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KPMG survey finds global auto execs expect ICE dominance for some time; ICE downsizing and PHEVs to receive greatest investment over next 5 years; mobility-as-a-service in cities

10 January 2013

Kpmg1
Biggest investments in powertrain technologies over next five years. Source: KPMG. Click to enlarge.

Global auto executives have cooled a bit on the prospects for e-mobility, with a majority of automakers from both developed and emerging markets believing that internal combustion engines (ICE) will remain the dominant powertrain for some time, according to the 14th Annual Global Automotive Executive Survey conducted by KPMG LLP, the US audit, tax and advisory firm.

Two-thirds (67%) of respondents believe e-vehicles will represent 15% or less of total new car sales by 2025. Nevertheless, this still represents potential sales of up to 5.7 million in China, 2.5 million in India, 3.8 million in the US and 2.1 million in Western Europe.

In the 12 months since the last KPMG automotive survey, the optimism over electric cars has dampened considerably among automakers from TRIAD [Japan, Western Europe and North America] countries, the majority of whom now acknowledge that it will be well over 6 years before electric vehicles overtake ICE as the cleanest, most efficient technology.The trend is similar among respondents from the BRICs [Brazil, Russia, India and China]: in 2012 half believed ICE had up to 5 years left as the leader, yet this year they acknowledge it could be another 6 to 10 years before e-cars become more efficient.

These results show an increasing realization that the electric vehicle is not quite the savior many had hoped for. Although e-technology is still high on the agenda, respondents from the mature regions now place a greater faith in optimizing ICE technologies. Even in the BRICs, ICE downsizing has become a big deal.

—“14th Annual Global Automotive Executive Survey”

The survey found that most companies are hedging their bets and spreading funding across a wide range of areas, with ICE downsizing and plug-in hybrids expected to receive the greatest investment over the next 5 years. OEMs are allocating a higher proportion of their resources into hybrids (either plug-in or pure), with just 8% investing primarily in battery technology.

“...more than half of auto executives involved in the survey feel that battery electric vehicles will have the same driving range as their petrol-fueled equivalents within 6 years.”

Around 40% of Chinese and 37% of Brazilian manufacturers and suppliers are investing the largest proportion of their powertrain resources in ICE optimization, according to the survey. This is “quite a turnaround in direction”, the report on the survey notes, and a sign that some of the newer technologies are taking longer than expected to emerge.

The report suggests that perhaps TRIAD markets have already established a lead in ICE powertrains and are therefore choosing to expand into newer areas, while the BRICs are playing catch-up, and that consequently respondents from the developed TRIAD nations are more likely to invest in pure battery R&D.

Forty-one percent of executives taking part in the survey believe that government subsidies are needed if e-vehicles are to become affordable.

Since the 2012 global survey, respondents from both the US and Russia have become more optimistic about the potential for e-mobility in their countries, whereas those from Brazil and Japan have reduced their expectations, which is surprising given that Japan has traditionally been seen as a pioneering force in electric vehicles.

It seems that a lack of infrastructure, high purchase prices and limited driving range are deterring consumers from embracing e-vehicles on a large scale. However, despite the caution of manufacturers, more than half of auto executives involved in the survey feel that battery electric vehicles will have the same driving range as their petrol-fueled equivalents within 6 years.

—“14th Annual Global Automotive Executive Survey”

Regional expectations on the market share of all annual new e-vehicle (based on light vehicles) registrations by 2027 (in million cars) are:

  • US: 40% of respondents believe the share of e-car registrations will be 16–20%.

  • Western Europe: 33% believe the share will be 6–10%.

  • Japan: 46% believe the share will be 11–15%.

  • Brazil: 35% believe the share will be 1-5%

  • Russia: 33% believe the share will be 16–20%.

  • India: 25% believe the share will be 6–10%.

  • China: 32% believe the share will be 11–15%.

In terms of allocating R&D expenditures, the single biggest response around the world (from 42% of respondents) was for the traditional combustion engine. Only 13% voted for alternative propulsion technologies. However, 24% split their spending equally among different technologies and 21% are uncertain how their company splits its expenditure, suggesting a lack of clarity over development strategies, the report notes.

