the car is used. Milage increase (driven by sharing) can boost economics of a EV and autonomy drive
costs further down. 

The speed of EV adoption depends on development in technology, infrastructure, mobility patterns,
global car manufacturing regime, electricity sector and energy and fuel prices. All of these are heavily
influenced by policy and have regional variances. There appears to be increased alignment on EV
targets between OEM strategy and Govt policies.

Due to path dependence and requirements of transition, the OEM responses vary based on
considerations for protection of balance sheet assets (lease books), orientation to markets (global or
domestic), level of government support and technology leadership

The e-mobility transition will be shaped city by city, it is affected by the infrastructures and transport
systems of each city, and each city will find different e-mobility business models suitable to their needs.
21
Are Electric cars viable for consumers? 2017
Reality check : Enter Chevy Bolt and Tesla Model
3, BYD and of course Renault - Nissan
22
Rapid decreases in battery prices have helped
accelerate EV sales, especially in Europe and China.
The effect of battery price decline is global in nature
Source : IHS, Bloomberg, New Energy Finance
23
However for ICE cars, Gasoline pump
prices in selected countries worldwide
show high variance
Source : Statistica24
Pump prices as of 2nd quarter 2017 (in U.S. dollars per gallon)
So do the electricity prices
Source : Statistica
Global electricity prices 2017 $ / Per KwH
Total cost of private ownership of an EV over
lifetime is heavily influenced by Battery cost
and energy prices ( along with fuel taxes)
Source : Vygon Consulting Mar 2016
5 year TCO Analysis with Nissan Leaf and Nissan Versa Note in US
Markets with private ownership milage (~ 10,000-12,000 kms/annum )
26
Based on high retail fuel prices, even if subsidies are
ignored, EVs are set to achieve cost of ownership parity
with ICE cars in medium term on private car usage miles
Source : UBS Analysis UBS Evidence Lab Electric
Car Teardown May 201727
As the milage per annum of car increases, the
competitiveness of EV gets better. This allows for
a nice blending with B2B shared mobility EV fleets
Source : McKinsey Report : An integrated
perspective on future of mobility Oct 2016
28
Autonomous driving with shared mobility improve the case for
electrification. For every 10 percent increase in shared mobility
as a proportion of the total, the cumulative number of electric
vehicles sold in 2015–30 could increase by up to 5 percent.
Source : McKinsey Report : An integrated
perspective on future of mobility Oct 2016
29
The user context stretch is being provided by other
trends like shared and autonomous mobility. BEVs have
better economics than ICEs in such future user context
Source : The emergence of an electric mobility trajectory : 2011, others30
Electric cars are likely to proliferate within
both car sharing and individual ownership
user modes supported by multi-modality
Source : The emergence of an electric mobility trajectory,
McKinsey Integrated perspective on the future of Mobility, Oct 2016
31
So far….
The automotive industry is being disrupted by many forces and e-mobility is just one of them.

Despite lack of initial enthusiasm OEMs have finally embraced electrification as inevitable and lot of it
has to do with government action and industry reaction.

The consumer viability of electric vehicle depends on where you are (which govt regime) and how
(much) the car is used. Milage increase (driven by sharing) can boost economics of a EV and
autonomy drive costs further down.
The speed of EV adoption depends on development in technology, infrastructure, mobility patterns,
global car manufacturing regime, electricity sector and energy and fuel prices. All of these are heavily
influenced by policy and have regional variances. There appears to be increased alignment on EV
targets between OEM strategy and Govt policies.

Due to path dependence and requirements of transition, the OEM responses vary based on
considerations for protection of balance sheet assets (lease books), orientation to markets (global or
domestic), level of government support and technology leadership

The e-mobility transition will be shaped city by city, it is affected by the infrastructures and transport
systems of each city, and each city will find different e-mobility business models suitable to their needs.
32
How is the market being reshaped due to electrification
in the medium term (5-10 year horizon)? How are
industry and government action influencing
developments in the market?
33
The existing national order in the EV industry
is changing very quickly and China has clearly
entered the automotive club through EVs
34
Source : Roland Berger E-mobility Index Q2 2017
The Chinese EV march : Effect of low
motorisation or something more?
Source : McKinsey, CAAM, EV-sales.blogspot.com,
IHS Markit March 2017)
35
New Vehicle Registrations (‘000)

