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The Mobility Battleground Moves Toward Vehicle Electrification 2019

DuckerFrontier, May 9, 2019

The move towards vehicle electrification is gaining traction at an unprecedented scale, as new investment pours in and the race toward $100/kWh battery offerings intensifies. Despite the notable increase in global launch activity of mass market EVs, the move to electrification comes with its own set of challenges and road-blocks. However, OEM strategic plans, along with just the right amount of regulatory push, makes the road ahead critical to monitor closely. According to DuckerFrontier’s analysis, over 35% of new vehicles produced and sold in 2030 will have some form of battery-based powertrain.

Advancements in battery technology, software based “connectivity” development, charging infrastructure and overall enhanced customer experience enables a rapid program planning shift. Thus, the trend is moving away from pure ICE based vehicles to the emergence of new class of “mobility” based suppliers, while also stress testing traditional suppliers with both their capabilities as well as their patience.

Will the “mass market” adopt these new offerings?  What new revenue opportunities will emerge across the value chain including Body & Chassis, Powertrain & Battery, Electronics, Interior & Safety?  Will manufacturers prefer open source operating systems and what new monetization pathways will emerge for indirect providers? To what extent will traditional OEMs vertically integrate software development? In contrast, will they continue to rely on their supplier partners for hardware, software and system integration? These are just some of the important areas being monitored by DuckerFrontier’s global mobility analyst team.

Additional Trends and Strategic Considerations:
  • ICE based vehicles still remain dominant in the 15-20 year horizon, especially for global markets that are still emerging
  • China and Europe will lead with sheer volume of vehicle introductions in the next decade. This will underpin how the market reacts to and accepts electrification
  • The International Energy Agency predicts that over 125 million EVs will be on the road globally by 2030
  • Traditional automotive suppliers are increasingly challenged with meeting stringent and rapidly evolving needs from ‘newer’ automotive OEMs
  • Battery technology, input materials, and related volume based cost reduction for $/KwH may limit the forecast outlook. Therefore, accelerating EV productions and sales requires significant technological breakthrough.
  • Asian suppliers will control the majority of the market for EV batteries worldwide (e.g. CATL, LG, BYD, Panasonic, Samsung, AESC, etc.)
Vehicle Electrification Infrastructure Motivations Vary By Region:

Motivations of EV growth varies among countries. The EU and China have comparatively fewer barriers for EV growth as compared to the US. In spite of the push for automotive electrification, the unintended consequences of generating electricity must also be part of the solution for CO2 reduction.

  • US: low oil prices in the US are not helpful for the development and sale of EV’s. However, as OEMs perfect their strategy of meeting their CO2 goals, R&D and investments are continuing on an upward trajectory. Major announcements and corresponding investments from GM and Ford demonstrate commitment.
  • Europe: in the near-term, PHEVs will be “the” replacement for diesels making it the biggest market for PHEVs. CO2 regulations are likely to accelerate the push for BEVs in Europe. By 2030 in the EU, 35% of new car sales mix should be EV’s.
  • China: the long-term view of Chinese government has made the EV market thrive in China.
    • EVs made 1.2% of total sales and production in China (2016)
    • China accounts for more than 40% of EVs sold internationally
    • China has several startup EV companies at varying scales of readiness to enter the market over the next 2-5 years and beyond (NIO, Leading Ideal ONE, etc.)

For an in-depth look at the impact of vehicle electrification on the industry going forward, fill out the form below to download DuckerFrontier’s market insights, and be added to our global “mobility” focused community to receive future insights:

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