Bain: Germany’s goal of 1M electric cars by 2020 is unattainable; fewer than 50,000 units on road by end of this year
The German Federal Government plan to have one million electric cars on its roads by 2020 has failed, according to the analysis of international management consulting firm Bain & Company. By the end of 2015, there will be a total of about 50,000 electric cars and plug-in hybrids on the roads in Germany (about 75% below plan); nevertheless, structural transformation towards electromobility is continuing, according to the firm.
Stricter emission laws and the technological advances in electric drives will accelerate the trend towards e-mobility in the medium term, Bain said.
In 2014, Germany had only about 26,000 pure electric cars and plug-in hybrids registered. According to the policy plan, that number should have been 100,000 units.
According to Bain analysis, 20,288 electric cars and plug-in hybrids were registered from January to November 2015 in Germany, suggesting approximately 23,000 vehicles for the full year. But instead of the targeted 200,000 electric cars and plug-in hybrids the total inventory is the end of 2015 will be less than 50,000 vehicles—about 75% below goal.
In terms of international electric car market share, Germany with 0.6% (as of 1Q 2015) is far behind Norway (33.1%) and the Netherlands (5.7%).
Tax incentives, special depreciation allowances for electrically powered service vehicles and incentives for private customers of up to €5,000 (US$5,450) per vehicle are currently discussed politically, but the funding remains unclear.
The challenge now is to develop electromobility under the prevailing conditions in Germany. In the medium-term there is no alternative to achieve the more stringent emission standards by 2025.—Dr. Klaus Stricker, Head of Global Automotive Practice Group at Bain & Company
The European Commission is discussing new CO2 and fuel consumption targets for 2025 that could be a further 18-28% lower than those of 2020. Further, changes in emissions testing with the advent of the WLTP and Real Driving Emissions (RDE) will raise the performance bar.
Against this background, it is even more important now to create a solid basis for a sustainable growing market for alternative drive systems, beyond political visions.—Dr. Stricker
According to Bain analysis, the cost of Li-ion battery systems will fall significantly from today’s €260/kWh (US$283/kWh) to be less than €150/kWh (US$163/kWh) by 2018, with the possibility of dropping further to €110/kWh (US$120/kWh) by 2022. The more than 50% decrease in Li-ion costs in the coming years will fuel structural change, Bain said.
In parallel, policies will drive an increase in the cost of conventional drives, forcing further optimization of engines and exhaust technology further. Bain projects that the cost of pure electric cars with the required range and corresponding battery capacity compared to vehicles with combustion engines will achieve parity about 2022 when calculated over the entire lifecycle.
However, the exact timing of cost parity depends on different, non-predictable factors, including oil and fuel prices as well as national and local policy decisions, such as zero-emission zones in inner cities.
Bain suggests several key areas for action for manufacturers to prepare for and to support what the company sees as an inevitable transition to electromobility:
Further develop battery technology. The development and production of Li-ion batteries for electric cars is mainly the domain of Asian manufacturers. Bain advises the German automobile manufacturers to work together at a local battery production, ideally including cell production, through consortia similar to Audi, BMW and Mercedes’s acquisition of Nokia Here digital maps and related services. The next generation of batteries—especially solid-state batteries—re-open new market opportunities, Bain said.
Build the charging infrastructure. Consumers demand sufficient charging and fast charging options for their e-cars, both in the city and on the highway. Tesla for example, maintains in Germany today a fast charging network with 55 "Super chargers". Other manufacturers rely on their own networks, which also here synergies must be realized by multi-vendor solutions.
Expansion vehicle range. With ever-improving efficiency of electric cars, manufacturers will also broaden their EV product ranges. Instead of electrified derivatives of conventional vehicles, new vehicles coming on the market are optimized for electromobility.