PHEV

BEV
The Chinese development is supported by
multi-pronged government action, unlike other
markets where Govt action is less invasive
Source : Webinar by Ducker Worldwide : The auto
industry of the future – connected, electrified and
led from Asia? September 2017
Incentives and Domestic Market Preferences in China
• Incentives of up to 23% for mid-size EVs, free license plates for EV car owners

• Subsidy only for battery manufacturers over 8 GWh capacity (only BYD and CATL meet the criteria)

• Only Chinese companies allowed to supply batteries, subsidy available only from buying batteries from approved makers

• Subsidies for foreign companies only on JV with Chinese companies
36
Denmark and Norway offer some of the highest electric
vehicle purchase subsidies. This support along with
higher retail fuel prices in these countries make EVs an
increasingly attractive consumer proposition.
Source : McKinsey Study37
Such a regulatory driven approach can forward the era of
EVs by at least 5-7 years as compared to market forces
of innovation and imitation as shown by this analysis of
Norway markets.
Source : McKinsey Integrated perspective on the future
of Mobility, Oct 201638
OEMs are warming up to EVs and have
made significant recent announcements
Source : Global EV outlook 2017, IEA
39
As countries are imposing ultimatums on EVs. The level
of ambition resulting from the OEM announcements
assessed shows a fairly good alignment with country
targets to 2020.
40
Source : Global EV outlook 2017, IEA
So far….
The automotive industry is being disrupted by many forces and e-mobility is just one of them.

Despite lack of initial enthusiasm OEMs have finally embraced electrification as inevitable and lot of it
has to do with government action and industry reaction.

The consumer viability of electric vehicle depends on where you are (which govt regime) and how
(much) the car is used It will keep improving further with falling battery prices and/or rising fuel prices.

The speed of EV adoption depends on development in technology, infrastructure, mobility
patterns, global car manufacturing regime, electricity sector and energy and fuel prices. All of
these are heavily influenced by policy and have regional variances. There appears to be
increased alignment on EV targets between OEM strategy and Govt policies.
Due to path dependence and requirements of transition, the OEM responses vary based on
considerations for protection of balance sheet assets (lease books), orientation to markets (global or
domestic), level of government support and technology leadership

The e-mobility transition will be shaped city by city, it is affected by the infrastructures and transport
systems of each city, and each city will find different e-mobility business models suitable to their
needs.
41
What are the hinderances for
German OEMs to go full steam on
EVs? How much do local factors
affect success of EVs?
42
Car Production and Consumption
- Worldwide and Germany
Worldwide spread - Production All Cars 2015 (in millions)
 Who
Where 
DE RoW Total
DE 4,7 1 5,7
RoW 8,4 54,5 62,9
Total 13,1 55,5 68,6
Worldwide spread - Consumption All Cars 2015 (in millions)
 Who
Where 
DE RoW Total
DE 1,9 1,3 3,2
World 10,7 53,4 64,1
Total 12,6 54,7 67,3
The automotive industry is at the heart of German
economy. EVs require Germany’s automotive industry to
re-establish their pole position on the global market
which is being accelerated by regulatory push
• According to Germany’s Federal Statistical Office, more than one fifth (in
excess of 317 billion euros) of Germany’s total industrial turnover in
2010 was generated by the automotive industry. 

• Almost one in seven jobs are directly or indirectly linked to vehicle
making, be it in planning, component supply, produc-tion or service
provision. 

• German manufacturers sell the lion’s share of their products (more than
60%) abroad. In 2011, the industry reported international sales revenues
of approximately 223 billion euros. A majority of trade surplus (~ 300
billion) for Germany comes from automotive and transport industry

