NMO S4 SPRINT ONE | BUSINESS CASE SCENARIO - 02

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Case Understanding

BCS Solution Summary

Solution

Global

After a decade of rapid growth, in 2020 the global electric car stock hit the 10 million mark, a 43% increase over 2019, and representing a 1% stock share. Battery electric vehicles (BEVs) accounted for two-thirds of new electric car registrations and two-thirds of the stock in 2020. China, with 4.5 million electric cars, has the largest fleet, though in 2020 Europe had the largest annual increase to reach 3.2 million.

Overall the global market for all types of cars was significantly affected by the economic repercussions of the Covid-19 pandemic. The first part of 2020 saw new car registrations drop about one-third from the preceding year. This was partially offset by stronger activity in the second-half, resulting in a 16% drop overall year-on-year. Notably, with conventional and overall new car registrations falling, global electric car sales share rose 70% to a record 4.6% in 2020.

About 3 million new electric cars were registered in 2020. For the first time, Europe led with 1.4 million new registrations. China followed with 1.2 million registrations and the United States registered 295 000 new electric cars.

Numerous factors contributed to increased electric car registrations in 2020. Notably, electric cars are gradually becoming more competitive in some countries on a total cost of ownership basis. Several governments provided or extended fiscal incentives that buffered electric car purchases from the downturn in car markets. 

Europe

Overall Europe’s car market contracted 22% in 2020. Yet, new electric car registrations more than doubled to 1.4 million representing a sales share of 10%. In the large markets, Germany registered 395 000 new electric cars and France registered 185 000.  The United Kingdom more than doubled registrations to reach 176 000. Electric cars in Norway reached a record high sales share of 75%, up about one-third from 2019. Sales shares of electric cars exceeded 50% in Iceland, 30% in Sweden and reached 25% in the Netherlands. 

This surge in electric car registrations in Europe despite the economic slump reflect two policy measures. First, 2020 was the target year for the European Union’s CO2 emissions standards that limit the average carbon dioxide (CO2) emissions per kilometre driven for new cars. Second, many European governments increased subsidy schemes for EVs as part of stimulus packages to counter the effects of the pandemic.

In European countries, BEV registrations accounted for 54% of electric car registrations in 2020, continuing to exceed those of plug-in hybrid electric vehicles (PHEVs). However, the BEV registration level doubled from the previous year while the PHEV level thripled. The share of BEVs was particularly high in the Netherlands (82% of all electric car registrations), Norway (73%), United Kingdom (62%) and France (60%).
 industries. 

United States

The US car market declined 23% in 2020, though electric car registrations fell less than the overall market. In 2020, 295 000 new electric cars were registered, of which about 78% were BEVs, down from 327 000 in 2019. Their sales share nudged up to 2%. Federal incentives decreased in 2020 due to the federal tax credits for Tesla and General Motors, which account for the majority of electric car registrations, reaching their limit.

Other countries

Electric car markets in other countries were resilent in 2020. For example, in Canada the new car market shrunk 21% while new electric car registrations were broadly unchanged from the previous year at 51 000.

New Zealand is a notable exception. In spite of its strong pandemic response, it saw a decline of 22% in new electric car registrations in 2020, in line with a car market decline of 21%. The decline seems to be largely related to exceptionally low EV registrations in April 2020 when New Zealand was in lockdown.

Another exception is Japan, where the overall new car market contracted 11% from the 2019 level while electric car registrations declined 25% in 2020. The electric car market in Japan has fallen in absolute and relative terms every year since 2017 when it peaked at 54 000 registrations and a 1% sales share. In 2020, there were 29000 registrations and a 0.6% sales share.

Consumers spent USD 120 billion on electric car purchases in 2020, a 50% increase from 2019, which breaks down to a 41% increase in sales and a 6% rise in average prices. The rise in average prices reflects that Europe, where prices are higher on average than in Asia, accounted for a bigger proportion of new electric car registrations. In 2020, the global average BEV price was around USD 40 000 and around USD 50 000 for a PHEV.

China continues to dominate the electric bus market, with registration of 78 000 new vehicles in 2020, up 9% on the year to reach a sales share of 27%. Local policies to curb air pollution are the driving force.

