Electric cars — when will the stars align? | Business| Economy and finance news from a German perspective | DW | 23.10.2019
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Electric cars — when will the stars align?

Despite many obstacles, electric vehicles are being relied upon to help halt climate change. DW asks three auto industry experts how we'll know that the electromobility era has arrived.

Global sales of electric vehicles (EVs) could grow as much as 48% in 2019, with up to 2.9 million new plug-in cars expected to hit the streets this year. That would take the total number of electric automobiles sold to nearly 8 million. 

Traditional car manufacturers and ambitious startups like Tesla are hedging their reputations and futures on electromobility, but issues like battery range, affordability, charging infrastructure and public confidence remain. Three industry analysts give DW their predictions for when EVs will become the new normal.

Read more: Electric cars: Low earners may never get to drive one

Scott Shepard, senior research analyst (energy) at Navigant Research

Picture of Scott Shepard

American auto analyst Scott Shepard sees Tesla and Volkswagen dominating in the electric era

DW: Define the sweet spot for electric cars.

Scott Shepard: The sweet spot will be when pure electrics show up in rental car fleets at airports. This would show that fleet operators have confidence that visitors will be able to tap local infrastructure solutions seamlessly.

When will it happen?

Between 2025 and 2030.

What will this period look like?

The purchase price of a 250-kilometer (155-mile) pure electric vehicle should be at parity with a conventional internal combustion engine (ICE) powered car without purchase subsidies. Solid-state batteries should be impacting markets at this time, which besides helping to reduce vehicle costs, will also improve battery durability and the speed at which EVs charge.

Public charging infrastructure services will be diverse, but more importantly, reliably available to the mainstream vehicle driver. I would expect more aggressive government policies on vehicle emissions standards, making ICE vehicles and carbon-intense fuels less attractive.

Tesla is already the global leader and is likely to remain so for years. However, when EVs hit the sweet spot, mainstream brands will dominate, with Volkswagen expected to become the leader from a volume perspective. Other potential leaders include: Nissan, Toyota, and Ford. Tesla will retain the premium market.

What is the biggest obstacle to reaching the sweet spot?

A reliable public charging solution to those who do not have a dedicated charging point. Current EV technologies are great for people who can charge at their residence, but not yet that great for people who do not have consistent parking spots.

Read more: Bolivians protest over lithium deal with German company

Bernhard Mattes, president of the German Association of the Automotive Industry (VDA)

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VDA President Bernhard Mattes has previously held senior positions at BMW and Ford Europe

DW: Define the sweet spot for electric cars.

Bernhard Mattes: When there are 7 to 10.5 million electric cars on the road in Germany, along with 1 million public charging points, 100,000 fast charging points and several million private charging points.

When will that happen?

The EU has set very ambitious CO2 fleet limits for manufacturers to achieve by 2030, so it could happen by then. But it will require high consumer acceptance and optimal framework conditions. German manufacturers and suppliers are making enormous advances to this end, investing €40 billion ($44.5 billion) over the next three years. Every third patent in the field of electromobility and hybrid drive worldwide comes from Germany.

What will be required to meet the target date?

The charging infrastructure in public and private areas must be expanded rapidly. Politics, at the local, state and federal level, must also play its part, including environmental subsidies and the promotion of electric vehicles. Other barriers, including limits to homeownership/tenancy laws and energy laws will also need to be overcome.

Read more: Will millions of electric vehicles disrupt Germany's power grid?

Automotive analyst Matthias Schmidt

Picture of Matthias Schmidt

Matthias Schmidt publishes the West European BEV Electric Car Registrations Market Intelligence Monthly Report — a publication focussing on the adoption of electric cars in Europe

DW: Define the sweet spot for electric cars.

Matthias Schmidt: When volumes are high enough to generate the economies of scale required in key components (battery cells) so that electric cars can achieve a profit margin similar to existing models.

When will that happen?

Between 2025 and 2030. The real sweet spot, however, will likely come post-2030 when the EU enforces a 37.5% cut in CO2 emissions from carmakers' fleets. Electric vehicles will be an absolute necessity to reach this target. If electric cars aren't profitable by then, there is little hope for car manufacturers going forward.

What is required to meet the target date?

Government regulation and legislation is the key driver for this. Although car manufacturers pretend they are pushing electromobility for the sheer joy of it, they are being forced to do this by the European Union and the Chinese government. You can expect manufacturers to ask for tax incentives and purchase subsidies from their national governments to meet these targets.

What are the biggest obstacles to reaching the sweet spot?

Economies of scale, a fast charging infrastructure and the break up of the Asian oligopoly that controls the battery cell supply chain. This would achieve better battery cell deals for manufacturers. Finally, consumers need educating that the days of cheap cars are essentially over.

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