• More than a third of all industrial expenditure on research and
development takes place in the automotive sector
44
However, an accelerated shift
to EVs implies residual value risk on existing lease books
for many OEMs. At the same time threat of new players
warrants urgency of market action
45 Source : UBS estimates
Lease book size by OEM – (€bn)
PHEVs versus BEVs
Source : Wietschel, Martin et al. Perspektiven des
Wirtschaftsstandorts Deutschland in Zeiten
zunehmender Elektromobilität
46
The e-mobility transition will be shaped city by city, it is
affected by the infrastructures and transport systems of
each city, and each city will find different e-mobility
business models suitable to their needs.
Source : Global EV outlook 2017, IEA
47
Sharing models (e.g Drivenow) are yet to
adopt EVs exclusively (perhaps a result of
sub-optimal TCO parity and infrastructure)
Drive Now number of vehicles and Type
City Country Vehicles Type Start date
Lisbon Portugal 210 Gasoline, Diesel, Electric September 2017
Helsinki Finland 150 Gasoline, Electric May 2017
Milan Italy 500 Gasoline & Electric October 2016
Brussels Belgium 320 Gasoline, Electric July 2016
Stockholm Sweden 400 Gasoline, Diesel, Electric October 2015
Copenhagen Denmark 400 Electric September 2015
London United Kingdom 310 Gasoline, Diesel, Electric December 2014
Vienna Austria 700 Gasoline, Diesel, Electric October 2014
Hamburg Germany 600 Gasoline, Diesel, Electric October 2013
Cologne Germany 310 Gasoline, Diesel, Electric September 2012
Düsseldorf Germany 310 Gasoline, Diesel, Electric January 2012
Berlin Germany 1400 Gasoline, Diesel, Electric September 2011
Munich Germany 750 Gasoline, Diesel, Electric June 2011
Source : Wikipedia
In Conclusion
The automotive industry is being disrupted by many forces and e-mobility is just one of them.

Despite lack of initial enthusiasm OEMs have finally embraced electrification as inevitable and
lot of it has to do with government action and industry reaction.

The consumer viability of electric vehicle depends on where you are (which govt regime) and
how (much) the car is used It will keep improving further with falling battery prices and/or rising
fuel prices.

The speed of EV adoption depends on development in technology, infrastructure, mobility
patterns, global car manufacturing regime, electricity sector and energy and fuel prices. All of
these are heavily influenced by policy and have regional variances. The state action in support
of electrification can bring forward the adoption curve by about 5-7 years.

Due to path dependence and requirements of transition, large OEM responses vary based on
considerations for protection of balance sheet assets (lease books), orientation to markets
(global or domestic), level of government support and technology leadership. The e-mobility
transition will be shaped city by city, it is affected by the infrastructures and transport systems
of each city, and each city will find different e-mobility business models suitable to their needs.
49
Sources : 1/2
• The automotive revolution is speeding up, McKinsey, Oct 2017

• EV vs ICE Vehicles : When to expect robust competition, VYGON Consulting March 2016

• Electric Car Teardown – Disruption Ahead?, UBS Evidence Lab, May 2017

• An integrated perspective on future of mobility, McKinsey, Oct 2016

• Global EV outlook 2017, IEA

• Digital Transformation of Industries Automotive Industry, World Economic Forum in collaboration
with Accenture, Jan 2016

• The emergence of an electric mobility trajectory, Dijk, Orsato and Kemp, 2012

• Electric Mobility – Rethinking the Car, Federal Ministry of Education and Research (BMBF), May
2013

• Shaping an emerging market for electric cars: How politics in France and Germany transform the
European automotive industry, Julia Hildermeier et Axel Villareal
Sources 2/2
• Electromobility in Germany: Vision 2020 and Beyond, Germany Trade and Invest, Feb 2015

• Perspektiven des Wirtschaftsstandorts Deutschland in Zeiten zunehmender Elektromobilität,
Wietschel, Martin et al.

• THE INNOVATION INTERFACE, Dr Stephen Hall, Prof Simon Shepherd, Dr Zia Wadud, University
of Leeds in collaboration with Future Cities Catapult

• Developing and Enacting Transformative Innovation Policy, Joanna Chataway, Chux Daniels, Laur
Kanger, Matias Ramirez, Johan Schot, Ed Steinmueller, June 2017

• The auto industry of the future – connected, electrified and led from Asia? , Webinar by Ducker
Worldwide, September 2017

• E-mobility Index, Roland Berger, Q2 2017

• EVvolumes.com, Next Greencar, IHS, New Energy Finance, Statistica, CAAM, EV-
sales.blogspot.com, IHS Markit, Wikipedia

