Electric Car Sales Targets Look Overblown.
Electric Only Sales Will Led By Volkswagen Golf And Ford Focus.
“I think a more realistic target for VW, and BMW and Mercedes is probably 15 to 20% by 2025 at the very most, and that includes BEV’s and PHEVs,”
Electric car sales are gathering momentum, but some manufacturers are exaggerating the pace of likely change and their sales expectations won’t get close to being met, according to experts.
But German manufacturers, despite failing to meet these over-ambitious targets set with a mind-blowing allocation of investment, will still maintain their long-term profitability targets, they said.
Andrew Fulbrook, executive director of powertrain research at IHS Markit, said in an interview Europe electric only sales will be led by family cars like the Volkswagen Golf and Ford Focus. The idea that small, niche, cheap, lightweight city cars will lead the charge is wrong. Successful electric cars will have to be affordable and versatile because sales volumes must be high enough to generate acceptable profits. Long distance premium vehicles will be mainly plug-in hybrid electric.
Although battery technology is making rapid progress towards affordability and acceptable range, governments need to step in and incentivize charging networks and car sales. But the supply of batteries won’t keep up with the pace suggested by the likes of Volkswagen, which has said 25% of its sales will be all-electric by 2025.
IHS Markit’s sales projections for the development of electric and electrified car sales suggest manufacturers like VW could have painted themselves into a corner. Other German manufacturers have also made extravagant claims. And on Tuesday, Toyota Motor shocked the industry with its plans to launch more than 10 battery-electric vehicles (BEV) by the early 2020s. GM plans 1 million BEVs by 2026.
BMW has said between 15 and 25% percent of its sales by 2025 will be electric only (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 $40 billion for BEVs, autonomous cars and mobility services by 2022. Mercedes has an $11 billion BEV research programme.
According to IHS Markit, combined BEV and plug-in hybrid electric (PHEV) sales will only reach 15 per cent 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 proclivity for large SUVs.
Respected European newsletter Automotive Industry Data (AID), agrees these targets are too high, particularly VW’s aim of 25% of its sales to be pure electric.
“I think a more realistic target for VW, and BMW and Mercedes is probably 15 to 20% by 2025 at the very most, and that includes BEV’s and PHEVs,” AID editor Peter Schmidt said in an interview.
Schmidt said the German manufacturers are desperate to increase the amount of electric vehicles in their fleets to make sure they don’t face cripplingly high fines for exceeding harsh CO2 emission rules.
The already tough target for 2021 was increased by 30% for 2030 by the E.U. in November.
Fulbrook said combined BEV and PHEV sales currently amount to 1.8% of those 3 markets, will rise to 7% by 2020, 15% by 2025 and over 25% in 2030.
Fulbrook doesn’t see large volume in the small lightweight electric city cars, but neither does he see the big Tesla Model S and their equivalents leading the way.
In Europe, sales will be led by all-electric family cars in segments typically occupied by the likes of the VW Golf and Ford Focus, the BMW 3-series and slightly smaller VW Polo and Ford Fiesta, and popular compact SUVs like the Nissan Qashqai and smaller premium SUVs including the Porsche Macan and Audi Q5. Plug-in hybrids will predominate in larger vehicles and across the volume manufacturers.
“I think if you really want to try and break the market with some serious volume, if you try and change that mix of the market in favor of electric vehicles, you need a configuration of vehicle that can act as single car in the family. If it’s a second car the limited volume is not going to move the market much, thereby constraining the compliance objective for the (manufacturer), hence everybody seems to be targeting the 300 to 400 kilometre (190 to 250 miles) range that can handle shopping and small distances, but this daily vehicle can also handle longer trips. There’s no doubt absolutely that battery technology is moving at a pace that can deliver the energy and that kind of mileage,” Fulbrook said.
“Longer term, the batteries will not necessarily be lithium ion but solid state – timed to power what we class as the 3rd generation of BEV’s. By 2020, industry would have largely cured the range anxiety problem, if one choses to measure that only in range and not the provision of infrastructure and/or charging time, the important convenience factor.”
“For electric cars to be successful, governments need to do more to help challenge range anxiety. Potential buyers need a visual display of charging infrastructure, to know that the charging capability is there. I think it’s incumbent on local and national governments and not just the manufacturer or the private sector, to fund the build up this infrastructure. The car manufacturers are saying, yes we will give you the cars you need, but governments need to incentivize the buying of electric cars and put up the charging infrastructure.”
More rapid chargers
“We need a lot more rapid chargers – over 100 kW which will refill in less than 20 minutes – they don’t have to be as quick as conventional fuel but we are convinced that sub-20 minutes could be critical in attracting a large share of the market. We are a very long way from seeing sufficient rapid fast charging networks in Europe,” Fulbrook said.
British vacuum cleaner manufacturer Dyson has said it will enter the market too. It has kept its plans close to its chest, but given its technology, does this suggest its vehicle will be one of these small lightweight urban runabouts?
“No. Whilst almost certainly based on solid state battery technology and with eyes on China where range is important as part of the regulatory framework, Dyson’s electric car will still need to offer utility that we believe will almost certainly result in a small C segment (Golf, Focus) size vehicle, more akin to a Tesla Model 3, than a Renault Twizzy.,” Fulbrook said.
The Renault Twizzy is more like an electrified four-wheel motorbike with a passenger sitting behind the driver. The Zoe is a little city car.
This failure to meet targets though won’t damage long-term profit margins, according to AID’s Schmidt.
“They (the Germans) won’t make the targets but they will achieve the real goal – mitigating the E.U. CO2 targets and avoiding the swingeing financial penalties. On balance this massive investment makes sure big fines won’t be payable, and the profitability we see today will be maintained. There’s no reason BMW, Audi and (Daimler’s) Mercedes will not continue to make operating margins of between 8 and 10% through 2025,” Schmidt said.