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Market Analysis Analysis of Electromobility in Six Countries— Where to Invest Next

From MA Alexander Stark

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Electromobility is catching on and is forcing an entire industry to transform. But how do the individual markets develop in terms of demand, production and infrastructure? An analysis of six countries.

Norway currently has a connection density of almost 200 charging stations per 100,000 inhabitants. The Netherlands reached 192 in 2017 compared to 30 in Germany.
Norway currently has a connection density of almost 200 charging stations per 100,000 inhabitants. The Netherlands reached 192 in 2017 compared to 30 in Germany.
(Source: Public Domain / Pixabay)

Who buys electric cars, who buys hybrid and who buys fuel cell vehicles? What barriers do manufacturers face? Who are the key players? In which countries are major investments in production and infrastructure due? Where are the locations of the future? Germany Trade & Invest addressed these and other questions and examined the developments in 15 countries on three continents. We took a look at the study and summarized the development in six interesting markets. Germany and China were not considered.

Related: Development of Electric Mobility Until 2030


Electromobility in the USA

Demand in the USA

For car drivers in the USA, range is a decisive factor, and fossil fuels are also extremely inexpensive. As a result, cars with an internal combustion engine are clearly ahead of the competition. Thanks to falling battery prices, however, a breakthrough of fully electrified models can be expected in the medium term. Hybrid vehicles are already enjoying considerable popularity compared to BEVs. Hybrid models accounted for 2.1 % of total sales in 2017, while electric cars only made up 0.6 % of total sales. Toyota was and still is the industry leader. On average, the Japanese company sells 200,000 hybrids (HEV) and 21,000 plug-in hybrids (PHEV) annually in the USA. This corresponds to a market share of 60 and 24 %, respectively. However, Toyota has not yet introduced a purely electric model. According to Toyota boss Akio Toyoda, this is to change only slightly. The focus will continue to be on hybrid models until at least 2030.

However, fleet managers prefer the combustion engine for the time being. Both the range and the purchasing costs are important factors. Due to economies of scale in mass production, however, the manufacturing costs of electric vehicles are already declining noticeably. Between 2010 and 2017, the prices for lithium-ion batteries fell by 73 %. From 2022 onwards, e-vehicles should start to become the more favorable purchase. In general, sales forecasts for electric drive systems in the USA are pointing upwards in all vehicle classes. Sales by BMW, Mercedes and VW are expected to grow rapid until 2025. The three companies are aiming for e-models to have a share of around 20 % in each of the companies’ sales volumes. On the other hand, competitors from Asia expect their growth rates to amount to two to six percent.

Production in the USA

US car manufacturers are investing billions of dollars in the development of new drive systems. They are responding to China's announcement that they will no longer allow vehicles with internal combustion engines in a few years' time. Since 30 % of global total production is sold in China, the US must keep pace with technological progress. The USA itself is also the source of additional adjustment pressure on car manufacturers. Some states are tightening their emission regulations. In addition, the purchase of electric and hybrid vehicles is going to be promoted by tax incentives.

Tesla has been positioning itself as a pioneer amongst US car manufacturers. The Model 3 is intended to enter the mass market. According to the company, Tesla built 76,000 electric cars in 2017. By 2018, this number is expected to be around 100,000. In any case, there is no shortage of interested parties: there are around 450,000 orders worldwide. The pressure to succeed is enormous, not least because the Model 3 consumed over four billion US dollars in development costs. In addition, competitor General Motors is trying to secure a piece of the cake with its Chevrolet Bolt. Additionally, GM plans to launch a total of 20 battery-powered vehicle models by 2022. Ford enters into partnerships and forges alliances. The E model, which will be on display in the salesrooms from 2020, is to flush money into the cash registers. The Focus Electric, C-Max Energi and Fusion Energi models are already in production.

The third US company, Fiat Chrysler Automobiles (FCA), also produces its Pacifica minivan as a plug-in hybrid version and the Group brand Fiat contributes the 500e. In general, however, the FCA Group is showing noticeable restraint with regard to electromobility. Nissan also produces electric cars in the USA. Annual sales of the Leaf II are expected to level off at between 40,000 and 60,000 units in the foreseeable future. In the meantime, Volkswagen would like to manufacture its I. D. Crozz in the USA without mentioning a specific location. The plant in Chattanooga (Tennessee) is considered as the most likely location. Mercedes, in turn, will have an electric SUV rolling off the production lines at its Tuscaloosa plant in Alabama. It is, however, still unknown when production will start.

Infrastructure in the USA

Charging stations in the USA are extremely unevenly distributed. On the west coast, along the highways and in major cities there is the densest network. One of the most known initiatives is the West Coast Electric Highway, which connects the states of Washington, Oregon and California. Refueling is possible after 40 to 80 kilometers. Funding is provided by private and public sources. Tesla has also installed charging stations at 375 locations. From one to the next Tesla station, an average of about 100 kilometers can be covered. Tesla wants to double the number of charging stations in the medium term. According to the US Department of Energy, there are approximately 16,000 public and 3,000 private charging stations nationwide. For comparison: owners of petrol and diesel vehicles have around 112,000 filling stations with up to 30 petrol pumps at their disposal. However, improvement is in sight: In the course of the Diesel affair, VW has signed a commitment to invest two billion US dollars in the expansion of the charging network over the next ten years.