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European electric cars

  • 1. Electric Cars in Europe Amit Agrawal Sustainable Mobility Management, TU Berlin 18.12.2017 1
  • 2. Agenda • What makes the car and its electrification an interesting topic? • What are the key changes relevant for the automotive industry in current times? • What is an electric car? Why and how has electrification become important? How have governments contributed to the same? • Are Electric cars viable for consumers? • How is the market being reshaped due to electrification in the medium term (5-10 year horizon)? How are industry and government action influencing developments in the market? • What could be a national near term perspective to these developments? What are the hinderances for German OEMs to go full steam on EVs? How do the multiple business models manifest at city/regional level? 2
  • 3. Image Source : http://www.fantasticmanmagazine.com 3
  • 4. The Electric car market has seen increased OEM action recently Source : Vygon Consulting 2010- 2011 Nissan Leaf Chevrolet Volt BMW Active E Smart Fortwo Tesla Roadster Mitsubishi i-MEV Fisker Karma CODA 2012 BYD e6 Ford Focus Electri Tesla Model S Toyota Prius Plug-in Hybrid Toyota Rav-4 EV Renault Zoe Honda Fit EV 2013 Fiat 500e Ford C- Max Energi PHEV Ford Fusion Energi PHEV Smart ED Chevrolet Spart EV Porsche Panamera S-E Cadillac ELR Aston Martin DB9 PHEV 2014 BMW i3 BMW i8 Cadillac ELR Honda Accord Plug-in Hybrid Mercedes B-Class ED Kia Soul EV VW e- Golf Porsche Cayenne S-E 2015 Tesla Model X Mercedes S550e BMW X5 xDrive 40e Hyundai Sonata PHV Mercedes S550 PHV Volvo XC90 Audi A3 E-tron 2016- 2018 Chevro let Bolt Volvo XC90 T8 Volvo S90 T8 Hyundai IONIQ BMW i5 Volkswage n Tiguan OTE PHEV Citroen E-Mehari Aston Martin Rapid E Tesla Model 3 Audi e- tron Qattro Nissan IDS Concept Apple Titan 9 16 24 32 39 51 4
  • 5. The OEM launch activity has been met with exponential off take in demand, though we are still at very early stages of the market Source : EVvolumes.com5
  • 6. Source : Calvin and Hobbes6
  • 7. Electric cars : We may like them or hate them but we cannot ignore them! Image Source : bizpyscho.com7
  • 8. What are some of the current mega trends relevant for the automotive industry? 8
  • 9. Increased urbanization along with transportation needs, shifting demographics, new emerging markets and sustainability concerns are challenging the existing automotive industry structure • Global Urbanized population is expected to increase from 54% in 2014 to 66% by 2050. Currently 64% of all travel is made within urban environments and the total amount of urban kilometers traveled is expected to triple by 2050 (Arthur D. Little and Futurelab) • Shifting global population dynamics: In 2013, people aged 55 to 64 became the age group most likely to buy a new car. At the same time close to 2 billion digital savvy consumers are exerting new demands on the industry • Re-alignment of geographical markets: By 2030, an estimated 3 billion people are expected to enter the middle class, mostly in emerging markets. 90% of overall shift to urban regions is also expected to happen in emerging markets. The emerging countries accounted for only 24% of the sales of all automobiles in the world, whereas they increased their share to more than 50% currently • Sustainability concerns : CO2 and NOX emission target reductions by EU and the National governments is creating pressure to improve the efficiency of the existing (ICE based) technologies or shift to new technologies Source : Accenture / World Economic Forum Study and others9
  • 10. Developments in Autonomous driving, Shared Mobility, Connectivity and Electrification can lead to multiple future scenarios for automotive industry Base case for study [ Disruption to personal mobility] Commercial introduction of robo-taxis covering up to 5 percent of passenger miles traveled by 2030 90 percent adoption rate of smartphone ride- sharing apps by 2030 and Tenfold growth in reliance on shared mobility, accounting for about 15 to 20 percent of vehicle miles traveled in dense cities by 2030 100 percent vehicle connectivity 50 percent of vehicles sold have cost-efficient electrified powertrains in 2030 10 Source : McKinsey Report : The automotive revolution is speeding up, Oct 2017
  • 11. The share of industry revenue from disruptive business models could increase from around 1% in 2016 to 25% in 2030 Source : McKinsey Report : The automotive revolution is speeding up, Oct 2017 11
  • 12. This digital transformation of the automotive ecosystem has allowed a number of nontraditional, technology- based companies to enter at various points along the automotive value chain Source : Accenture / WEF Analysis 201312
