Hanover, February 19, 2018 Despite all the scepticism, global automobility will become more electric in the future. What will happen to the German supplier industry for combustion engines? A recent study by the German Foundry Chemicals Industry Association (IVG), led by Professor Dr. Stefan Bratzel (CAM), provides answers. Their conclusion: the industry needs a transformation strategy.
The Industrieverband Giesserei-Chemie e.V. (IVG), based in Laatzen near Hanover, wanted to know the details: What will automotive drive technology look like in 2030? The association organizes the leading manufacturers of foundry chemicals in Germany. One of its main sales markets is the production of combustion engines for the automotive industry. If electromobility becomes established, this will have a significant impact on the future sales opportunities of the companies organized in the association.
Comprehensive analysis
IVG commissioned the Center of Automotive Management (CAM) in Bergisch Gladbach with a market assessment for Germany, the European Union, the USA and China. The 165-page scenario analysis comes to the following conclusion, assuming an ambitious expansion of the charging infrastructure: “E-mobility will prevail with serious consequences for the automotive industry in general and the companies associated with IVG in particular,” says study leader Professor Dr. Stefan Bratzel, Director of CAM. “Especially for those that mainly supply parts for vehicles with combustion engines.” After all, almost 30 percent of new registrations in Germany in 2030 will be e-vehicles, which would mean annual sales of around 900,000 cars. In total, there will then be around 6 million electric cars on German roads. The production volume for combustion vehicles will fall from 3.2 million vehicles (2016) to just 2.4 million.
“This is not a nightmare scenario for us, but a motivational boost,” says Dr. Carsten Kuhlgatz, Chairman of the Foundry Chemicals Industry Association. “Firstly, the result means that there will still be over 70 percent combustion engines in 2030. Secondly, e-engines also offer opportunities for us.” For example, through their further development with the help of cast parts or solutions for fastening the batteries. Especially as they are an important safety component, as they are non-flammable. “I firmly believe that Germany, as a traditional innovation leader, will achieve great things here and can take the technological lead in terms of costs and safety standards,” says Kuhlgatz.
No chance of survival without transformation
Nevertheless, the study concludes that it is advisable for suppliers to prepare appropriate adaptation and transformation strategies. Firstly, options for expanding technological expertise such as electromobility components are conceivable. Secondly, strategies for industry diversification beyond the automotive industry could be considered in order to expand the corridor for action. Thirdly, companies could consider increasing the depth and breadth of added value in the combustion engine sector and thus become consolidation winners. “However, companies should not allow themselves too much time to implement such transformation strategies in view of the enormous requirements,” advises Professor Bratzel, head of the study. After all, there is no doubt that the market share and sales volume of the combustion engine in Germany will decline significantly. Even if these developments take place gradually and will only gain momentum at the beginning of the 2020s.
German e-mobility is only just beginning
The study provides a solid presentation of the current status of the key players (original equipment manufacturers, OEMs) and the relevant influencing factors for the development of e-mobility. It is based on numerous current studies on the topic and the CAM innovation database, in which the vehicle technology innovations of the 19 global automotive manufacturers with currently 60 brands are systematically inventoried and expanded through regular surveys and background discussions with the relevant industry experts.
The clear result: in Germany, the volume and growth dynamics of electric cars and plug-in hybrids are low. With around 25,000 new registrations in 2016 and a market share of 0.75 percent, the level is low by international standards. The share of electric and alternative drives is only 0.6 percent of total production. At the same time, the diesel share of new registrations in Germany and other EU countries is currently in sharp decline. However, if this leads to more new registrations of petrol engines, this will increase the pressure on manufacturers to sell electric vehicles in order to meet the EU’s CO2 limits for 2021.
Wishes of potential e-car buyers
The reasons for the low acceptance of e-vehicles are still the short range, the high price and the low level of state subsidies, the comparatively small product range, but above all the inadequate (fast) charging infrastructure. Users want public charging stations where they often park. There is a lack of basic supply for long-distance traffic, with weekends and vacation traffic being the decisive factors here.
“We are therefore calling on the German government to quickly and consistently expand the charging station network and introduce a standardized payment system for users,” says IVG Chairman Dr. Carsten Kuhlgatz. This is because customers would accept lower ranges if there was sufficient network and charging infrastructure. The Chinese government is taking a more consistent approach in this regard.
A global view
The international comparison also provides groundbreaking insights. Global production of passenger cars and light commercial vehicles under 6 tons (LCV) has risen from 56 million in 2000 to 91.6 million in 2016. The CAM forecasts further growth to 116 million by 2030. From a global perspective, the automotive industry has been and continues to be a pronounced growth industry.
China, the USA and (Western) Europe are still by far the most important global vehicle markets and remain decisive for the strategies of global car manufacturers. However, while the market in the USA and Europe is likely to stagnate in the medium term, China holds further potential for passenger car growth up to 2030. This is because motorization rates are low, while the population is expected to become more affluent. Especially as the government is setting relatively strict targets. Over the next few years, for example, there will be e-car quotas for original equipment manufacturers (OEMs) and a ban on sales of combustion engines. China will therefore play a central role in the drive strategies of the future. If battery development is positive and the expansion of charging stations continues at the current rate, the number of e-cars could grow to up to 114 million vehicles by 2030. In the long term, India also offers considerable future potential.
The analysis on the “Market development of electric vehicles for the year 2030: Germany, EU, USA and China” provides the foundry industry with valid data for the future direction of the automotive sector. “I was impressed by this commission,” says study director Professor Bratzel. “It shows that the industry recognizes the signs of the times and is preparing for the future.”
Click here for the press release with infographic and study.
Source graphic: Study by the Center of Automotive Management on behalf of the Industrieverband Giesserei-Chemie e. V.
