Battery electric vehicles and climate change
market dominated by five players: LG, Samsung, Panasonic, BYD and CATL. This is perhaps unsurprising, given the region ’ s strength within the tech and electronics industry and the national growth of BEVs that has already been seen in China as an early-adopter nation. This outsourced expertise and supplier dominance creates a challenge for OEMs: for competitive differentiation, they each need access to ‘best in class’ battery technology, but have none in -house; they require open-market sourcing of batteries across a stable consolidated market if they are to be able to encourage both scale research development within their supplier base, while still able to negotiate effectively to bring down the purchase price of batteries; and finally they require deep and collaborative partnerships with battery suppliers if they are to integrate power management technology into vehicle platforms to optimize vehicle range and recharge times. These needs create a set of complex interactions between OEMs and the battery supply industry, which all need to come together rapidly if both increases in battery capacity and reduction in costs and charge times are to move at a pace that OEMs will need for electric vehicles to become a compelling proposition for consumers. Furthermore, battery technologies need to develop with sufficient lock-step standards to enable an inter-operable charging infrastructure for all vehicle types. Indeed, improvements in BEV OEM technology – allowing reduced purchase price, improved driving performance, and greater range – is academic unless consumers can readily charge their new vehicles. Concerns over charging convenience remain a major barrier to purchase, with a range of charging solutions required for a variety of charging use cases (exhibit 4.1). While home charging offers slow overnight ‘refilling’, the need for fast charging for ‘emergency’ needs, or for mid -point stops in long distance trips – and to address urban dwellers’ challenges in installing home charge access points – creates consumer concern and the need for a broader range of charge solutions. And yet, downstream fuel retailers, who already have the existing site footprints to be able offer recharge locations, have limited incentives to rapidly build out any infrastructure. While Tesla, as a lead player driving early adoption, has developed its own supercharging grid ( ‘ Tesla supercharger station locations ’ , 2020) across US and Europe (exhibit 4.2), normal rules would indicate that single player investment is irrational, and likely to lead to a fragmented supplymarket and consumer confusion. New consolidated industry bodies are therefore rapidly emerging to address the challenge, with major OEMs jointly investing to address the ecosystem need. Ionity, founded as a joint-venture between BMW, Daimler, Ford, Volkswagen, Hyundai and Kia, is now building a long-distance charging network ( ‘ Our Network ’ , 2020) across major traffic routes, withmore than 400 locations planned across Europe by 2020 (exhibit 4.3). Locations need to be selected based on vehicle flow projections, forecast distances that BEV drivers will make, and anticipated recharge times (National Grid, 2019). However, creating a charging network is only one part of the challenge. Electricity supply is required to reach all charging stations, and national electricity grid operators are now focusing on reinforcing and extending their power connections to such locations – such as Motorway Service Areas (MSAs) – to enable sufficient power for ultra-rapid charging hubs. These same operators are also now forced to anticipate new demands on electricity power generation, with not only increased needs for electricity, as BEVs replace ICE vehicles, but a temporal shift in demand, as home-chargers draw overnight on networks to ‘refill’ their cars (National Grid, 2019). Globally, b etween £200-400 billion of infrastructure investment is anticipated by 2040 to enable supercharger and home-chargers (exhibit 4.4, source: Morgan Stanley, 2017)
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