The hybrid has a challenger. While battery electric vehicles (BEVs) have so far dwelt in the shadow of full hybrids such as the iconic Toyota Prius and even plug-in hybrid vehicles (PHEVs), recent announcements by major carmakers, and the latest sales data, suggest that demand and infrastructure in advanced auto markets are now at the point where the BEV is ready to start taking the lead in the electric vehicle sector.
The UK’s battery electric vehicle market, for example, is forecast to grow at a CAGR of more than 22 percent by 2025, according to Orion Market Research. Favorable government policies, subsidies and ongoing introduction of new BEV models are some of the major factors driving the growth of the UK market. According to the European Automobile Manufacturers Association, BEV sales in the country increased by 144 percent YOY in 2019, exceeding 37,500 units. In contrast, PHEV sales decreased by 21 percent to just under 35,000. Another key factor is a change to the tax regime from April 2020, under which company car tax is zero for fully electric cars. In addition, after 2021, the average carbon dioxide emissions of all newly registered cars from an automaker must be below 95 g/km.
China has been the world’s fastest-growing EV market for years helped by generous state purchase subsidies. But the wave began to recede in 2019 with the reduction of EV-supporting government policies. However, a surge in sales this year for Tesla – the market leader and still the brand most synonymous with EVs globally – suggests the dream is not over. Chinese EV startups NIO, XPeng Inc, Li Auto and WM Motor raised more than $8 billion between them in 2020 – their rival Aiways is also planning to go public, its co-founder and President Fu Qiang told Reuters in the run-up to this year’s Beijing auto show. Fu said the success of US initial public offerings by XPeng and Li Auto had encouraged Aiways’ ambitions to list. As in most markets, electric charging infrastructure in China remains in an early development stage – but the country’s huge urban population provides a strong platform for adoption. Here, too, BEVs are on the rise: the Hongguang Mini EV is China’s best-selling electric car this year.
Kia, General Motors announce EV plans
Under Kia’s ‘Plan S’ strategy, announced at the start of 2020, the brand plans to expand its BEV line-up to 11 models by 2025. Over the same period, Kia is aiming for BEVs to account for 20 percent of the brand’s total vehicle sales in advanced markets, including South Korea, North America and Europe. Kia announced on September 16 that seven dedicated BEVs will be launched by 2027. The first of these, code-named CV, will be revealed in 2021 as the brand’s first dedicated BEV.
Kia sees the expansion of electric charging infrastructures as a pre-condition for the popularization of EVs – the supply of charging stations occupies the curious position of both meeting and stimulating demand. In South Korea, Kia aims to supply around 1,500 EV chargers by 2030, while internationally the company is setting up more than 2,400 EV chargers in Europe and around 500 in North America, partnering with its dealer networks. Kia plans
to continue to increase its charging infrastructure in line with the growing market for EVs.
“EVs offer significant untapped potential to Kia both in the domestic and the overseas markets such as Europe and North America. Despite the COVID-19 crisis, EVs fared well when compared to other passenger vehicles,” said Animesh Kumar, Director of Automotive Consulting at GlobalData, a leading data and analytics company, in a statement shortly after Kia’s September announcement.
In the first half of 2020, EV sales in Europe grew by 57 percent despite a 37 percent decline in the overall light vehicle market. In South Korea, where the government offers subsidies for electric vehicles, EV increased by 23 percent in the same period.
“The ramp up of EV production could also be a strategy to counter the rapid growth of EV giant Tesla in the domestic and overseas markets,” Kumar noted. “Tesla’s market share in EV sales in South Korea and the US stood at 43.3 and 81.6 percent, respectively, in H1 2020. The widening of EV line-up is also set to give competitive benefit to Kia in Europe, which is a key playground for the company’s EV business. The company’s EV sales (including BEV, PHEV & HEV) grew by 20.8 percent YOY in Q1 2020, accounting for 19 percent share of its total vehicle sales in Europe.
“Kia’s plan to launch a global range of BEV models, along with focus on creating an ecosystem, which includes charging infrastructure, after service infrastructure and new mobility services such as vehicle subscription, car rental and battery leasing, will help it to establish leadership position in the global EV market. The company’s recent collaboration with tech giants and regional governments is expected to supplement the company’s EV vision of achieving 500,000 EV sales by 2026.”
Emilio Herrera, Chief Operating Officer for Kia Motors Europe, commented: “The whole market is wrestling with a dramatic slowdown in sales caused by the effects of the pandemic, and Kia is not unaffected by this. However, rapidly growing sales of our electric and hybrid vehicles have contributed to our record market share so far this year thanks to our long-term strategy to offer a wide range efficient, advanced powertrains. This certainly gives us a strong foundation for sustainable growth as the market starts to recover.”
Kia has seen combined sales of its two fully electric vehicles, the e-Niro and e-Soul, more than double year-on-year, according to a recent press release. Kia sold 20,649 EVs in Europe in the first eight months of 2020, up from 9,303 units in the same period in 2019.
In the US, meanwhile, General Motors has taken an 11 percent stake and struck an agreement to share technology with electric truck startup Nikola. “The tie-up with Nikola follows the announcement last week that GM and Honda would deepen their collaboration in advanced electrification technologies,” commented David Leggett, Automotive Analyst at GlobalData. “A spin-off of GM’s electrification operations could conceivably create a new company that would be highly attractive to investors – more so than GM in its current form. The opportunity is certainly there to explore and GM has readily identifiable assets – for example in its Ultium battery tech – that could be hived off to flourish independently. The meteoric rise of Tesla and its market cap point to strong investor appetite for companies perceived to be at the apex of transformational technological change.”
GM has its own battery electric truck, a GMC Hummer, due to go on sale in 2021.
What does this mean for sourcing?
Purchase price and running costs are major considerations for consumers. One of the driving forces behind the Hongguang Mini EV’s outstanding sales figures in China is its low sticker price: 28,800 yuan for the baseline model. When BEV performance lags behind the equivalent hybrid or internal-combustion car, the relatively abstract selling point of environmental friendliness is no match for the concrete numbers of lower costs. So buyers looking to import whole vehicles must pay close attention not only to competitors but the current and future price of keeping the vehicle running in their specific markets.
Buyers of automotive accessories should not need to adapt their product lines much to cater to BEVs. A BEV is much the same size and shape as any other, which means that universal accessories and gadgets remain suitable. For items that must be fitted specifically, such as in-car entertainment modules or replacement parts, buyers must keep up to date with the most recent announcements from automakers and stay in communication with their suppliers to keep in touch regarding capacity and possibilities as new specifications and details are released.
The buyers most affected by the upswing for BEVS, of course, are those interested – or already involved – in batteries, charging apparatus and other components or infrastructure products specific to BEV applications. These buyers must act early can to establish relationships with the suppliers who can provide high-quality products at competitive pricing that are compatible with new BEVS, timed to hit the market as close to the vehicles’ launch date as possible – if not before. That also means staying on top of automakers’ product roadmaps and the latest BEV technologies. (For batteries in particular, a subscription to Global Sources’ Electronic Components magazine is free and brings you regular coverage – see the November 2020 issue for an in-depth report on LiFePO4 batteries produced for EV use.)
As David Leggett put it, “The auto industry stands at an inflection point in its long-term development as advanced technologies and disruptive business models combine to threaten the established order. Sweeping structural change is inevitable and the companies that grasp this early for successful execution stand a good chance of being competitive winners.”
This article first appeared in the Global Sources Hardware, Auto & Machinery magazine.