Electric bus registrations in Europe were 2 100, an increase of around 7%, well below the doubling in registrations seen in 2019. Electric buses now make up 4% of all new bus registrations in Europe. It is too early to see the effect of the non-binding European Clean Bus Deployment Initiative and demand may be still largely driven by municipal level policies.

In North America, there were 580 new electric bus registrations in 2020, down almost 15% from the prior year. In the United States, electric bus deployment primarily reflects polices in California, which is the location of most of the current e-bus stock. In South America, Chile leads the way registering 400 electric buses in 2020 for a total stock of more than 800. India increased electric bus registrations 34% to 600 in 2020.

Heavy-duty truck registrations

Global electric HDT registrations were 7 400 in 2020, up 10% on the previous year. The global stock of electric HDTs numbers 31 000. China continues to dominate the category, with 6 700 new registrations in 2020, up 10% though much lower than the fourfold increase in 2019. Electric HDT registrations in Europe rose 23% to about 450 vehicles and in the United States increased to 240 vehicles. Electric trucks are still below 1% of sales in both. 

Electric bus and truck registrations expanded in major markets in 2020
The availability of electric heavy-duty vehicles (HDVs) models is expanding in leading global markets.1 Buses were the earliest and most successful case of electrification in the HDV market, but the growing demand for electric trucks is pushing manufacturers to broaden product lines. Nevertheless, model availability is not the only indicator of a healthy market – fewer total models may reflect the reliability and broad applicability of existing designs, whereas more diversity of models may reflect the need to tailor products for specific needs and operations.

The growth in electric model availability from 2020 to 2023 across segments – bus, medium freight truck (MFT), heavy freight truck (HFT) and others – demonstrates manufacturers’ commitments to electrification. Truck makers such as Daimler, MAN, Renault, Scania and Volvo have indicated they see an all-electric future. The broadening range of available zero-emission HDVs, particularly in the HFT segment, demonstrates the commitment to provide fleets the flexibility to meet operational needs.

The HDV segment includes a wide variety of vehicle types, e.g. from long-haul freight to garbage collection trucks. China has the most variety in available electric bus models. The availablity of MFT models is broadest in the United States. For HFTs – the segment where the EV model offer is expected to the grow the most – Europe offers the widest selection of models.

Types of zero-emission HDVs expand, and driving range lengthens
Current And Announced Zero Emission HDV Models By Segment, Release Year And Powertrain In Major Markets, 2020-2023
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Current And Announced Zero Emission Hdv Models By Segment Release Year And Powertrain In Major Markets 2020 2023
Private sector commitment and other electrification trends
Private sector demand for zero-emission commercial vehicles amplifies market signals for OEMs to develop EVs

Despite a turbulent year, major companies around the world are accelerating the transition to electric mobility by shifting fleets to electric vehicles and installing charging stations.

The Climate Group’s EV100 Initiative brings together over 100 companies in 80 markets committed to making electric transport the new normal by 2030. This equates to 4.8 million vehicles switched to EVs and chargers installed in 6 500 locations by 2030.

Collectively, by 2020 EV100 members had already deployed 169 000 zero-emission vehicles, double the previous year. Even though companies identify commercial vans and heavy-duty vehicles as the most difficult EVs to find, the number of commercial electric vehicles rose 23% in 2020, including a threefold increase in electric trucks.

EV100 members are also expanding the availability of charging infrastructure for staff and customers, with 16 900 charging points installed at 2 100 locations worldwide. Over half of EV100 members are using renewables to power all their charging operations.

Significant barriers to EV adoption remain. EV100 members reported the lack of charging infrastructure as the top barrier (especially in the United States and United Kingdom). Lack of availability of appropriate vehicle types was also highlighted by the companies as a persistant obstacle. The purchase price of EVs remains an important hurdle despite many companies acknowledge the significant cost savings over the lifetime of a vehicle due to lower fuel and maintenance costs.

To help overcome these barriers, 71% of EV100 members support more favourable EV procurement tax benefits and 70% favour more supportive policies at state, regional and city government levels. Sixty percent of the member companies support government targets to phase out petrol and diesel vehicles.

