Europe is Leading the Way in Electric Vehicle Adoption
Electric vehicles are set to see increased adoption as regulations restricting carbon dioxide emissions become standard across Europe, batteries become more efficient, and the cost of purchase falls. Because it seems like electric vehicles may have reached a tipping point, GLG conducted a video panel with Philippe Chain, former Chief Electric Vehicle Strategist at Renault and Cofounder of Verkor; Franck Mourge, former Program Director for Electric, Commercial and Pick Up Vehicles at Nissan North America; and Adam Panayi, Managing Director at Rho Motion, to discuss the current state of the market and what the future may hold. Below are edited excerpts from our broader discussion.
Adam, let’s start with you. Can you bring us up to speed in terms of the design of EVs, and — perhaps the key part — the development of batteries?
Adam Panayi: The key discussion this year has been effectively the return of the lithium iron phosphate battery (LFP) — that’s a non-cobalt, non-nickel battery. When the industry started, that was the key technology and we moved into nickel-cobalt-manganese batteries and — outside of the bus and some of the commercial vehicle sectors — LFP fell out of favor. But now, it’s making a bit of a comeback in passenger cars. That’s because the passenger car market for electric vehicles is becoming more diverse. There are a number of new types of vehicles coming into the market.
In China you’re seeing a number of subcompacts and compact vehicles — which lend themselves to using LFP — being brought into the market. We’ve also heard that Tesla is using LFP in its battery packs sourced from CATL for its Chinese manufacturing. While that story seems to be currently overstated, it is a development that’s coming. It feeds into this narrative that they’re offering a different type of vehicle there for a different market segment.
On the anode side, we’ve seen a transition from a purely synthetic graphite to a blend of synthetic natural flake graphite, and the inclusion of silicon. I should also mention silicon dominance and potentially solid-state batteries as well. I guess that can come later in the discussion. But as a quick overview, that’s what I see in terms of battery chemistry development in the last year or so.
One of the main arguments we hear against EVs is that the car doesn’t go far enough. What effect do these batteries have on range?
Philippe Chain: The range of new models of electric vehicles has been continuously increasing and is now reaching a sort of standard — about 400 kilometers of range, which seems to be enough for most people to consider buying an EV. We can see this in all the new coming electric vehicles on the market, be it from Hyundai, or the Volkswagen Group, and even Nissan, of course, and all the others.
The return of LFP is linked to a different, interesting trend. For many people, cars with 400 or 500 kilometers of range may be too much. They don’t need to carry so much battery; they simply don’t need that much capacity. It’s likely that we’ll see some shorter-range cars that have a much lower price tag. The Renault short-range, low-cost vehicle — I believe it’s called K-ZE in China and will probably be called Dacia Spring when it comes to Europe — could be the first example of that.
In first half of 2020, we’ve seen the penetration of EVs rise in Europe. Is this a trend that’s here to stay or will it fall back to a more normal level?
Philippe Chain: I completely expect these trends to continue, expand, and maybe even explode. Consider that European CO2 regulations are virtually forcing original equipment manufacturers (OEMs) to offer these cars. Cost is going down, especially battery costs, which will soon make it an economically reasonable choice for more and more people to drive an electric car. Up to now infrastructure has been a barrier to adoption, and that also is now significantly lifting.
But I’d like to mention the fourth aspect, which is actual customer demand. In my opinion, this is oftentimes underrated or underestimated. Electric cars really offer a superior user experience, and you can see this in many customer satisfaction surveys. Anecdotally, I’ve heard many times that once you move to an electric vehicle, you never go back to an internal combustion. There are many reasons for that: silence, acceleration, smoothness, and, of course, the fact that they are environmentally friendly vehicles. In my mind, that will be the most powerful driver of adoption.
Once the barriers are lifted, which is happening now, the public will really enjoy and show enthusiasm for these cars. In the auto industry, that’s always the main driver: actual customer demand.
As EVs become more commonplace, other industries — garages, mechanics, breakdown services, etcetera — will all have to adapt to them. Can you speak to that briefly?
Franck Mourge: It’s a big disruption. You don’t have all the moving parts that you have on a combustion engine. You don’t have oil or spark plugs to change on the vehicle, which is, in the end, a major issue for the dealer because they’re losing revenue here. You drive an electric vehicle differently; you break less and rely on deceleration to recharge your battery. The brakes don’t wear out. In terms of maintenance, it’s very low. You still have crashes and things that sometimes bring in interesting revenue, but for both dealer and OEM, it’s definitely down from the combustion engine. They must reinvent themselves for this new reality.
For many European countries, 2030 is the deadline they have set for when they’ll turn off the sales of combustion engines and switch to electric vehicles. What sort of penetration do you think we’re going to see in the market 10 years hence?
Adam Panayi: We look at it at a national level, from the legislative level, and then we look at OEMs and their plans. For the battery-electric and plug-in hybrid electric worldwide, we’re looking at about 30% penetration by 2030. This doesn’t really agree with the narrative we hear about entirely banning the combustion engine by then, but you have to differentiate between a target that has been signed off and mandated and one that is just a headline grabber.
Philippe Chain: I completely agree. In my opinion, 30% would be a minimum by 2030. I expect the trend to amplify as adoption grows.
Franck Mourge: I agree with Philippe. If you take it at the global level, 30% can make sense. But if you consider it regionally, I’m sure in Europe, Asia, and some other markets the penetration will be much higher. Even today an electric vehicle is more economical than a combustion engine if you drive a reasonable mileage per day. When the costs reach the parity between combustion engine and electric vehicle, it will make little sense to buy a combustion engine. The combination of economic sense and increased regulations will be the triggers that launch an explosion of EV adoption.
About Philippe Chain
Philippe Chain is currently a Cofounder of Verkor, a new European battery cell manufacturer. Previously, he was the owner and founder of Zenobe, a consultancy providing strategic consulting services on matters including electric vehicles, battery technologies, and charging infrastructure. Before that, he served as Vice Chairman at Faraday Future, Battery Electric Vehicle Technical Project Director at Audi, and Vice President, Quality at Tesla. Prior to these roles, Philippe worked for 20 years at Renault. He was also Vehicle Program Manager at Nissan North America.
About Franck Mourge
With more than 25 years of leadership experience in automotive and digital industries worldwide, Franck generated new business opportunities and profit growth through innovation, cost optimization, and market expansions strategies. He is now CEO and Founder at Comutiq IQ, a company that proposes to create a connected urban electric vehicle. Prior to this, he occupied different management positions at Nissan and led the Connected Zero Emission Light Urban Mobility Program at Nissan between 2013 and 2015.
About Adam Panayi
Adam is the Managing Director at Rho Motion, a specialist electric vehicle and battery consultancy. He is also currently engaged by Benchmark Mineral Intelligence as a Principal Consultant, looking at issues in both upstream and downstream battery supply chains for electric vehicles. Previously, Adam held the position of Research Manager, Environment and Emissions, at Integer Research, looking at the market for environmental technologies in the automotive sector and the implications of emissions legislation on the whole automotive supply chain from OEMs to fuel retailers.
This article is adapted from the July 29, 2020, GLG video panel “European Electric Vehicles Market: Update and Outlook.” If you would like access to this video panel or would like to speak with Philippe Chain, Franck Mourge, Adam Panayi, or any of our more than 700,000 experts, contact us.