Urbanization and mobility. The survey also found that auto execs generally agreed that in the future, more and more city dwellers will choose not to own a car, preferring to access vehicles and other forms of transport through mobility-as-a-service (MaaS).

A majority of respondents believes that 6-15% of urban inhabitants will use MaaS in the next 15 years. The market for MaaS could be as high as 105 million people in China, 54 million in India, 32 million in the US, 20 million in Brazil and 18 million in Western Europe. In comparison to last year’s survey, these figures are a significant increase.This is largely due to the expected increase of the urban population in China, within which the percentage of potential MaaS users has stayed the same.

For OEMs accustomed to selling and leasing cars, MaaS is to some extent a leap into the unknown. There are a number of ways to achieve positive margins from such new business models, with respondents most optimistic about the provision of added-value services, such as apps for mobile payment and location-aided services.

Two-thirds believe that MaaS could be a profitable solution for the overcrowded megacities of the emerging markets. Resales are seen as an attractive option especially in TRIAD markets, and this could also spread to China, with its anticipated rapid increase in demand for used cars. A higher proportion of respondents from developed countries think that mobility solutions offer opportunities to market e-vehicles.

—“14th Annual Global Automotive Executive Survey”

Blurring boundaries, changing models. At a high level, the survey finds that a range of global megatrends are blurring the traditional boundaries of the automotive model. Automakers face environmental challenges, growing urbanization, changing customer behavior and the growth of the emerging markets.

These rapid changes are forcing a re-evaluation of traditional business models, as OEMs seek to broaden their core competencies and choose whether to move into multiple new areas or narrow their focus.

Kpmg2
Routes to success. Source: KPMG. Click to enlarge.

Other areas investigated by the survey include:

  • Customer behavior and dealers. Online activity is increasing, as is multi-brand availability, with dealers serving as touch points for mobility services, financial services and car servicing. Captive financial service arms are increasingly attractive, especially in emerging markets.

    83% of auto execs from the Americas predict that online activity will increase for both dealerships and intermediaries. Only 54% of respondents from TRIAD countries believe the existing dealership model is vital to future success.

  • Growth and globalization. BRICs’ share of global vehicle sales are expected to near the 50% mark by 2018, with these nations also exporting significant volumes.

    While sales and production in Western Europe and Japan continue to decline, the reverse is true for the BRICs. Overcapacity remains an issue, and no efficient solutions have so far been found.

  • Routes to success. The main growth tactics include new products and new markets, affordable vehicles and sales and price incentives. OEMs favor corporate partnerships over organic expansion, while suppliers are expanding their value chains and diversifying.

  • Winners and losers. Volkswagen (at number one) and BMW are the only two providers from ‘mature’ economies in the list of top 10 fastest growers. There are four Chinese manufacturers in the top 10.

Resources

January 10, 2013 in Electric (Battery), Engines, Fuel Efficiency, Market Background, Mobility services, Plug-ins, Surveys | Permalink | Comments (8) | TrackBack (0)

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Comments

Electric Vehicles have had their time in the sun, they had a good run.

Who Killed The Electric car? Why the small diesel and petrol hybrid did.

The energy efficiency of new internal combustion engines is very good and coupled with hybridisation, there is no space for EVs.

What will win in the end? The CNG hybrid of course, filled at night with gas at home using home fill compressors that chug away overnight on the days of the week that the wind is blowing. Only fill up 2 x a week so just do it on windy nights.

So, utlises the wind for compression that could have charged EV batteries but in a way that allows complete 100% displacement of diesel/petrol as no range issue anymore on CNG (as they hardly use any fuel)

The fact that UK has >200 years worth of gas under Lancashire etc helps as well.

Sorry Qatar, sorry Saudi Arabia, sell your fuel to someone else please.

I cant wait for the US home fill devices that are being funded by Obama (you got to admire the US Govt – they funded the shale gas technology breakthrough and are now funding home fill CNG. We would call it joined up thinking)

We are in a Golden Age for natural gas and I haven't even mentioned biomethane which is what we work in!

@baldwincng.
To mention a couple of the more egregious errors in your post, you are confounding resources and reserves.

No resource can be extracted at 100%, nor anything like it.
The original reserve base it first knocked back to the technically recoverable reserve, what could be got if money was no object, and then a fraction of that becomes the economically extractable reserve.