EV100 member companies
Automotive lithium-ion (Li-Ion) battery production was 160 gigawatt-hours (GWh) in 2020, up 33% from 2019. The increase reflects a 41% increase in electric car registrations and a constant average battery capacity of 55 kilowatt-hours (kWh) for BEVs and 14 kWh for PHEVs. Battery demand for other transport modes increased 10%. Battery production continues to be dominated by China, which accounts for over 70% of global battery cell production capacity.

China accounted for the largest share of battery demand at almost 80 GWh in 2020, while Europe had the largest percentage increase at 110% to reach 52 GWh. Demand in the United States was stable at 19 GWh.

Nickel-manganese-cobalt continues to be the dominant chemistry for Li-ion batteries, with around 71% sales share and nickel-cobalt-aluminium accounting for most of the rest. Lithium-iron-phosphate battery chemistry has regained sales share but is still under 4% for the electric car market.

According to the BNEF’s yearly survey of battery prices, the weighted average cost of automotive batteries declined 13% in 2020 from 2019, reaching USD 137/kWh at a pack level. Lower prices are offered for high volume purchases, confirmed by teardown analysis of a VW ID3 showing an estimated cost of USD 100/kWh for its battery cells.

In Europe, demand for batteries in 2020 exceeded domestic production capacity. Today Europe’s main battery factories are located in Poland and Hungary. Production capacity is roughly 35 GWh per year, but announced capacity could yield up to 400 GWh by 2025. Momentum was evident in 2020 in Europe with many new battery plants announced or under construction with support from the European Investment Bank. In the United States, both Korean and domestic battery manufacturers have signalled large investments in a market currently dominated by a Tesla-Panasonic joint venture.

Many shared micromobility operators reduced or suspended services during the height of the second-quarter 2020 Covid-19 lockdowns. But as confinements were eased, services rebounded strongly, with 270 cities worldwide relaunching operations. As of February 2021, around 650 cities have shared micromobility services. In Europe, e-scooter services have increased rapidly, with more than 100 cities adding operations since July 2020.

Preliminary data from operators indicate average trip distances on e-scooters have increased by around 25% relative to before the pandemic. Operators are increasingly offering more powerful e-bikes with plans to expand into electric mopeds, which could further displace longer trips currently completed by car or public transit.

Several major operators are introducing swappable batteries to improve operational efficiency and reduce emissions. Although the use of swappable batteries increases the number of total batteries needed to support a fleet, it can significantly reduce operational emissions and enable longer lifetime of vehicles.

Privately owned electric two/three-wheelers (which include motorised vehicles such as motorcycles and mopeds but exclude micromobility solutions) are concentrated in Asia, with China accounting for 99% of registrations. The global stock of electric two/three-wheelers is now around 290 million. Electric two/three-wheelers account for one-third of all two/three-wheeler sales. While current sales are dominated by Asia, the market is growing rapidly in Europe, rising by 30% in 2020, benefitting from wider model availability and continued incentives.

Pandemic spreads popularity of electric micromobility
Availability of dockless shared micromobility services in Europe and Central Asia, 2019-2021
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Number of cities

Shared e-scooters
Shared dockless bicycles
Fuel cell electric vehicles (FCEVs) are zero-emission vehicles that convert hydrogen stored on-board using a fuel cell to power an electric motor. FCEV cars became commercially available in 2014, though registrations remain three orders of magnitude lower than EVs as hydrogen refuelling stations (HRS) are not widely available and unlike EVs cannot be charged at home. Few commercial FCEV models are available and with high fuel cost and purchase prices result in a higher total cost of ownership than EVs.

To address the chicken-and-egg problem for FCEVs a number of goverments have funded the construction of HRS and have deployed public buses and trucks, such as garbage trucks, to provide a certain level of station utilisation. Today, there are approximately 540 HRS globally that provide fuel for almost 35 000 FCEVs. Approximately three-quarters of the FCEVs are LDVs, 15% are buses and 10% are trucks.