  • 13. So far…. Business models and industry structure of automotive industry is being disrupted by many forces and electrification is just one of them. Despite lack of initial enthusiasm OEMs have finally embraced electrification as inevitable and lot of it has to do with government action and industry reaction. The consumer viability of electric vehicle depends on where you are (which govt regime) and how (much) the car is used. Milage increase (driven by sharing) can boost economics of a EV and autonomy drive costs further down. The speed of EV adoption depends on development in technology, infrastructure, mobility patterns, global car manufacturing regime, electricity sector and energy and fuel prices. All of these are heavily influenced by policy and have regional variances. There appears to be increased alignment on EV targets between OEM strategy and Govt policies. Due to path dependence and requirements of transition, the OEM responses vary based on considerations for protection of balance sheet assets (lease books), orientation to markets (global or domestic), level of government support and technology leadership The e-mobility transition will be shaped city by city, it is affected by the infrastructures and transport systems of each city, and each city will find different e-mobility business models suitable to their needs. 13
  • 14. What goes inside an Electric car? Why have they become suddenly important? 14
  • 15. Major Types of EVs • BEV : uses chargeable batteries to power electric motors and motor controllers for propulsion • HEV : a hybrid electric vehicle (HEV) combines a conventional ICE propulsion system with an electric drive system. The presence of an electric power train increases fuel efficiency and performance levels. • PHEV : Have a externally rechargeable battery in addition to the HEV. PHEVs essentially operate as electric vehicles with an ICE back-up facility. 15
  • 16. Cost Walkthrough Nissan Note (ICE) to Nissan Leaf (BEV) 2015. PHEV economics can be less drastic due to lower battery size 16 Source : Vygon Consulting, Bernstein Research
  • 17. Batteries which constitute bulk of the cost also determine the range of the electric only car. Very few “cheap car” experiments in pure electric market. Source : Next Greencar17
  • 18. Electric cars have the potential to resolve at least some of negative externalities of ICE cars, while simultaneously preserving many social and economic benefits of the established automobility regime • Climate protection policies and targets included electric propulsion as a source of reduction of CO2. FCVs and (especially after2005) BEVs became an icon for zero-carbon vehicles and efficiency of energy use / reuse • The peak oil expectation and unpredictability of future prices has brought government attention to vehicles that avoid dependence on oil; • Thus, the economic recovery programmes in the US and Europe favoured clean technologies, including EVs giving a positive push to EV technology • Further, progress in battery technology spurred by consumer electronic sector, helped lower the costs of EVs accompanied by developments in drivetrains, light weight materials Source : The emergence of an electric mobility trajectory : 2011, Innoz and others18
  • 19. The domino effects of state intervention and industry reaction gave a new lease of life to EVs (Renault and France) • Inspired by the commercial success of Toyota Prius (a HEV), automotive OEMs were following a path of development with more efficient ICE engines and hybridisation. • The French state initiatives on demand and supply side to promote HEVs/BEVs presented similar opportunities to Renault and PSA. The state wanted to establish France as the leader of a new important sector • Renault group (which was lagging in hybrid R&D) took advantage of the crisis on 2008-09 and the subsequent state funding to align itself to a new BEV vision. Because of its alliance with Nissan (access to battery tech), creating demand for BEVs with public money was cheaper than catching up on hybrids. • PSA with its sunk investments in hybrid did not follow suit. This has now created a change in the industry order in France. • The OEM developments in France and policy developments in EU pushed German carmakers and govt to consider EVs by 2011/12. The German policy action went largely towards R&D investments in collaboration with and in a balanced fashion among existing private industry leaders Source : Shaping an emergent market for Electric Cars : How politics in France and Germany transform the European Automotive industry 19
  • 20. Frame 3 STI Policy Thinking is evident in government action on EVs 20 Explicitly Addressed Aspect. Expected Follow-through Aspect Frame 1 Frame 2 Frame 3 Source : Developing and Enacting Transformative Innovation Policy
