Shift to electric vehicles is starting to take off as production ramps up

11 September 2018 5 min. read

The shift to electric vehicles is starting to take off, with development and production set to ramp up in the coming three years. New research suggests that around 13 million new electrical vehicles will be produced per year by 2021, with China out ahead in numbers but European producers developing the most premium cars.

Transformation in the automotive industry is necessary to meet global climate targets, and as a result research into alternative forms of greener transportation is in full swing. Sustainable advancements include new car types but also improved utilisation of vehicles through various new mobility business models, public transportation efforts, as well as schemes to support to biking and walking.

In a new report by Roland Berger, the researchers explore the key developments in the plug-in electric hybrid (PHEV) and battery electric vehicle (BEV) space. The two forms of electrical vehicles stand at the heart of the automotive industry players’ endeavours to improve their carbon footprints.

E-mobility Index 2018

The study shows that France has a significant competitive advantage on the back of a wide range of both PHEV as well as value for money BEV ranges – performing particularly strongly in the area of technology. The production side currently stands somewhat behind Germany however. German technology meanwhile comes in at second, followed closely by Korea, Japan and the USA. China remains dominant in the industry, reflecting the country’s significant involvement in the space, although technologically the country’s car manufacturers have some-way to go. Italy has the smallest market and the lowest level of innovation of the countries assessed.

Analysis of the results shows that the German market has picked up its relative score in recent years, while the French market has seen stable demand since 2014. Germany is hampered by a lack of cell production capacity, even while around 1.5% of all new vehicles in the country are PHEV or BEV. Japan and Korea too are seeing double digit growth in new electric vehicle sales.

The US has seen the market slow slightly, even while industry has picked up. In China, industry has picked up significantly since 2014, with the market growing at a similar rate – reflecting the government’s focus on shifting consumers to electric vehicles. Japan faces fluctuating market fundamentals, while its industry has stayed relatively stable over the past four years.

E-mobility Index 2018

In terms of value for money, France has offerings that mix high levels of innovation with moderate sales prices. Germany and the US produce relatively complex vehicles, although their sale prices remain high by comparison – think of Tesla vehicles for instance. Chinese vehicles tend to have relatively low (but improving) levels of technology, yet make up for this with relatively low price points.

Production of electrical vehicles

The study suggests that BEV and PHEV production is set to ramp up considerably in the coming years. China will be the leader, with around 6.8 million new units produced annually by 2021. The US meanwhile is projected to see around 3 million new units produced by 2021, with Tesla models projected to be the most popular behind the Chevrolet Bolt.

Germany is set to become a major producer by 2021, with around 2.2 million new units, including from major premium brands such as Audi, Mercedes and BMW. Japan’s Nissan Leaf, Toyota Prius and Mitsubishi Outlander will dominate production, with the country rolling out around 1 million new PHEV and BEV vehicles off its production lines by 2021. France meanwhile can expect 763,000 new units produced and Korea 632,000 by the same year.

Future production projection

According to another research, by PA Consulting Group, the large investments in green driving will see several large automotive players, including Daimler, BMW and Volvo, displace Tesla as the most mature producers of electrical cars.

“China has strengthened its lead in the industry indicator on the back of strong growth in vehicle and battery cell production and remains the global number 1 in e-mobility,” explained Wolfgang Bernhart, Partner at Roland Berger. Commenting on Germany’s outlook; “German OEMs have struck deals with suppliers to secure most of their battery cell and battery module requirements for the upcoming years. But in doing so, they have made themselves dependent on a very small number of providers.”

Late last year BearingPoint warned that European countries risk missing out on leadership in the electric vehicle driving market.

Related: Amsterdam and Stockholm lead the way for urban mobility in Europe.