Compiled / Zhu Lin
Editor/ Qian Yaguang
Design / Zhao Haoran
Source/Forbes, by Neil Winton
A report published by Jeffery University says automakers overestimate the market for electric vehicles and will waste millions of dollars as they will eventually be forced to resume plans to abandon the internal combustion engine.
But that's still the view of a minority, with front-line forecasters insisting that the electric revolution will continue, especially in Europe, where the internal combustion engine is running out of time.
Auto prediction agency LMC Automotive also predicts that by 2030, the proportion of pure electric vehicle sales in Europe will increase from 9.6% in 2021 to 61.2%, while schmidt Automotive Research believes that by 2030, 60% of cars and SUVs sold in Western Europe will be pure electric vehicles.
The report was written by Michael M. Written by Michael C. Lynch, president of Strategic Energy & Economic Research, headquartered in Amherst, Massachusetts. The report predicts that by 2030, global pure electric vehicle sales will be close to the lower of the International Energy Agency's (IEA) three scenario forecasts (20%/40%/60%), or 20%.
The report said the widespread praise for electric vehicle performance was exaggerated, with little chance of achieving large-scale sales forecasts for 2030. Improvements in battery technology, lower prices, and required infrastructure improvements are unlikely to happen.
Public opinion is dominated by EV enthusiasts who exaggerate the advantages of electric vehicles and ignore their drawbacks (including higher prices). The environmental advantages of pure electric vehicles compared to the power of internal combustion engines are often almost non-existent.
The industry's obsession with mobilizing large amounts of investment to try to make all-electric vehicles perform on par with fuel vehicles will fail. Because long-distance, high-speed travel is beyond the capacity of pure electric vehicles.
Instead of this blind path is a realistic view of the advantages of electric vehicles: vehicles that meet the needs of daily local commuting, school and shopping have cheaper, lower-capacity batteries, because demand for electric vehicles should come from the stimulus of utilities, not from subsidies from taxpayers.
The dangers of investing
The massive investment by automakers is in jeopardy.
"$500 billion is in danger," the report said. It is estimated that over the next 5 to 10 years, automakers have committed to investing more than $500 billion in pure electric vehicles and batteries. ”
"German automakers plan to reach $185 billion by 2030 and China more than $100 billion, while Ford and GM intend to spend $60 billion by 2025. Japan's major automakers have only pledged $40 billion, perhaps because they are promoting both gasoline-electric hybrid vehicles and hydrogen fuel cell vehicles as more promising alternatives. ”
Ford motor vehicles just announced that it will launch 3 new pure electric vehicles and 4 electric vans in Europe by 2024. Ford and other major automakers, including Renault, Peugeot and Volvo, have announced that they will be fully electrified in Europe by 2030. Volkswagen said 70 percent of its European sales will be pure electric vehicles by 2030, with Mercedes hoping to be fully electrified by then, while Jaguar says it will do so by 2025.
EU legislation is very strict about CO2 emissions from internal combustion engine vehicles, so pure electric vehicles will be the only option, which has forced Europe to accept the move of an all-electric vehicle lineup. In turn, the rapid growth in electric vehicle sales has been driven by huge government subsidies.
According to Schmidt Automotive Research, by 2030, the share of pure electric vehicle sales in Western Europe will reach 60%, or 8.4 million. In 2020, sales of pure electric vehicles more than doubled to just under 750,000 units, and in 2021 they jumped again, with sales of 1.143 million units, accounting for 10.3% of the market.
This represents a rare and high-priced market where car owners are either very wealthy or those who are paid for by their employers. Some manufacturers worry that as entry-level fuel vehicles are squeezed out of the market, people with ordinary incomes will be forced to abandon their cars and switch to public transportation. For mainstream automakers, who are accustomed to selling small profits and selling high, this has a ominous impact on their future.
Stellantis CEO Carlos Tavares warned in 2021 that in this case, the automaker's financial situation will be hit hard.
"In the next 5 years, we have to increase production efficiency by 10% per year, and this industry usually increases production efficiency by 2-3% per year. The future will tell us who will be able to digest these productivity gains and who will fail. We are pushing this industry to the limit. Tang Weishi said.
Stellantis, formed by the merger of PSA Group and FCA Group in 2021, includes brands such as Peugeot, Citroën, Opel, Vauxhall, Fiat, Chrysler and Alfa Romeo, making it the second largest automotive group in Europe after Volkswagen Group.
