19 July 2017
E-mobility Winners and Losers
Competing in the E-mobility Era
Though still at an early stage, e-mobility is already affecting players all along the automotive supply chain. Those at the forefront are developing and launching breakthrough technologies. The less risk-taking are, at the very least, considering EV-dominant scenarios when developing their long-term strategies. Below, we look at two key implications of the e-mobility revolution and how industry participants are adjusting.
1. The battery, rather than the internal combustion engine (ICE), becomes the vehicle’s value-defining element.
This major change will render many of the technological achievements of conventional car makers and part suppliers irrelevant for competing in the EV market. As shown below, electric-first OEMs – who have focused purely on innovative battery systems and products – are leading the PEV segment. Battery makers and charging infrastructure providers are also set to gain from this shift, as shown in the diagram below. Traditional OEMs and component suppliers, on the other hand, must be flexible and build up their innovation capabilities to compete in the plug-in market. Even suppliers who are less affected by the phasing out of gas engines, such as paint and lacquer makers, are adapting to the market’s growing concerns with energy efficiency. They are developing functional technologies, such as cooling coatings, to minimise air conditioning waste, thus reducing energy consumption and increasing the range of electric cars.
2. Alternative forms of mobility are emerging in which vehicle ownership is no longer a given.
This trend is set to be particularly strong in China, where a combination of chronic traffic congestion, a dynamic tech scene, rapid consumer adoption, and favourable regulations are pushing it forward. China’s bike-sharing boom is the clearest indicator of consumers’ readiness for alternative forms of mobility. Now, an on-demand car-sharing market is on the rise. An estimated 30,000 shared cars are already in circulation, 95 percent of which are NEVs. The number is expected to reach 600,000 by 2025. Forward-looking OEMs, such as Geely and SAIC Motors in China, are jumping on this car-sharing trend early on. Others, such as Build Your Dreams (BYD), are focusing on another promising segment: emission-free public transportation. Further down the supply chain, the search for new ways of getting from A to B is opening up opportunities for developers of enabling software and hardware.
The table below shows how certain industry clusters are more likely than others to win from the shift to green cars. Even those most threatened by e-mobility, such as ICE component suppliers, are finding their way into the EV supply chain through diversification and innovation.