The Boston Consulting Group (BCG) has deciphered the automotive sector through the prism of the electric vehicle. If the strategy consultancy issues a positive opinion, it still points to challenges to be overcome.
To be ecologically profitable, a battery-powered vehicle must travel 25,000 km.
The Boston Consulting Group (BCG) became interested in the challenges that await the industry with the emergence of the electric vehicle. With a predicted penetration of 39% by 2030 and nearly 60% by 2035 globally, an entire ecosystem will be transformed in the next decade.
“For a hundred years, the top 10 manufacturers and suppliers have remained unchanged. But today there are new players from China or the western United States, exclusively electric, but also battery suppliers that now represent the most expensive part of a vehicle.highlighted Thomas Weberassociate director of the BCG Paris office. There is an entire industry in transformation and the ecosystem that we knew a decade ago will be totally different.“.
The ecologically profitable 25,000 km battery-powered vehicle
As the battery technology is preferred by manufacturers, the company questioned whether the latter is really interesting for a low-carbon future. BCG finds, based on an IHS Markit study, that the CO2 emission rate emitted during the production of an electric vehicle is higher than a thermal model, largely due to drum manufacturing.
On the other hand, over the life of the car, there is almost 20 tons of difference in terms of CO2 emissions. Thus, for a battery-powered vehicle to be ecologically profitable compared to thermal vehicles, it must have traveled at least 25,000 km.
While BCG is optimistic about a carbon-free future through battery-powered vehicles, the company highlights five challenges ahead. In particular, it predicts a 10% drop in global production volume due to multiple shortages, funding of the €600-900 billion needed for the industrialization of battery-powered vehicles, a two-year innovation cycle instead of five in systems battery life, 600,000 employees in transitions and a higher unit price for a mid-size car, over 5,000 euros.
Read too: Feda warns Emmanuel Macron about all-electric too quickly
According to Mikael Le Mouelliassociate director of the BCG Paris office, the main constraint of the battery-powered vehicle is the cost: “s‘is asked to renew the entire fleet, the population will have to pay for two cars instead of one over a period of 15 years, which has a big impact’. BCG therefore questioned how to reduce the price of battery-powered models. Among the topics rarely discussed is the issue of the car’s weight. “A vehicle today has more than 1.5 tons on average to carry a few kilos. There is thus a relationship from 1 to 8 between what is transported and the weight of the car. The latter has a very significant impact on price and the environment.“, alarm Mikaël Le Mouëllic.
“Weight is an important issue if we are to make this transition. Already, the electric vehicle is heavier than the thermal vehicle, but we noticed that the weight of the cars also varied 40% in 15 years, for equivalent use, cnotes Mikaël Le Mouëllic. One of the reasons is in the fashion of SUVs, but also because road safety has become passive. All chassis and bodies have been adapted to perform well in crash tests and these require a lot of material. Passive safety has increased the weight tremendously over the last 20 years.”
Another major constraint is the issue of resources used in battery-powered vehicles. Today, stresses are very strong in materials like lithium or nickel. But BCG finds two different reasons. The lithium risk is not linked to a potential shortage, but to a problem in the insufficient number of mines available (the latter mainly in Australia and Chile).
Read too: A lithium refining plant will be built in France
There is therefore a gap between demand and extraction capacities. A matter that was not taken seriously right away and that could cause problems in the future. Thomas Weber specifies that it takes between six and nine years to open a lithium mine. On the other hand, for nickel, there is a real risk of shortages”,because the demand for pure nickel for electric vehicles is very high and concerns a rare element” explains Mikaël Le Mouëllic.
Battery at all costs is not a solution
Above all, the consultancy looks at four major axes in the automotive sector of tomorrow: the electric vehicle, car-sharing, connectivity and the autonomous vehicle. Thomas Weber clarifies: “the transformation will not be exclusively electrical. The challenges that await the sector are linked to a change in all areas, such as the new mobility or the autonomous vehicle.“. However, for the latter, BCG expects a marginal participation in the future.. Mikaël Le Mouëllic guarantees that “the battery-powered vehicle is not suitable for all uses, which is why it will also be necessary to rely on other forms of mobility and hydrogen.”
Thus, according to the study, urban car-sharing trips will only account for 12% in 2030 and 14% in 2035, far behind bicycles or private cars. Even so, usage is still expected to increase by 8 points between 2019 and 2035, according to BCG. Regarding autonomous vehicles, the share of tier 3 and 4 models is expected to rise respectively by 2035 to 13% and 7%. In terms of connected cars, their number is bound to explode. Where in 2019 its share was just 10%, the company estimates it will rise to 50% in 2025 and 90% in 2035.”Gradually, the new generation is mainly interested in in-vehicle connectivity and not in other criteria.“, comments Thomas Weber.