Tang Weishi said: "I can't imagine a modern society without the freedom to move, because this is only the business of the rich, and others can only use public transportation." ”
He also complained that regulations on carbon dioxide emissions were political and not determined by industry. He said it would be better if a less radical approach was taken to deal with the problem and gradually replace fuel cars with electric vehicles.
"I think we could have been more productive with multiple technologies, not just one." Tang Weishi said.
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Some manufacturers worry that as entry-level fuel vehicles are squeezed out of the market, people with ordinary incomes will be forced to abandon their cars and switch to public transportation. This has an ominous impact on their future.
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Different insights
Jeffery's report cites the International Energy Agency's projections for global pure electric market penetration, namely 20%, 40%, and 60 percent by 2030, and compares it to "the number of automakers planning to reach 50% or 100% of pure electric vehicle sales by 2030, which is clearly unrealistic and needs to assume a massive increase in government support and/or major technological breakthroughs." Both are possible, but neither is."
LMC Automotive expects global pure electric vehicle sales to reach 30.7 million units in 2030, accounting for 33.2% of the market, up from 6.8% in 2021. Sales in China will reach 38.3% (12.2%) in 2030, while the US will lag behind at 35% (2.8%).
Al Bedwell, an analyst at LMC Automotive, said pure electric cars would win, largely because fuel cars would be banned by the government.
"Over time, in Europe and China, the sale of fuel cars will not be allowed, so people have no other choice. If pure electric vehicles are still much more expensive than fuel vehicles, what you might get is a shrinking market, but I don't think the transition to zero-emission vehicles (mostly pure electric vehicles) will be interrupted unless the net-zero carbon target is abandoned, which seems unlikely. Bedwell said.
Matt Schmidt, an automotive analyst who publishes the monthly European Electric Cars Flash Report, believes the idea that ambitious goals will not be achieved is largely from the U.S. perspective.
"The momentum in Europe to develop electric vehicles is quite resolute. Manufacturers are rolling out more pure electric vehicles on dedicated platforms aimed at economies of scale and meeting new carbon emission standards that will be implemented starting in 2025. ”
"This momentum will increase further from 2027 onwards, when the EU imposes stricter regulations on new models, and the profits of electric vehicles will likely catch up with fuel vehicles and may reach a critical point where the share of electric vehicles in new car sales in most European countries will approach 50%."
"From 2028 onwards, we will see manufacturers withdraw from the competition for fuel vehicles and instead switch to pure electric vehicles." Schmidt said.
But Jeffery's report argues that this prediction will not succeed and automakers will be forced to resume production of fuel vehicles.
"Ultimately, many automakers will have to redesign their auto production lines and recalibrate their factories to accommodate a larger than expected share of fuel vehicles in their sales."
"In the long run, this could translate into significant financial losses and higher costs for consumers." The energy transition is likely to continue and be very successful, but with more emphasis on decarbonised power generation, while the much-hyped electric vehicle revolution could be another lesson for irrational exuberance. ”
The report says that for all-electric vehicles to succeed at the level assumed by governments and manufacturers, they need to go beyond the level of market segments that luxury cars have already reached.
As for the development of batteries, the assumption that prices will inevitably fall to a generally acceptable level has recently come under pressure with the collapse of supply chains and the unexpected involvement of political events such as the Russo-Ukrainian War.
The report also disputes the claim that pure electric vehicles are relatively clean, noting that China dominates electric vehicle manufacturing but is "heavily dependent on coal."
Wouldn't it be more realistic for the automotive industry to acknowledge the advantages and disadvantages of electric vehicles and focus on developing small, pure electric vehicles with smaller battery capacities?
Lynch said in an emailed exchange: "I basically agree with that. I think the physics of energy storage means that pure electric cars will be 'expensive toys for the rich kids.'" ”
"The weakness of a pure electric car has a much bigger impact on long-distance travel, and if it can get cheaper, I also think it will be a good cheap commuter car." It's a bit like a microwave, which is very convenient but not suitable for heating everything. But if microwave ovens are 50% more expensive than conventional ovens, their market share will be much lower. Lynch said.
The energy transition is likely to continue and be very successful, but with more emphasis on decarbonised power generation, while the much-hyped electric vehicle revolution could be another lesson for irrational exuberance.
This article was originally produced by Automotive Business Review
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