Semester OEM Review, H1 2021

Automakers were sent reeling in July when lawmakers of the European Union, the world’s largest trading block and one of its biggest car markets, unveiled sweeping proposals detailing how it will become the world’s first climate-neutral continent by 2055. This grand scheme includes reducing net greenhouse gas emissions by at least 55% over the next nine years.

One way this will be achieved is by banning the sale of internal combustion engine cars, something that the European Car Manufacturers’ Association said was “not rational.” This new policy may shrink the playing field for ICE vehicles further, especially after U.S. President Joe Biden’s administration signaled in August that the United States is ready to play ball on reducing emissions, too.

Road transportation is responsible for an estimated 12-15% of global greenhouse gas emissions.

American carmakers were quick to throw their weight behind the administration’s goal of increasing the share of battery electric vehicles and plug-in hybrids in total car sales. Ford, GM and Stellantis (Chrysler, Dodge, Jeep and RAM) released a joint statement on their goal of achieving a 50% share for EVs by 2030. BMW, Ford, Honda, Volkswagen and Volvo released a statement of support of their own, as did the United Autoworkers Union.

Many legacy carmakers have in recent months chosen to finally commit to phasing out ICEs entirely. GM set things in motion with its announcement in January, albeit it for passenger cars only, to give up gasoline in favor of BEVs only by 2035. Other major manufacturers were quick to follow suit. As of August, they included:

  • Smart (Daimler): electrified since 2020
  • Alfa Romeo (Stellantis): from 2024 to 2027
  • Lancia (Stellantis): by 2024
  • Audi (Volkswagen Group): from 2026 to 2033
  • Bentley (Volkswagen Group): from 2026 to 2030
  • Ford: from 2026 to 2030 (Europe only)
  • Fiat (Stellantis): by 2030
  • Jaguar (Jaguar Land Rover): by 2030  
  • Mini (BMW Group): by 2030
  • Volvo (Geely): by 2030
  • Volkswagen: from 2033 to 2035

Other manufacturers have yet to lay out specific time frames, but it is becoming increasingly clear that carmakers’ ICE vehicles will only have a tiny share in new car sales by the end of this decade, especially in Europe. Even legendary German sports car company Porsche has laid out plans to that end.

Global sales of passenger electric vehicles reached 3.2 million units by the end of 2020, an increase of 41% over the previous year.

Sales Force

In the first quarter of this year, some 727,000 battery electric vehicles were sold worldwide, said automotive business intelligence provider JATO in June. Tesla achieved a market share of 25%, Wuling of China 15.8% and Volkswagen Group 8%. Stellantis and BYD complete the top five, hitting 4.8 and 4.6%, respectively. 

The majority of the world’s BEV were sold in China in the first quarter of this year – up 326% to hit close to 400,000 units. In Europe as a whole, they rose by 57% to 212,000 new vehicles, while 115,000 BEVs were registered in the United States and Canada, up 69%. 

On a country-by-country basis, there were marked differences across the globe. While BEV sale growth in South Korea was almost level at 6,100 units, the numbers in Italy jumped 1,023% year-on-year, 410% in the United Kingdom and 305% in Germany. 

First quarter 2021 sales

  • China: 369,300 +90%
  • USA: 101,200 +118%
  • Germany: 64,200 +305%
  • UK: 30,600 +4107
  • France: 30,200 +187%
  • Norway: 19,200 +3%
  • Italy: 13,300 +1.023%
  • Canada: 13,000 +1575
  • Austria: 6,700 +160%
  • South Korea: 6,100

Looking at the first six months of the year, accounting firm PwC puts the share of BEV’s in new passenger car sales at 57.3% in Norway, the highest such figure in the world. BEVs have a share of 12.6% in Sweden and 11.4% in Austria. Germany and the Netherlands follow with 10.7%. The share of BEV’s in China doubled to hit 9.8%.

Power Moves

Another major development during the first half of this year was European auto companies and governments committing to localized battery manufacturing. Still heavily reliant on South Korean, Chinese and Japanese suppliers, the likes of Volkswagen Group and Stellantis have outlined their plans for securing a supply in the current decade.

