Electric mobility will be highly disruptive for the automotive industry. But the timing of this disruption seems to be more uncertain than ever: in fact, there are several factors influencing the electric car market that will have to be resolved in order to unchain it from its stale and sleeping present state and express its fully disruptive potential.
The Battery Barrier
The main concerns are still those regarding battery issues. According to McKinsey, although from 2010 to 2016 the prices of a battery pack fell considerably from $1,000/kWh to roughly $227/kWh, this 80% drop is not enough: the battery keeps representing the main cost source of an electric vehicle (EV). It is more costly than internal combustion engine (ICE) powered vehicles.
In fact, a 60 kWh battery translates entails an immediate cost of $13,500, showing that EVs are not yet ready to compete economically with ICE in the near term when it comes to the purchase. The predictions about a possible battery pack price below $100/kWh by 2030 seem still too far away.
Another battery-related issue is the range: consumers says autonomy concerns are the major deterrent when it comes to thinking about purchasing an electric vehicle. Range issues have as a natural consequence the problem of infrastructure. In order to address concerns regarding low autonomy, a capillary recharging infrastructure should be put in place. So why has no one developed it yet? It is like the causality dilemma of the chicken and the egg: what came first? What is the cause and what is the effect? Any successful infrastructure should take into account the recharging needs.
But since the market is still in its infancy, there is no recharging standard: every car manufacturer has the incentive to propose its own technology. As a consequence, designing an infrastructure able to satisfy all the potential demands is impossible in the short term.
So consumers will think twice before buying an EV vehicle knowing that they can not count on an effective infrastructure. This limits the potential of the market, and everyone is waiting for something to happen, resulting in the poor performance (Global EV Outlook 2016 by IEA).
Why Investors Are Not Worried
If all these issues seem to scare potential consumers resulting in poor sales, investors are sure the EV is going to be a gold mine in the future. Every car manufacturer is launching its own electric vehicle line as the forecasts about the demand for EVs in the next years are expected to rise dramatically.
CATL, a Chinese firm operating in the battery industry, says that by 2020 it plans to produce more than Elon Musk’s Gigafactory, exploiting the expected rise in demand for EVs: that would make it the biggest battery factory in the world.
The reasons for this optimism about the future development of the electric car market are different: firstly, meeting 2030 decarbonisation and sustainability goals requires a major deployment of electric cars, so traditional car manufacturers will need to boost EV sales in order to respect the CO2 emissions threshold.
Then comes the urbanisation issue: the endless flow of people moving toward cities will increase the need for new mobility solutions in order to meet the high standards for quality, and at the same time will result in shorter distances on average per trip, constituting a partial solution to the range concerns.
Last, but not least, there are all the other trends related to the auto industry, like the autonomous vehicle, connected cars and shared mobility, that seem to have a great potential for development when associated with the electric car.
It seems that the disruption caused by electric vehicles in the automotive industry is unavoidable: the only uncertainty relates to timing. The time bomb is armed, and no one can turn it off.