You then propose going to the expense of installing CNG tanks in the home, to be powered by compression equipment which only runs when it is windy.

It is not clear why you want to use CNG in vehicles rather than the far more efficient hydrogen and fuel cells, which uses the gas around twice as efficiently even after allowing for compression losses, assuming that you use natural gas for that rather than only getting fuel when the wind happens to blow.

I hope your numbers for biomethane make rather more sense.

This is obvious and Ford shows it. They put a 2L in the Fusion Energi which holds true to form.

Naturally, I will again mention the double efficiency of the Artemis hydraulic hybrid in urban traffic without any downsizing of the engine.

The INNAS NOAX CHIRON free piston hydraulic pump can be used in pairs for low vibration to provide hydraulic power and energy with large pistons for efficiency that approaches that of fuel cells and with far lower costs than fuel cell electric hybrids or any electric hybrids. Bladon jets can make tiny turbines to recover more energy from the exhaust to keep the lighting battery charged and improve the efficiency to more than that of the well to wheel efficiency of the hydrogen fuel cell automobile.

Methane (natural gas, erdgas etc.)in several small tanks can supply sufficient energy for most automobile trips and a NOAX style methane powered methane compressor can be used most efficiently to fill the tanks. For those who like biogas, methane can be made at home rapidly from any food starch or sugar that humans or animals eat. The engine can run on liquid fuel for longer trips.

A company in the Netherlands knows how to make a natural gas liquifier that can be run at home, but first it should be used for stranded natural gas. It can also be powered by a NOAX type free piston engine.

Unless there is a carbon tax, methane is too cheap now to consider wind power for most situations. Antarctica should have many more wind machines, but the government there (none) does not require it by legislation or support it by subsidies. There are places and times there where it is always daylight so solar cells are a good fit?

Combine three molecules of methane to make one of propane plus two of hydrogen which can be burned with oxygen to provide the heat required for the process and you have the nearly perfect automotive fuel. Low pressure liquid: high octane rating: No spills to clean up: No CO2 released at the fuel factory.

Like electric cars, Fuel cells are too expensive now. ..HG..

Are these the same executives who ran GM and chrysler into the ground and nearly crashed the world economy? Or are these the guys that used huge federal tax dollars to save themselves from failure. Maybe it's the guys that said seatbelts, catalytic converters and airbags would destroy the car industry. History tells us that these guys are typically buffoons.

Davemart

The CNG tanks are on the CNG car, as VW Eco Up! at 79 g/km. Gas is taken directly from the grid and into the vehicle, no storage at the home.

The Eco Up! has been given the award of Germany's most environmentally friendly car. The Verkehrsclub Deutschland (VCD) — Transport Association Germany — awarded five stars and overall first place for 2012/2013 to the VW eco up!

With home fill needs a compressor to run approx 30 hours per week for annual miles of 15,000 - to save co2 it is best to select the 30 hours at times of high renewable elec production and low elec demand. Solar also a great source. Of course can also run on fossil generated electricity but that should just be back-up. The VW Up! also runs on petrol, range around 500 miles

Because of the existing gas grid, if you do the full well to wheels of CNG home fill using wind for electricity and highly economical VW Up! it is much lower than using gas to make h2 for fuelling a car.

H2 is very good to use surplus electricity but it is very inefficient if made from NG as the conversion process is far too wasteful in energy terms

Of course the idea is to make Biomethane, inject it into the gas grid and take it out at the home fill device. More than 200 CNG stations in Germany now offer this, very low carbon, very efficient

It is incredibly exciting to see cars such as the Up! I have waited 15 years for cars to be designed specifically for CNG and we now have them and they are fantastic. The old range issue with CNG has completely gone away due to the efficiency strides which means a large CNG tank is not required.

We are entering a Golden Age for gas and it is a fantastic opportunity for the planet, to reduce global warming, displace coal and oil and support renewables.

"Are these the same executives who ran GM and chrysler into the ground and nearly crashed the world economy? Or are these the guys that used huge federal tax dollars to save themselves from failure. Maybe it's the guys that said seatbelts, catalytic converters and airbags would destroy the car industry. History tells us that these guys are typically buffoons."

What Brotherkenny4 said.

This is so beautiful and creative. I just love the colors and whoever gets it in the mail will be smiling. sell wheels

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