General concept for finances in context with electromobility, such as financing, subsidy programs, … [+]
Battery electric vehicle (BEV) forecast charts in Europe point at a 45-degree angle between now and 2030 showing sales burgeoning up to 10 million new cars. But there are doubts about this electric car revolution, despite European Union (EU) politicians decreeing it will happen.
“The Economist” magazine, in an article entitled “Could The EV Boom Run Out Of Juice Before It Really Gets Going”, points to possible shortages in key battery ingredients like lithium, nickel and cobalt. The magazine also said expected EU rules might raise the price of batteries from the biggest supplier China. The EU is expected to enact regulations on suppliers of carbon-intensive imports, and China’s high proportion of coal-generated electricity could add $500 to the cost of battery packs.
Global consultancy KPMG’s auto experts warn that despite the overwhelming current belief that BEVs will dominate, the winner is more likely to be a combination of technologies, not just one.
There are many unanswered questions about the future of BEVs. Will there actually be enough batteries with all their exotic, rare and expensive ingredients, to supply this market? After all, in Europe and a lesser extent the U.S., the expected change to electric power from the internal combustion engine (ICE) is truly monumental in scale. Will there be enough electric power? Will there be an adequate charging structure?
And given the high price of new BEVs, what happens to the majority of current buyers of the cheapest ICE cars? Cynics say they will be taking the bus to work, while others say that is the whole point of the EU policy, to force the majority of Europe’s motorists out of their cars and on to public transport, for the good of the planet.
Stellantis, now the 2nd biggest collection of auto brands in Europe behind Volkswagen, has said the high price of new electric vehicles and the absence of cheap ICE ones will price average wage earners out of the market, and that is likely to trigger political resentment.
The EU’s move to exile ICE cars started in 2015, with a gradual tightening of CO2 emissions through 2030 when it will be almost impossible to make money from selling them. After the EU rules tighten in 2025 even plug-in hybrid electric vehicles (PHEVs) will find it hard to survive in the marketplace. (PHEVs have smaller batteries than BEVs and can provide between 30 and up to 60 miles of electric-only motoring).
Yet forecasts relentlessly point to the sale of up to 10 million new electric cars in all of Europe by 2030.
Schmidt Automotive Research forecasts battery electric sales in Western Europe will jump this year to 1,575,000 for a market share of 14.0% from 11% last year. Sales edge up to 14.5% share in 2023 and 15% in 2024 to 1,950,000. Sales regain momentum jumping to 20.0% of the market in 2025 and sales of 2,700,000, then they explode, to 9,230,000 in 2030 and a market share of 65.0%.
Western Europe includes all the big car markets like Germany, France, Britain, Italy and Spain.
Bernstein Research predicts all of Europe’s BEV sales will capture 14% of the market this year, 27% in 2025 and on to 50.5% in 2030.
Investment researcher Jefferies said European BEV sales will hit 1,618,000 this year, 3,919,000 in 2025, and just under 10 million in 2030.
Buying a car
S&P Global Mobility’s forecast for 30 European markets sees BEV market share of 14.1% this year, 29.8% in 2025 and 70.6% in 2030 for a total of 9 million.
The current acceleration in sales of BEVs has been driven by well-off early adopters dedicated to the idea of electric power and all they believe it can do for the planet. They will likely buy an electric Tesla
TSLA
Carlos Tavares, CEO of Stellantis, has said the EU rules will lead to an early death for ICE- powered vehicles and this was wasteful because gasoline/electric hybrids had a crucial role to play in cutting CO2. Tavares criticized the EU for designing anti-CO2 rules which were driven by politics and not industry.
Tavares said this last year.
“I can’t imagine a democratic society where there is no freedom of mobility because it’s only for wealthy people and all the others will use public transport”.
Environmental groups were quick to criticize Tavares and say the EU rules are not tough enough if the climate emergency threat is to be avoided.
Stellantis was formed by a merger of Groupe PSA and Fiat Chrysler Automobiles in January 2021. Stellantis owns European brands like Peugeot, Citroen, Opel, Vauxhall, Fiat, Maserati, Alfa Romeo and Lancia, and U.S. ones Jeep, Dodge and Chrysler. In June, Stellantis said it will withdraw from ACEA, the European Auto Manufacturers Association, at the end of this year. It was reportedly at odds with ACEA’s role in the EU Parliament’s decision to ban the sale of new ICE vehicles from 2035.
Stellantis is still making controversial statements. Chief Manufacturing Officer Arnaud Deboeuf said in June unless BEVs became cheaper, the car market will collapse, according to Automotive News Europe. Experts worry that without cheap, entry-level electric vehicles a huge chunk of the European car market will either disappear, crippling the economics of the big mass carmakers, or will taken over by Chinese manufacturers which will achieve the same thing.
Chinese car makers are already a powerful presence in Europe. According to French auto industry consultancy Inovev, Chinese vehicles sold in all of Europe reached 75,000 in the first half of 2022, suggesting 150,000 is possible for the whole year. In 2021, under 80,000 were sold. So far though these sales haven’t yet targeted the cheaper levels of the market.
Red wood Car sitting on 100 Euro Banknotes. White Background.
The Economist article quoted the Benchmark Minerals consultancy saying in theory there would be enough new battery capacity by 2031 for electric cars but this relied on newcomers in a capital-intensive industry. It quoted S&P Global Mobility saying battery factories typically took 3 years to build, but often required a few extra years to gain full capacity, and therefore might fall short by 2030. Manufacturers often had different specifications for battery cells and were not readily interchangeable.
Some important battery ingredients had a troubling outlook, according to “The Economist”. Some new suppliers of nickel like Indonesia were filling the supply gaps but were not as high quality as supplies from Canada, New Caledonia and Russia, and had to be smelted twice, emitting more CO2 thus undermining the point of BEVs. Cobalt might require more supply from the Democratic Republic of Congo, but its record of using and abusing child labor might not be acceptable in Europe. Most uncertainty concerns lithium, but the move to raise output is much costlier, the magazine said.
KPMG Global Automotive Sector Leader Gary Silberg said BEVs might have the inside track for now, but it’s too early to be sure.
“A BEV future is clearly the current conventional wisdom, but I believe that the coming years will be far more complicated and unpredictable than (this) suggests,” Silberg said in a recent interview.
“With infrastructure challenges, I believe the future of the industry will be fragmented and there will not be a single, monolithic model for success – the industry will look more like a mosaic. For the next 10 to 20 years, multiple fuel/powertrain combinations – including gasoline/ICE will coexist, and innovation from the private sector will be driven by consumer demand,” Silberg said.