In 2020, Korea took the lead in FCEVs, surpassing the United States and China, to reach more than 10 000 vehicles. To support these FCEVs, the number of HRS in Korea increased by 50%, with 18 new stations in 2020. FCEVs in China are almost exclusively buses and trucks, unlike most other countries where cars are dominant. China accounts for 94% of global fuel cell buses and 99% of fuel cell trucks.

In 2020, the global FCEV stock increased 40%, with Korea contributing half and doubling its total FCEV stock. Japan and China increased the number of HRS, each opening about 25 stations in 2020. Worldwide the number of HRS increased 15%. 

Slow chargers

The pace of slow charger (charging power below 22 kW) installations in China in 2020 increased by 65% to about 500 000 publicly accessible slow chargers. This represents more than half of the world’s stock of slow chargers.

Europe is second with around 250 000 slow chargers, with installtions increasing one-third in 2020. The Netherlands leads in Europe with more than 63 000 slow chargers. Sweden, Finland and Iceland doubled their stock of slow chargers in 2020.

Installation of slow chargers in the United States increased 28% in 2020 from the prior year to total 82 000. The number of slow chargers installed in Korea rose 45% in 2020 to 54 000, putting it in second place.

Fast chargers

The pace of fast charger (charging power more than 22 kW) installations in China in 2020 increased by 44% to almost 310 000 fast chargers, slower than the 93% pace of annual growth in 2019. The relatively high number of publically available fast chargers in China is to compensate for a paucity of private charging options and to facilitate achievement of goals for rapid EV deployment.

In Europe, fast chargers are being rolled out at a higher rate than slow ones. There are now more than 38 000 public fast chargers, up 55% in 2020, including nearly 7 500 in Germany, 6 200 in the United Kingdom, 4 000 in France and 2 000 in the Netherlands. The United States counts 17 000 fast chargers, of which nearly 60% are Tesla superchargers. Korea has 9 800 fast chargers.

AFID, the key policy regulating the deployment of public electric EVSE in the European Union, recommended that member states aim for 1 public charger per 10 EVs, a ratio of 0.1 in 2020.

In the European Union, the average public EVSE per EV ratio was 0.09 at the end of 2020. But that is not the whole story. The Netherlands and Italy are above the target at 0.22 and 0.13 respectively, with almost all being slow chargers, though fast chargers are 3% of the installations in the Netherlands and 9% in Italy.

Countries with the highest EV penetration tend to have the lowest EVSE per EV ratios, such as Norway (0.03), Iceland (0.03) and Denmark (0.05). In these sparsely populated countries with many detached houses and private parking spaces, most EV owners can largely use private home charging. To a lesser extent, it also refects that the Nordic countries have a higher proportion of fast chargers, with shares of 40% in Iceland, 31% in Norway and 17% in Denmark. 

HFTs require batteries with high capacity to meet their needs for heavy-duty cycles and long-range operations, and consequently they require high power charging. So far charging options for HFTs have tended to be early stage demonstrations, proof-of-concept activities and efforts to faciliate standardisation.   

Megachargers of 1 megawatt (MW) or more would be capable of charging trucks operating over long distances reasonably quickly. Long-term planning for megacharger infastructure is needed now to avoid negative impacts on the electrical grid. Some impact to grids is inevitable given the high power requirements of megachargers. Significant investment may be needed for grid reinforcements, modernisation, storage and integration with power systems. Planning and co-ordination among electricity generators, distribution system operators and megacharging operations are needed.

Some efforts are underway to develop standards for megachargers. Working jointly, the CHAdeMO association and the China Electricity Council have developed an ultra-high power charging standard (up to 900 kW), called ChaoJi. A version up to 1.8 MW, called Ultra ChaoJi, is under development. In parallel, the CharIN initiative established a task force called the Megawatt Charging System Taskforce which aims to develop a new high power standard above 1 MW by 2023 for charging heavy-duty trucks, based on the combined charging system (CCS) standard. Prototype testing started in September 2020. Tesla announced in late 2020 that it is working with third-parties to develop a standard for megachargers that can be provided to Semi truck owners. Tesla is one of five to have submitted a design to CharIN.

Conclusion

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