ELECTRIC VEHICLE TECHNOLOGY

Electric Vehicle TechnologySustainable Energy Supply InfrastructureMarket Drivers and E-Mobility ConceptsPilotsEnabling / Innovation Accelerator

Findings

Technology, Value Added and Supply Chains of Electric Vehicles


The electrification of the drivetrain has already been implemented in many new models of most OEM. First step is a start-stop-system, often with an integrated starter-generator. The next step in electrification leads to a mild hybrid, the electric engine is used to support the internal combustion engine (ICE) during acceleration or in stop-and-go traffic.

Those vehicles which are able to drive serious distances purely electric need a significantly
larger battery, which recharges through a generator, driven by the ICE or by plugging it to an external power supply. Examples for plug-in hybrid electric vehicles (PHEV) are the Toyota Prius, GM Volt and Ampera.

The last step of the electrification of the drivetrain is to remove the ICE. The set up for a completely electric vehicle may be very simple. The mechanic drive train is reduced to an electric motor that drives the wheels directly or through a differential gear box. The complete drive train is less complex, compared to conventional vehicles with ICE. This gives a lot of new freedom for the design of EV. The big drawback is the battery. It is big, heavy and expensive and can hold less energy than a fuel tank. The range is limited to less than 200 km with a battery capacity of 15 to 25 kWh. Purchase costs for EV are much higher, but the pure costs for operation (consumption, maintenance) are significantly lower than those of conventional cars. For some BEV range extenders are available, which guarantee independence from recharging. A range extender has a small ICE, a fuel tank and a generator to produce enough electricity for the BEV when the battery is down. The range extender turns the BEV into a PHEV.


The battery electric vehicles (BEV), available today, are very similar to conventional cars in terms of design, comfort and safety. Most OEM use existing platforms or derive the design of an EV from existing models. Even completely new developed EV are designed like conventional cars.


We expect BEV to be competitive, concerning total cost of ownership (TCO), first for urban delivery services, commuter services and on site traffic. Those BEV run high daily mileages on defined routes with good access to recharging points. Pilot projects in most European countries have demonstrated the suitability of EV for mission of fleet operators.

Without massive governmental measures we can anticipate, that under present conditions,
BEV will at first be operated in commercial fleets. Private customers will follow, when prices go down.

Besides the battery, the costs for production of BEV are significantly higher than the production costs for ICE-vehicles. A reduction of production costs can be achieved through mass production and efficient supply chains in the future.

Analysis of the supply chain for BEV in comparison to ICE

Two major criteria were analysed for predictions on the design of the supply chain for BEV. These are value added in production and consumer value.


A BEV comes along with ~ 63 % higher value added, which is mainly generated at the supplier for the battery cell. About 75 % of the ICE drive train production value falls away. This is an important and not surprising message for the suppliers.


Important for the OEM is a combination of own competence strength and customer value. This is in general the base for a make-or-buy analysis. In simple words, high competence of the OEM and high customer value result in a high probability, that the OEM chooses to produce the component. This reflects the core competences of the OEM.


Currently other strategic aspects have to be considered, to understand make-or-buy decisions of OEM.

  • The production of the electric drive train requires know how, which is yet not built up on either side, suppliers and OEM. For a deeper understanding, some OEM try to keep the whole development in-house at first.

 

  • The pressure on purchase costs for EV is high. Some OEM may decide only on prices if they produce components inhouse or buy it from suppliers.
  • In strategic alliances of OEM and suppliers with special know how in electric components, the share of production and value added are a term of negotiation.

An OEM which focusses on high quality and high performance may probably choose to produce engine management, integration of batteries and electric systems, thermal and battery management. Suppliers may develop and produce transmission, battery cells, power electronics, high voltage wiring and comfort/safety/infotainment components.

Other OEM may decide different, depending on the preferences of the core customer groups, e. g.: performance, quality, comfort, safety, style and price.

Today the supply structure for BEV production is not suitable for an efficient mass production. Many one-on-one relations require an extensive management to ensure the production.


The small number of vehicles, especially if we consider converted BEV, is produced with a
high amount of manual processes. It can be characterized as batch production.


Along with the rising demand, the production capacities and supply chains have to be adapted to mass production design. Since battery production capacities are not yet  sufficient for the future demand, new plants are necessary as well. A local sourcing share
for the electric components is necessary and essential since the main value added of future vehicles is created in this field.


Although the BEV has a simple setup from technical side, compared to an ICE vehicle,
mass production is a complex process which follows the same principles and requires high investments in advance. From this point of view, we expect, that the mayor OEM of today will also dominate the future market of EV. New OEM will certainly appear, but will face
a strong competition in the mass markets. For niches and probably new segments of vehicles there may be better chances for a long term success.


For many regions in North West Europe, the supply for the automotive industry is an important part of the economy. The introduction of e-mobility will have an effect on the suppliers, but will not cause significant changes within the next decade. On the other side
we see good chances for new components and suppliers to grow in e-mobility. Some
recommendations might be considered to enter the automotive industry as a supplier

for EV components or technology.Automotive industry produces extremely effective, margins are narrow and quality requirements are high.

  • Suppliers must have a good know how in production and product technology, an understanding of the following production processes and customer needs is essential.
  • A supplier has to orientate towards the right business partner (OEM vs. system supplier).
  • A supplier should differentiate through innovation from others. A good link to R&D facilities and universities is an advantage.
  • Production facilities have to be suitable for mass production.
  • Pilot projects offer opportunities to start cooperation with OEM, 1st/2nd tier suppliers,R&D/universities and public bodies.

Perspectives

The automotive industry is a global industry. This is also true for e-mobility, which is driven
from the industry on international level.


We expect great differences in the markets for EV, due to different governmental regulations,
economic and ecologic framework and customer acceptance. A benchmark concerning markets and production of EV in Europe, the US and Asia anticipates good chances for European productions, due to competences in vehicle production, engineering and qualified personnel, but also clearly shows the strong position of Asia and ambitions of the US.


A reasonable prognosis for the next 15 years cannot be made without considering the development of the energy market, especially fossil fuels, and of changing mobility demands in Europe and Asia, especially in urban environments. On one hand, a shortage of fossil fuels will lower the cost-break-even for EV compared to the ICE, on the other hand a growing environmental awareness may also lead to multimodal individual mobility, which
can weaken the automotive market. For Europe and its automotive industry it is necessary
to be flexible in production volumes and vehicle design for the coming decades.