  • 21. So far…. The automotive industry is being disrupted by many forces and e-mobility is just one of them. Despite lack of initial enthusiasm OEMs have finally embraced electrification as inevitable and lot of it has to do with government action and industry reaction. The consumer viability of electric vehicle depends on where you are (which govt regime) and how (much) the car is used. Milage increase (driven by sharing) can boost economics of a EV and autonomy drive costs further down. The speed of EV adoption depends on development in technology, infrastructure, mobility patterns, global car manufacturing regime, electricity sector and energy and fuel prices. All of these are heavily influenced by policy and have regional variances. There appears to be increased alignment on EV targets between OEM strategy and Govt policies. Due to path dependence and requirements of transition, the OEM responses vary based on considerations for protection of balance sheet assets (lease books), orientation to markets (global or domestic), level of government support and technology leadership The e-mobility transition will be shaped city by city, it is affected by the infrastructures and transport systems of each city, and each city will find different e-mobility business models suitable to their needs. 21
  • 22. Are Electric cars viable for consumers? 2017 Reality check : Enter Chevy Bolt and Tesla Model 3, BYD and of course Renault - Nissan 22
  • 23. Rapid decreases in battery prices have helped accelerate EV sales, especially in Europe and China. The effect of battery price decline is global in nature Source : IHS, Bloomberg, New Energy Finance 23
  • 24. However for ICE cars, Gasoline pump prices in selected countries worldwide show high variance Source : Statistica24 Pump prices as of 2nd quarter 2017 (in U.S. dollars per gallon)
  • 25. So do the electricity prices Source : Statistica Global electricity prices 2017 $ / Per KwH
  • 26. Total cost of private ownership of an EV over lifetime is heavily influenced by Battery cost and energy prices ( along with fuel taxes) Source : Vygon Consulting Mar 2016 5 year TCO Analysis with Nissan Leaf and Nissan Versa Note in US Markets with private ownership milage (~ 10,000-12,000 kms/annum ) 26
  • 27. Based on high retail fuel prices, even if subsidies are ignored, EVs are set to achieve cost of ownership parity with ICE cars in medium term on private car usage miles Source : UBS Analysis UBS Evidence Lab Electric Car Teardown May 201727
  • 28. As the milage per annum of car increases, the competitiveness of EV gets better. This allows for a nice blending with B2B shared mobility EV fleets Source : McKinsey Report : An integrated perspective on future of mobility Oct 2016 28
  • 29. Autonomous driving with shared mobility improve the case for electrification. For every 10 percent increase in shared mobility as a proportion of the total, the cumulative number of electric vehicles sold in 2015–30 could increase by up to 5 percent. Source : McKinsey Report : An integrated perspective on future of mobility Oct 2016 29
  • 30. The user context stretch is being provided by other trends like shared and autonomous mobility. BEVs have better economics than ICEs in such future user context Source : The emergence of an electric mobility trajectory : 2011, others30
  • 31. Electric cars are likely to proliferate within both car sharing and individual ownership user modes supported by multi-modality Source : The emergence of an electric mobility trajectory, McKinsey Integrated perspective on the future of Mobility, Oct 2016 31
  • 32. So far…. The automotive industry is being disrupted by many forces and e-mobility is just one of them. Despite lack of initial enthusiasm OEMs have finally embraced electrification as inevitable and lot of it has to do with government action and industry reaction. The consumer viability of electric vehicle depends on where you are (which govt regime) and how (much) the car is used. Milage increase (driven by sharing) can boost economics of a EV and autonomy drive costs further down. The speed of EV adoption depends on development in technology, infrastructure, mobility patterns, global car manufacturing regime, electricity sector and energy and fuel prices. All of these are heavily influenced by policy and have regional variances. There appears to be increased alignment on EV targets between OEM strategy and Govt policies. Due to path dependence and requirements of transition, the OEM responses vary based on considerations for protection of balance sheet assets (lease books), orientation to markets (global or domestic), level of government support and technology leadership The e-mobility transition will be shaped city by city, it is affected by the infrastructures and transport systems of each city, and each city will find different e-mobility business models suitable to their needs. 32
