Carmakers must invest in battery development and recycling, study suggests
If car manufacturers want to be economically successful with e-mobility, they should enter into vertical cooperations with raw material suppliers and develop sustainable solutions for the recycling of used batteries. These are the central recommendations of the new “Index of Electric Mobility 2018”.
This index shows how the seven leading countries in the field of automotive technology are positioned in the overall ranking and according to the three indicators market, technology and industry. The study included China, France, Germany, Italy, Japan, South Korea and the U.S.
The United States share first place with China in the current overall ranking, mainly due to a higher supply of all-electric cars in the mid-price segment. “China underscores its leading industrial position thanks to strong growth in vehicle and battery cell production and remains the world’s number one in e-mobility,” explains Wolfgang Bernhart, Partner at Roland Berger. The share of hybrid or all-electric cars in total new registrations in China was 2 percent for the first time in 2017. Germany was 1.5 percent.
French OEMs continue to lead the technology field, not least through the consistent expansion of their product ranges with a focus on smaller, low-cost electric cars. In contrast, Germany, is only fifth in the industry ranking behind Japan and Korea, although German car manufacturers are building more and more electric cars. “German OEMs have signed supply agreements that largely cover their demand for battery cells and modules for the coming years,” says Bernhart. “But they have also become dependent on very few suppliers.”
The market power of cell and battery manufacturers will continue to increase in the coming years. While only about one million pure e-vehicles and plug-in hybrids were on the road worldwide in 2017, the number of newly registered e-vehicles will rise to over 20 million worldwide by 2030.
To achieve this, capacities for the production of battery cells for passenger cars and commercial vehicles must increase significantly: from 70 gigawatt hours in 2017 to up to 1,600 gigawatt hours in 2030. Roland Berger and fka experts therefore anticipate a global market volume for battery cells of around 19 billion dollars by 2021. China will have a share of 29 percent, followed by Korea (21%) and Japan (17%).
Germany, in contrast, does not yet have significant cell production. Although a Chinese battery manufacturer (CATL) has announced that it will also start production in Thuringia at the end of 2019, this will only further increase dependency: “Car companies must finally react and develop suitable strategies, otherwise they will either be unable to implement their planned electric fleets due to lack of capacity or become dependent on individual battery manufacturers,” says Alexander Busse, consultant at fka. “The decisive factor here is that both OEMs and cell manufacturers keep the value chains in focus in order to avoid possible raw material bottlenecks and achieve competitive costs,” adds Wolfgang Bernhart.
The experts at Roland Berger and fka therefore see two strategic options for OEMs to protect themselves against excessive dependence on cell manufacturers.
The first strategy, the establishment of own battery cell production is particularly useful for large car manufacturers, since they are in a position to achieve the necessary technological know-how and to make the high investments – for example in research and development – permanently. OEMs should enter into partnerships along the entire value chain to hedge against risks.
As an alternative, a less monopolistic supplier structure could be set up to counter supply bottlenecks and the high price sensitivity along the value chain for battery cells. The aim should be to include other suppliers in addition to the dominant manufacturers so that they can grow. This could lead to increased competition in the market.
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