Electric Car Sales Set For Solid Expansion.
But Long Range Forecasts Look Tenuous-Delphi Technologies.
“Does diesel come back strong? No. But commercial vehicles are a totally different story”
Electric car sales growth looks solid and predictable towards the middle of the next decade, but projections past 2025 are more dangerous, threatened by possible changes in government regulation and blindsiding new technology.
The future of diesel in Europe looks bleak for private cars, although the commercial sector has plenty of life in it, according to Delphi Technologies Chief Technology Officer Mary Gustanski in an interview. There might be some life yet in fuel cells.
Delphi Technologies Plc, which provides advanced propulsion systems to global vehicle makers, was spun off from Delphi at the end of last year and is now quoted on the New York Stock Exchange and headquartered in London.
Electric car sales have been steadily growing and will be accelerating seriously towards the middle of the next decade, although predictions of actual outcomes vary widely. Many consumers remained to be convinced that an electric vehicle, often twice as expensive as a similarly sized traditional internal combustion powered one, is worth buying. Anxiety about range, insufficient charging networks, battery longevity and trade in values crimp demand, which is often only there at all because of big government subsidies.
Nevertheless the global auto industry is falling over itself to provide battery only and gasoline electric hybrids. Last week John Hoffecker, global vice chairman at AlixPartners, said billions of dollars may be wasted.
“A pile-up of epic proportions awaits this industry as hundreds of players are spending hundreds of billions of dollars on electric and autonomous technologies as they rush to stake a claim on the biggest change to hit this industry in a hundred years. The winners in this free-for-all will be those who have the right strategies and, equally important, execute on those strategies to their fullest potential—as billions will be lost by many,” Hoffecker said.
Ambitious or foolhardy?
Meanwhile ambitious, or foolhardy, Volkswagen has said 25% of its sales will be all-electric by 2025. BMW reckons between 15 and 25% of its sales by 2025 will be electric (BEV) and plug-in hybrid electric vehicles (PHEVs). Mercedes’ ambitions mirror this. VW and its brands like Porsche, Audi and Bentley has allocated more than $38 billion for BEVs, autonomous cars and mobility services by 2022. Mercedes has a $10.4 billion BEV research program.
But according to forecasts late last year by IHS Markit, combined BEV and plug-in hybrid electric (PHEV) sales will only reach 15% of the big three markets of the North America, Europe and China market by 2025, constrained by cell supply chain, infrastructure and, in the case of the U.S., the prospect of a long term low fuel price and a liking for large SUVs. IHS Market said combined BEV and PHEV sales currently amount to under 2% of those 3 markets, will rise to 7% by 2020, 15% by 2025 and over 25% by 2030.
Other predictions are more bullish. On Wednesday, investment bank Morgan Stanley raised its forecast slightly for global electric car sales alone to 9.7% in 2025 from its previous forecast of 9.2%, but bravely projected 26% for 2030 (up from 18%) and 68% in 2040 (50%).
Delphi Technologies’ Gustanski thinks this is a bit dangerous.
“In the period up to 2025 you can predict pretty accurately what demand will be. We can see what manufacturers have planned as they are forced to change their mix in Europe away from diesels to meet CO2 regulations,” Gustanski said.
This will be led by electric-only, as well as gasoline-electric hybrids, plug-in hybrids and mild hybrids.
“In Europe there are big penalties if you don’t meet the rules – fines (on individual companies) could hit over billion dollars in penalties a year. Will this (electric) growth continue? I don’t know. When you look at the trends you need more electric and electrified vehicles but you can’t rule out the possibility of a big technical breakthrough so you could meet targets without them. But in the near term it (electric and electrified) is going to happen,” Gustanski said.
But after 2025, it’s harder to say.
“Near term – up to 2021 and 2022 – we will see many more electric and electrified vehicles being sold, the manufacturers are all geared up to do this. They’ve invested and will make sure they sell them. But for 2025 and beyond we are going to have to all watch because that could change. Right now it looks like we’re going to see more and more electric vehicles. It would take major shifts in regulations or a major, major breakthrough in alternative technologies in which I’ve not even heard rumblings about so it’s unlikely we’ll see anything in the next 10 years. Could it? Sure. Will it? Probably not likely by 2025 or 2030,” Gustanski said.
Diesel’s decline in Europe, spurred by the Volkswagen dieselgate scandal, seems assured at least in smaller cars with engines of less than 2 litres. It’s too expensive to clean up smaller vehicles, even though the technology is available. The premium market will allow some diesels as higher prices make it possible to face the higher costs of cleaner engines.
But commercial vehicles will provide a lifeline for diesel.
“Does diesel come back strong? No. But commercial vehicles are a totally different story, but even here there will be liquefied natural gas and more electrified vehicles and hybrids to avoid city centre bans. Diesel stays around for a while, but mainly in commercial vehicles,” Gustanski said.
German environmental groups and politicians are gearing up to ban diesels from city centres because of the risks to health. This movement is also going to spread right across Europe.
Up until 5 years ago, fuel cells were vying with batteries as the key to future vehicle power. Fuel cells seem to have slipped out of the race, although some manufacturers – notably Hyundai of Korea, Honda of Japan and BMW – still develop the technology.
Is there scope for a fuel cell comeback after say 2025?
“Fuel cells haven’t taken off because you need pure hydrogen, so there’s an infrastructure issue immediately. Maybe a great infrastructure solution might be found and if so maybe then fuel cells will be go,” Gustanski said.
As far as Delphi is concerned it reckons it is ready for whatever technology wins out.
“Our portfolio is agnostic. Delphi has the full range of solutions. Whatever way it goes, Delphi wins,” Gustanski said.
(Delphi provided hotel accommodation)