The End of the European ICE Age
A recent report from Boldt and Avere examined the state of progress of European automakers’ attitudes to the uptake of electric vehicles. Although there was some reluctance to go first, it appears now that there is a greater aversion to be the last to introduce and promote EVs.
Perhaps one of the most striking points for me is that this report uses data from the end of 2021. If we compare this to the data coming out at the end of Q1 2022, we can see that the market has progressed even more than expected.
The report was set up to investigate the question: Is industry ambition outpacing government policy settings? Are we going from a regulation-driven environment to a market shaped by demand and supply? Is there still need for government intervention? McKinsey is quoted in the report saying that “in the most likely accelerated scenario, consumer adoption will exceed regulatory targets and Europe will reach around 75 percent EV market share by 2030.”
The authors note that nations dependent on the auto industry and the industry groups within them are now backing the moves towards electrification that they once fought against. A notable example is that big automakers convinced policymakers the watering down of regulations at the insistence of Germany in 2013. Volkswagen is now aggressively pursuing electrification and will likely exceed the targets set.
“Therefore, at least in parts of the industry, ambition and pace seem to have outgrown those of European policymakers.
“There appears to be a split in the industry, with half the carmakers aiming to electrify ahead of the policy timeline, and about another half of OEMs intending to stick to their established, ICE-based business model for now, or at least not keeping up in pace with announced policies. Major automotive corporations which are in control of multiple brands, at the time of data collection, tended to split their electrification strategies.”
It appears to mainly be the Japanese automakers that are not fully aligned with EU targets. The usual suspects.
Of course, obstacles to uptake then get bumped down the line. The raw materials for battery production will be the next limiting factor. Previous obstacles do not seem to be so much a problem now. EVs are experiencing high demand and consumers seem to be less concerned about price, range, charging infrastructure, etc.
In interviews with car manufacturers, the dominant view was that EVs were likely to make up more than 50% of the new vehicle market in Europe by between 2027 and 2030, and ICE-powered cars to be less than 20% of new vehicle sales (that is, largely irrelevant) by 2035. Of course, there will be differences between individual member states of the EU.
“However, most industry players believe that we have passed a point of no return and that the industry has engaged in a strong competition about electrification. While for some players this means that they are trying to be the first, there is nobody left who does not care to be among the last: everybody seems to have understood that this would be costly and that the shift towards EVs is now inevitable.”
The industry still seeks government support in a range of areas.
“Carmakers’ ambitious announcements throughout the last months show that they are now in the middle of a ‘race to the top’, aiming to secure technology leadership and sales shares in the market of the future — and this race is picking up the pace.”
I would hope that politicians at all levels of Australian government (council, state, and federal) will be able to learn from the European experience. We need ambitious clear targets, a unified approach across all states, and regulations that keep up to date with technology. Where Australia is now, Europe was about 3 years ago. We have no car industry to protect, and there are many incentives that can be used to accelerate the adoption of EVs in a manner that creates jobs and improves lives.
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