Stellantis and Saft Batteries, a subsidiary of Total Energies, in September last year set up the Automotive Cells Company. Plans for the construction of pilot plant in the French municipality of Nersac were announced in August. ACC will establish two main manufacturing facilities, one in France and one in Germany, in order to achieve a combined annual production capacity of 48 GWh by 2030.

Volkswagen Group teamed up with Northvolt of Sweden for a similar project. In July, it contributed 500 million euro’s to a financing round that saw Northvolt collect €2.75 billion in total. VW invested €900 million in the Swedish company in 2019, acquiring a 20% stake in the process. The tie-up is targeting six European cell manufacturing facilities for a total of 240 gigawatt hours annually.

Tesla wants to build a battery plant on its Berlin site. While it remains unclear as to when the American company can break ground, target capacity is 100 GWh per year. Not to be outdone, Korean electronics giant LG Energy Solutions and SK Innovation also have plans to ramp up European production capacity, as do China’s BYD, CATL and SVOLT. If all plans materialize, the EU should have annual battery cell manufacturing capacity of 850 GWh by 2030.

That might seem a lot, but given that China’s capacity is forecast to reach 1.181 GWh by 2025, it means that Europe still has a lot of ground to cover, albeit it not as much as the U.S. In June, the U.S. Office of Energy Efficiency & Renewable Energy released its National Blueprint for Lithium Batteries. It reveals, among other things, that the US is lagging far behind both China and the EU in battery cell manufacturing capacity. The US expected to achieve 224 GWh per year in 2025, up from 59 GWh in 2020.

The world’s total lithium-ion battery capacity is about 500 gigawatt hours.

Toyota made a lofty promise in the run up to the Tokyo Summer Olympics. ”We will produce a car with solid state batteries and unveil it to you in 2020,” Chief Technology Officer Shigeki Terashi told Autocar in 2019. The pandemic pushed the Olympics back a year and so too was Toyota’s prototype.

The Japanese manufacturer has kept quiet about it, and for now Toyota’s solid state batteries – the industry’s holy grail, remain pie in the sky. Compared with conventional lithium-ion batteries, solid-state batteries do not use a flammable liquid electrolyte and so are considered safer. They also pack greater energy density without the extra weight, which in turn provides additional range.

In April, Volkswagen channeled €100 million to cell technology start-up QuantumScape, which is working on cells that it claims can deliver 80% more range compared with standard lithium-ion cells, as well as have faster charging speeds. QuantumScape, which also has the support of the Shanghai Automotive Industry Corporation, aims to begin production in 2024.

BMW and Ford are backing Solid Power, and announced an equity investment in May to the tune of $130 million. Korea’s Hyundai had already invested in the company.

“Solid Power now plans to begin producing automotive-scale batteries on the company’s pilot production line in early 2022 as a result of our partners’ continued commitment to Solid Power’s commercialization efforts,” said Doug Campbell, CEO and co-founder of Solid Power.

GM is a major shareholder in US company SolidEnergy Systems, a startup spun off from the  Massachusetts Institute of Technology. Hyundai this year became the company’s fifth backer, investing some $100 million. Troubled Chinese EV maker Nio wants to beat the pack and in January claimed its solid-state battery technology is ready for production.

Trucking Network

Finally, in July Europe’s major truck manufacturers Daimler, Volvo Group and Volkswagen subsidiary Traton Group, which comprises Man and Scania, announced plans to roll out a high-performance charging network for electric heavy-duty long-haul trucks and coaches. The group of companies intends to set up an equally owned joint venture and commit €500 million for the installation of at least 1,700 chargers across Europe in the coming five years. The joint venture will be established in Amsterdam and begin operations in 2022.

The joint venture is intended to kick start the roll out of charging infrastructure for battery electric trucks. ACEA pointed out in a May 2021 position paper that, “the infrastructure that is indispensable to operate, charge and refuel these trucks is almost completely missing.”

The association calls for a revision of the Alternative Fuels Infrastructure Directive in an effort to raise the target for new charging points to 10,000-15,000 by 2025 and to 40,000-50,000 five years later.

ACEA estimates by 2025, 40,000 medium‐ and heavy‐duty BEVs will be in operation in Europe, increasing to 270,000 by 2030, an increase of 575%.