A quick overview for those looking forward to it – by the InterSearch Worldwide Automotive Practice Group
In 2020, electric vehicles sales worldwide showed a 43% increase compared to 2019 – while at the same time the total light vehicle market declined by 14% mainly due to the Covid19 pandemy. EV’s overall market share increased from 2.5 % to 4.2 % during the same period. And Europe surpassed China for the first time since 2015: Europe’s EV share increased from 3.3% in 2019 to 10.2% in 2020 (EU and EFTA countries, including the UK), while China only increased from 5.1% to 5.5% over the same period. Having a look into the future, BloombergNEF predict that by 2040, more than half of cars sold will be electric, corresponding to one-third of the global car fleet. Furthermore, major manufacturers such as VW, GM, Volvo and many others have committed themselves to electric drives for the next few years. This clearly shows that the global trend toward e-mobility can no longer be stopped, although the situation is of course different from country to country: The lower developed a national infrastructure and the less prosperity of a population, the less e-mobility will be an issue. In any case, the question arises as to whether all the necessary prerequisites for such rapid growth are actually in place or if we will soon be confronted with a tight bottleneck situation in terms of resources and infrastructure.
EV Batteries: Asia leading the Market
Regarding the vehicle itself, the battery is the crucial element, obviously: Approximately 40 percent of the total value added in the production is accounted for by the battery. And at the same time, it is the most vulnerable part in terms of resources and production volumes. Estimations are that the world will need 1,600 gigawatt hours (GWh) of battery capacity p.a. in 2030 to have enough batteries for the growing number of electric cars (by comparison: In 2017, the production capacity for battery cells was only 70 GWh). As of today, Asian manufacturers command an 85% share of the global lithium-ion battery market which means a rather dangerous dependence for manufacturers elsewhere in the world.
Battery Cell Production in Europe
Europe e.g. only has a 3% share of the global lithium-ion battery market – but that’s about to change within the next couple of years. Following the strategy of most European car manufacturers to concentrate on electric drives in the near and further future, there are numerous plans to strongly increase battery cell production in Europe. Gigafactories will be erected e.g. by Northvolt in Sweden; SVolt, CATL and Tesla in Germany, and ACC in France & Germany. Some OEMs are entering cooperations with battery cell manufacturers for their own supply (such as Volkswagen with Northvolt in Germany). Suppliers are in the mix, too, developing new materials, including highly dense materials for lithium-ion battery cathodes, such as Umicore or Johnson Matthey with their plans for factories in Poland.
These endeavours are based on broad political support: The European Commission’s aim is to establish a competitive, innovative and sustainable battery value chain in Europe with a special focus in Germany. 2019, the first project was started with a subsidies volume of 3.2 billion Euros. End of January 2021, the second major project was approved which includes a total of 53 companies from 13 member states. So, it is to be expected that in the upcoming years, Europe will become competitive regarding battery cell production. However, at the same time South East Asia will most probably not lose their lead in the market.
Apart from resources and production capacities the most important issue is, of course, charging options. As of today, the purchase of an EV in most countries of the world only makes sense if you have secure access to a charging station. In 2019, there were about 7.3 million chargers worldwide, of which 89% were private stations. As might be expected, the situation varies greatly from country to country. China currently has the world’s largest EV charging infrastructure network. As of end-2019, there were a total of 1,144,000 charging ports (42% of which were public) with a strong concentration in the major cities. The total number of charging points available across the EU – approx. 200,000, of which only 14% are suitable for fast charging – still falls far short of what is required; at least 2.8 million charging points will be needed by 2030.
And latest when crossing borders, you are faced with the challenge of finding adequate charging infrastructure, as even within Europe, differences are enormous: Four countries that can be deemed as among the richest ones – the Netherlands, Germany, France and the UK – account for more than 75% of all charging points, while in the Czech Republic e.g. there are only 808 public charging points in total. Public versus private charging is mainly a question of time: While you can charge your car overnight at your own premises easily and without pressure, being on the road you are dependent of the provided infrastructure – meaning that if only a standard station is available where you need charging, it might take up to 4 hours until con can continue your journey. And still you might be glad to have found one at all.
So where’s the bottleneck?
As Widukind Baier, Partner at InterSearch Personalberatung in Germany and Global Head of Automotive Practice Group at InterSearch worldwide, states:
“While in terms of battery cell production the future development might well hold the pace with the EV trend, it is safe to say that charging infrastructure is and will continue to be one of the major challenges of the transition to electric transportation – not least because it is one of the key decision criteria for the purchase of an EV. Thus, concerns whether enough attention is being paid to this area are more than legitimate, since the growth to date has not lived up with the fast-growing EV market figures. Furthermore, it should not be forgotten that not all countries in the world are able to follow this trend – thus the combustion engine certainly won’t die out in the near future.”
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