As electric vehicle market evolves, will the entire industry need a rethink?

electric-vehicle-parking

Combined with new mobility services and integration into smart grids, the electric vehicle is a pivotal element of the energy transition. The electric car market is only getting out of second gear but as it does so, its entire ecosystem could need a rethink, with potential impacts on multiple sectors.

Three recent studies have highlighted the rise of the electric vehicles in the next two decades.

  • UBS published a study in July which shows that the full cost of holding an electric vehicle will be lower than that of a petrol vehicle by 2018. Although concerns for autonomy remain high, UBS estimates that electric vehicles will have a market share of 14.2% by 2025 from 9% currently. The UBS study also highlighted estimates published in May 2017 by Mineral Intelligence predicting a drop in the cost of storing an electric kilowatt-hour from $450 today to $100 in 2025.
  • Supported by the lower prices and higher performance of lithium batteries, ING estimates that electric vehicles with a range of 400 kilometers will be cheaper in 2024 than vehicles operating on fuel oil derivatives. ING is therefore looking for an even more radical transformation of the automobile market, going as far as projecting a total market capture by electric vehicles in 2035.
  • The recent announcement by the Chinese government to impose a minimum quota of 10% of electric vehicles by 2019 will triple the worldwide market. The complete upheaval of the sector will put pressure on the current car manufacturers but it could go well beyond.

In the future, vehicle designers anxious to meet the needs of Generation Y could turn to ultra-customized vehicles far exceeding the current adaptations of urban mobility. The engine train of an electric vehicle, having far fewer parts than a thermal engine, is much simpler to produce. It is therefore likely that new manufacturers emerge. Dyson, for example, has just announced that it is working to release an electric vehicle by 2020. It is also possible that old brands reappear, as they will offer an opportunity to highlight the features of relaxation, sports or luxury. Given the considerable turnover potential for electricity producers and distributors, we may discover a new breed of car manufacturers altogether.

The surge in sales of electric vehicles is expected to coincide with that of the 3D printers which allow for the production of low cost pieces in small batches. This combination of technologies should favor the development of vehicles dedicated to niche markets. Imagine  vehicles designed specifically for windsurfers or cello fans! Think of it as an advanced version of what manufacturers currently offer with their extensive color ranges. Tired of waiting for manufacturers to meet their needs, some end customers could eventually launch their own vehicle range as was recently the case with German Deutsche Post.

End-of-life of vehicles will also be heavily impacted. The residual value of an electric vehicle  could be significantly greater than that of an oil vehicle. The vehicle recycling market could therefore take off, representing a good business opportunity for current recycling companies.

Finally, electricity distribution companies will have an enormous opportunity in the years to come. Europe had less than 100,000 public charging stations at the end of 2016. If the forecasts of UBS and ING turn out to be correct, more than 4 million charging stations will have to be connected to the electricity grid every year. These figures represent a massive opportunity for electricity grid operators to essentially duplicate the world’s existing network of gas stations and adapt their business models to include multi-service reception centers.

If we add to these developments the arrival of auto-sharing programs and the probable emergence of autonomous vehicles, it becomes clear that the electrification of vehicles is much more than a simple technological change.

It’s a revolution.


Jean François Dauphin is an international energy expert at DXC.

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Comments

  1. Fred Parkinson says:

    Great article, Francois – thanks. Technology may increase the range and decrease the initial cost of electric vehicles going forward, but the lack of charging infrastructure is already a limiting factor.
    Converting existing fossil fuel stations to handle electric vehicles also requires thought. Refueling a ICE vehicle takes only a couple of minutes, but electric vehicles need one or two orders of magnitude more. Firstly that impacts the layout of the station, as vehicles cannot queue in the same way that they do for liquid fuel pumps. Secondly, the driver and passengers will need to be occupied while waiting. This may be possible with large motorway filling stations, but does not fit easily into the layout of the majority of small rural or urban fuel retailers.
    Some supermarket chains are beginning to realize that they have a market in converting some of their parking bays to charge points, as this attracts customers who will have time on their hands for shopping.
    Advances in supercapacitor technology may achieve improved charge-mass ratios, and also improved charging times, but then the issue becomes the current carrying capacity of the infrastructure, especially for charge points in homes. Although the need for quick charging at home may be limited, once electric vehicles become the norm, the pattern of daily electricity use will shift to more demand in the evenings, which is also when solar energy is unavailable. This will drive a demand for intermediate storage and a need for novel electricity tariffs.

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