Why Japan leads in electromobility – and why this could change soon
If one sees the supporting role (at best) electromobility plays at the Geneva International Motor Show, one cannot escape the conclusion that despite frenzied design efforts and eye-catching announcements, the European carmakers are only half-heartedly committed to electric driving. Instead, they continue to push the conventional combustion engine technology to the limits.
The ‘Electromobility Index’ compiled by Roland Berger and the Aachen-based Forschungsgesellschaft Kraftfahrwesen (Research society for Automotive Issues) compares the competitive position of seven leading automotive economies – China, France, Germany, Italy, Japan, Korea and the U.S. – under the aspect of electromobility. The index ascribes the clear leadership in this mobility segment to Japan. The country leads in terms of technology as well as in terms of electric vehicle sales.
There are multiple reasons for Japan’s pole position (and Europe’s and to some extend the USA’s backlog) in the electromobility race.
- In Japan, electric vehicles are up to 40 % cheaper than in Europe.
- The charging infrastructure is far more developed in Japan whereas in Europe the lack of such an infrastructure still acts as a major roadblock to acceptance.
- As a consequence of the better price-performance ratio, 80 % of Japan’s electric vehicles are used privately where they seriously compete with conventional vehicles.
- Battery manufacturers in Japan (and in South Korea) master the entire battery production value chain, resulting in a competitive advantage for these countries.
In Germany, the price-performance ratio in battery manufacturing has slightly worsened over the past quarters. For this reason, South Korea currently holds a leading position in battery technology and manufacturing. The reason why Germany fell back in the competition is that it focuses on the high-end part of the market – something Germany currently has in common with the US. France lacks dynamics in the e-car model range, the study finds – and in Italy as well as China the progress is stagnating.
In terms of industrialisation, Japan is leading the field together with the US – both nations host the world’s most important production locations for electric vehicles. In this competition, Japan benefits from its strong position in battery production. The researchers believe that until 2016 Japan will keep its dominating market share of some 60%, followed by South Korea with 16 %. Germany will stand for a humble market share of just 4% in the battery market.
By 2016, the US will crank out 460.000 electric vehicles, followed by Japan with 385.000 units. Germany and France are neck-and-neck with 250.000 and 260.000 e-cars.
When it comes to market size and acceptance, the US remain the lead market with 96.000 vehicles sold in 2013. However, this is just a relatively small share of the total market. Under this aspect, France holds the top position: The share of e-cars in the total market is 0.83 % – very moderate but still higher than in the US (0.62 %) and Japan (0.59 %). In Germany, electric vehicles have a very small market share of 0.25 % or just 7400 units sold.
There is however a big caveat in the calculations. If Tesla manages to launch its Gigafactory and achieves the production output announced, this would massively impact the global battery value chain. Tesla propagates a manufacturing capacity of 2 billion type 18650 round cells annually, representing an energy content of 6.5 Gigawatt-hours. As a comparison: In 2012 the global lithium ion battery production amounted to 40 GWh. The type 18650 battery is wrapped instead of folded and stacked, which enables a much more cost-effective production compared to the batteries typically used for e-cars. With its high production output in its Giga factory, Tesla could achieve economies of scale. This could lead to 40 to 45% lower production costs and up to 12 % lower material costs. Overall, the cost advantage of this cell type could rise to $40 to $45 per kWh, triggering a fast price decline and, as a consequence hereof, to a consolidation process in the industry.
There is however a caveat in the caveat: The high buying power of just one market participant would make it less attractive to develop better cell chemistry, resulting in lower innovation thrust, the experts warn. It also remains to see if other vehicle manufacturers will switch to type 18560 cells, because thus they would become dependant from a competitor.