Government support for e-mobility is declining in all the countries surveyed with the exception of China, according to the report. None of the subsidy programs that ended at the end of 2012 were renewed. Additionally, the support that exists is inversely proportional to the increase in these countries’ economic performance—i.e., with subsidies growing more slowly than GDP, the subsidy situation does not benefit from increases in economic output.

Overall, worldwide sales forecasts—and hence the related production forecasts for EVs and PHEVs—are more conservative than in the preceding survey period. Among the seven automotive nations tracked by the index, the share of production in some segments is shifting in favor of individual countries. Since the previous survey, forecasts for vehicle production in Germany, France and South Korea have experienced positive development but remain at comparably low levels. Forecasts for vehicle sales in China, the US and Japan have been corrected downward. Growth in France is attributable above all to significantly higher sales forecasts for the Renault Twizy.

...Negative overall development in the market for EVs and PHEVs, despite mature technologies and optimized cost structures, suggests that the right conditions are not in place. Yet politicians still hold fast to the targets already set to ramp up the market for this class of vehicles—while conceding that realization will be delayed in some cases.

—Roland Berger E-mobility index for Q1 2013

According to the report, three major challenges still exist to the acceleration of adoption:

1. xEVs are unattractive to OEMs as a financial proposition. OEMs realize lower margins on the sale of electric vehicles than on vehicles with conventional powertrains. In terms of the total cost of ownership (TCO), partially or fully electrified powertrains are still at a significant cost disadvantage over the entire lifecycle compared to conventional powertrains.

   OEMs experience a shortfall in profit margins if they sell a plug-in hybrid vehicle (PHEV) rather than a vehicle with a conventional powertrain. The customer benefits from lower energy costs due to lower fuel consumption, but the OEM is not fully recompensed for the extra cost it incurs. As long as emissions standards and CO₂ targets can still be met with optimized internal combustion engines, there is thus no special incentive—marketing reasons aside—for OEMs to place more than the politically required minimum number of xEVs on the market (to comply with market access regulations, for example).

   This is a problem that will hit the e-mobility market even harder if further US fracking projects go ahead, the consultancy says.

   Extracting oil by fracking could stabilize the oil price over the next few years. This would make the cost disadvantage for alternative drives even worse.

   —Roland Berger Partner Thomas Schlick

2. Battery safety a key area of technology. Apart from attractive cost considerations, customers’ acceptance of EVs also hinges to a large extent on the safety of the vehicles on offer, the report asserts. In this context, the lithium-ion energy storage systems used in most of the EVs and PHEVs currently on the market are safety-critical components. Deformation of or damage to these systems can lead to critical behavior (a fire or an explosion, for instance). Verification of this problem in mechanical tests at cell level, in real accidents (in China and the US) and in crash tests has had a significant negative impact on public perception, according to the analysis.

   To ensure functional operating safety, legislatures have defined clear rules for the approval of EVs (e.g. ECE-R 100). For their part, OEMs are using rigid safety structures to provide passive protection against mechanical stresses on the battery systems. These measures are intended to avoid critical impacts as a result of accidents in the current generation of vehicles. However, these structures increase the weight of the vehicles and thus reduce their range, which is another important factor for customers. Innovative safety concepts for these battery systems are thus a key area in the development of EVs that are both safer and more efficient.

3. Infrastructure is becoming a global hurdle. The purchasing potential represented by early adopters is now being tapped by the current array of vehicle offerings for both private customers and institutional fleets. Once replacement buyer potential has been exhausted, just how suitable e-mobility is for unrestricted everyday use will come more sharply into focus, the report says.

   The public perception is that the problem of electric vehicles’ limited range has not yet been adequately addressed. Since optimized storage technologies will not be available until after 2020—according to Roland Berger’s analysis—this problem cannot be resolved on the basis of existing technology for pure-play battery electric vehicles. Only the availability of a comprehensive charging infrastructure that also features fast-charging options can address the issue in the interim.

   In this context, Germany, France, China and South Korea have already specified for the kind of charging infrastructures they envisage in the future. However, in view of considerable uncertainties surrounding planning, high required upfront investments and long payback periods, there are currently no business models that would make it attractive for private investors to enter this market.

   Only a lasting public-sector commitment that is understood to be an issue of national importance can elevate battery electric vehicles from a niche functions and establish their role in national vehicle fleets in the long term, according to the consultancy.

In the long term, the consultancy suggests, South Korea, Germany and France will increase their share in global xEV production. OEMs in these countries are catering to customer preferences more than their competitors in positioning their vehicles, according to the analysis; their products offer better value for money than those of US and Japanese competitors.

South Korea is still out in front in terms of technology, according to the report, although the considerable lead it used to enjoy over France and Germany has been eroded, mainly because subsidy programs have not been renewed.

While South Korea and Japan still have the most advanced vehicle technology, Germany has improved its value for money, according to the report. The reverse is true in the US, where dwindling overall sales and a shift toward more expensive models are resulting in lower value for money.