  • 33. How is the market being reshaped due to electrification in the medium term (5-10 year horizon)? How are industry and government action influencing developments in the market? 33
  • 34. The existing national order in the EV industry is changing very quickly and China has clearly entered the automotive club through EVs 34 Source : Roland Berger E-mobility Index Q2 2017
  • 35. The Chinese EV march : Effect of low motorisation or something more? Source : McKinsey, CAAM, EV-sales.blogspot.com, IHS Markit March 2017) 35 New Vehicle Registrations (‘000) PHEV BEV
  • 36. The Chinese development is supported by multi-pronged government action, unlike other markets where Govt action is less invasive Source : Webinar by Ducker Worldwide : The auto industry of the future – connected, electrified and led from Asia? September 2017 Incentives and Domestic Market Preferences in China • Incentives of up to 23% for mid-size EVs, free license plates for EV car owners • Subsidy only for battery manufacturers over 8 GWh capacity (only BYD and CATL meet the criteria) • Only Chinese companies allowed to supply batteries, subsidy available only from buying batteries from approved makers • Subsidies for foreign companies only on JV with Chinese companies 36
  • 37. Denmark and Norway offer some of the highest electric vehicle purchase subsidies. This support along with higher retail fuel prices in these countries make EVs an increasingly attractive consumer proposition. Source : McKinsey Study37
  • 38. Such a regulatory driven approach can forward the era of EVs by at least 5-7 years as compared to market forces of innovation and imitation as shown by this analysis of Norway markets. Source : McKinsey Integrated perspective on the future of Mobility, Oct 201638
  • 39. OEMs are warming up to EVs and have made significant recent announcements Source : Global EV outlook 2017, IEA 39
  • 40. As countries are imposing ultimatums on EVs. The level of ambition resulting from the OEM announcements assessed shows a fairly good alignment with country targets to 2020. 40 Source : Global EV outlook 2017, IEA
  • 41. So far…. The automotive industry is being disrupted by many forces and e-mobility is just one of them. Despite lack of initial enthusiasm OEMs have finally embraced electrification as inevitable and lot of it has to do with government action and industry reaction. The consumer viability of electric vehicle depends on where you are (which govt regime) and how (much) the car is used It will keep improving further with falling battery prices and/or rising fuel prices. The speed of EV adoption depends on development in technology, infrastructure, mobility patterns, global car manufacturing regime, electricity sector and energy and fuel prices. All of these are heavily influenced by policy and have regional variances. There appears to be increased alignment on EV targets between OEM strategy and Govt policies. Due to path dependence and requirements of transition, the OEM responses vary based on considerations for protection of balance sheet assets (lease books), orientation to markets (global or domestic), level of government support and technology leadership The e-mobility transition will be shaped city by city, it is affected by the infrastructures and transport systems of each city, and each city will find different e-mobility business models suitable to their needs. 41
  • 42. What are the hinderances for German OEMs to go full steam on EVs? How much do local factors affect success of EVs? 42
  • 43. Car Production and Consumption - Worldwide and Germany Worldwide spread - Production All Cars 2015 (in millions) Who Where DE RoW Total DE 4,7 1 5,7 RoW 8,4 54,5 62,9 Total 13,1 55,5 68,6 Worldwide spread - Consumption All Cars 2015 (in millions) Who Where DE RoW Total DE 1,9 1,3 3,2 World 10,7 53,4 64,1 Total 12,6 54,7 67,3
  • 44. The automotive industry is at the heart of German economy. EVs require Germany’s automotive industry to re-establish their pole position on the global market which is being accelerated by regulatory push • According to Germany’s Federal Statistical Office, more than one fifth (in excess of 317 billion euros) of Germany’s total industrial turnover in 2010 was generated by the automotive industry. • Almost one in seven jobs are directly or indirectly linked to vehicle making, be it in planning, component supply, produc-tion or service provision. • German manufacturers sell the lion’s share of their products (more than 60%) abroad. In 2011, the industry reported international sales revenues of approximately 223 billion euros. A majority of trade surplus (~ 300 billion) for Germany comes from automotive and transport industry • More than a third of all industrial expenditure on research and development takes place in the automotive sector 44
  • 45. However, an accelerated shift to EVs implies residual value risk on existing lease books for many OEMs. At the same time threat of new players warrants urgency of market action 45 Source : UBS estimates Lease book size by OEM – (€bn)
  • 46. PHEVs versus BEVs Source : Wietschel, Martin et al. Perspektiven des Wirtschaftsstandorts Deutschland in Zeiten zunehmender Elektromobilität 46
  • 47. The e-mobility transition will be shaped city by city, it is affected by the infrastructures and transport systems of each city, and each city will find different e-mobility business models suitable to their needs. Source : Global EV outlook 2017, IEA 47
  • 48. Sharing models (e.g Drivenow) are yet to adopt EVs exclusively (perhaps a result of sub-optimal TCO parity and infrastructure) Drive Now number of vehicles and Type City Country Vehicles Type Start date Lisbon Portugal 210 Gasoline, Diesel, Electric September 2017 Helsinki Finland 150 Gasoline, Electric May 2017 Milan Italy 500 Gasoline & Electric October 2016 Brussels Belgium 320 Gasoline, Electric July 2016 Stockholm Sweden 400 Gasoline, Diesel, Electric October 2015 Copenhagen Denmark 400 Electric September 2015 London United Kingdom 310 Gasoline, Diesel, Electric December 2014 Vienna Austria 700 Gasoline, Diesel, Electric October 2014 Hamburg Germany 600 Gasoline, Diesel, Electric October 2013 Cologne Germany 310 Gasoline, Diesel, Electric September 2012 Düsseldorf Germany 310 Gasoline, Diesel, Electric January 2012 Berlin Germany 1400 Gasoline, Diesel, Electric September 2011 Munich Germany 750 Gasoline, Diesel, Electric June 2011 Source : Wikipedia
  • 49. In Conclusion The automotive industry is being disrupted by many forces and e-mobility is just one of them. Despite lack of initial enthusiasm OEMs have finally embraced electrification as inevitable and lot of it has to do with government action and industry reaction. The consumer viability of electric vehicle depends on where you are (which govt regime) and how (much) the car is used It will keep improving further with falling battery prices and/or rising fuel prices. The speed of EV adoption depends on development in technology, infrastructure, mobility patterns, global car manufacturing regime, electricity sector and energy and fuel prices. All of these are heavily influenced by policy and have regional variances. The state action in support of electrification can bring forward the adoption curve by about 5-7 years. Due to path dependence and requirements of transition, large OEM responses vary based on considerations for protection of balance sheet assets (lease books), orientation to markets (global or domestic), level of government support and technology leadership. The e-mobility transition will be shaped city by city, it is affected by the infrastructures and transport systems of each city, and each city will find different e-mobility business models suitable to their needs. 49
  • 50. Sources : 1/2 • The automotive revolution is speeding up, McKinsey, Oct 2017 • EV vs ICE Vehicles : When to expect robust competition, VYGON Consulting March 2016 • Electric Car Teardown – Disruption Ahead?, UBS Evidence Lab, May 2017 • An integrated perspective on future of mobility, McKinsey, Oct 2016 • Global EV outlook 2017, IEA • Digital Transformation of Industries Automotive Industry, World Economic Forum in collaboration with Accenture, Jan 2016 • The emergence of an electric mobility trajectory, Dijk, Orsato and Kemp, 2012 • Electric Mobility – Rethinking the Car, Federal Ministry of Education and Research (BMBF), May 2013 • Shaping an emerging market for electric cars: How politics in France and Germany transform the European automotive industry, Julia Hildermeier et Axel Villareal
  • 51. Sources 2/2 • Electromobility in Germany: Vision 2020 and Beyond, Germany Trade and Invest, Feb 2015 • Perspektiven des Wirtschaftsstandorts Deutschland in Zeiten zunehmender Elektromobilität, Wietschel, Martin et al. • THE INNOVATION INTERFACE, Dr Stephen Hall, Prof Simon Shepherd, Dr Zia Wadud, University of Leeds in collaboration with Future Cities Catapult • Developing and Enacting Transformative Innovation Policy, Joanna Chataway, Chux Daniels, Laur Kanger, Matias Ramirez, Johan Schot, Ed Steinmueller, June 2017 • The auto industry of the future – connected, electrified and led from Asia? , Webinar by Ducker Worldwide, September 2017 • E-mobility Index, Roland Berger, Q2 2017 • EVvolumes.com, Next Greencar, IHS, New Energy Finance, Statistica, CAAM, EV- sales.blogspot.com, IHS Markit, Wikipedia