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Related: Car Companies Step-Up Investment in E-Mobility

Electromobility in Japan

Demand in Japan

Demand for electric cars is very low in Japan. Hybrids on the other hand are sold in high numbers. This won’t change over the next two to three years, even though there is growing interest in electrified commercial vehicles in the logistics sector. The country wants to promote domestic fuel cell technology, with the summer Olympic Games in Tokyo 2020 serving as a marketing platform.

The Japan Revitalization Strategy defined in 2015, envisages that next-generation cars will account for between 50 and 70 % of sales until 2030. Hybrid cars will play a dominant role in this process. With approximately 6.5 million units, HEVs account for more than 10 % of the total number of passenger cars. At the end of March 2017, the number of battery-powered cars amounted to 73,400. Toyota and Nissan are among the most important domestic suppliers of electric cars. Toyota is the dominant player in the hybrid vehicle segment, while Nissan is ahead in the Japanese market of BEVs.

Production in Japan

The introduction of strict electric car quotas in China has forced Japanese car manufacturers to change or accelerate their strategies. Toyota plans to cooperate with FAW and Guangzhou to develop a range of electric cars. Until 2030, 5.5 million (partly) electrified cars are to be sold worldwide. Meanwhile, Nissan is cooperating with Dongfeng. In February 2018, both companies announced that they would invest more than $ 9.5 billion in a joint venture. Production is expected to reach 2.6 million vehicles until 2022, of which around 30 % will be electric cars. Mitsubishi, on the other hand, is withdrawing from BEV production and has entered into a cooperation agreement with Renault-Nissan.

While the Japanese development strategy for e-vehicles focuses on foreign markets, efforts are being made to develop fuel cell technology in the domestic market. The government supports this strategy with the "Strategic Roadmap for Hydrogen and Fuel Cells", which provides for around 40,000 hydrogen-powered vehicles on Japan's roads by 2020. The target for 2025 is more than 200,000 units and, ten years later, more than 800,000 units. Two companies are at the forefront of fuel cell vehicle development in Japan: Toyota and Honda. Both companies already have a fuel-cell model on offer. Toyota has also developed a hydrogen bus that is going to be used in Tokyo.

Infrastructure in Japan

The number of charging stations is to be massively expanded over the next few years. Acceptance of electromobility in Japan is primarily a question of price, as well as of infrastructure and practicability. In addition, 320 hydrogen filling stations are to be set up throughout the country by 2025. At the end of the fiscal year 2016, the figure was 92 and the number of vehicles was around 1,800. However, with costs of up to $ 4.4 million, hydrogen filling stations are considerably more expensive than conventional fuel filling stations.

The charging infrastructure for both the electric and fuel cell drive systems has so far been financed mainly by public funds. The number of public charging stations was 27,800 at the end of 2016, including over 7,500 quick charging points. In the next few years, private actors intend to provide more support. In order to develop the general charging infrastructure, the Ministry of Economy, Trade and Industry is working on changing the regulations for the operation of filling stations allowing usual filling stations to set up charging stations.

An Interesting fact: Since fuel consumption in Japan is declining by one to two percent annually, the number of filling stations has dropped to just under 31,500. Twenty years ago, there were twice as many filling stations.

Electromobility in Great Britain

Demand in Great Britain

Government incentive schemes have been generating a growing demand for e-vehicles in Great Britain. From 2040 onwards, no more combustion engines are to be sold. Electrified vehicles are especially popular in London. Around 3,000 electric and hybrid buses are driving on the streets of the capital. Delivery services and car-sharing companies also rely on electromobility. Sales figures rose significantly in 2017. While the total number of new passenger car registrations was almost six percent below the previous year's level, demand for alternative drive systems rose by 35 %.

Since 2011, the British government has been subsidizing the purchase of cars that emit less than 75 grams of CO2 per kilometer. The state supports the purchase with up to £ 4,500. Buyers of electrified vans receive up to £ 8,000. The double-decker buses, which exclusively ran on diesel in the past, will be replaced. More than 9,500 buses are currently operated throughout London, including more than 6,500 diesel models, as well as just under 3,000 hybrid buses and 73 purely electric vehicles.

Production in Great Britain

The British government is striving for world market leadership in battery development. To achieve this goal, it is providing a € 280 million funding program, which is divided into three subprograms. As part of "The Faraday Battery Challenge”, Innovate UK, an agency of the Ministry of Economic Affairs, is providing companies and start-ups with around € 100 million for projects in the field of battery technology. In each case, € 90 million are earmarked for the national development center for battery production and for the establishment of a research campus.

Despite the planned Brexit, the BMW Group is planning to produce an electric version of the Mini in England. Aston Martin is currently working on two E-models. Following the London hybrid taxi, Geely now also wants to produce a hybrid van. However, with the Leaf Nissan is still the only manufacturer of electric cars in the United Kingdom. In 2016, 17,489 units of the compact e-car rolled off the production line in Sunderland. Most of the cars are exported to other EU countries. Production of the Leaf II is also expected to remain on the British Isles for the time being, despite the imminent Brexit. In January, the BMW Group UK confirmed to Germany Trade & Invest that it intends to start producing the E-Mini at the BMW plant near Oxford in 2019, Jaguar Land Rover announced in September 2017 that from 2020 onwards all new models would be equipped with an electrified powertrain. A first model is to be launched in 2019. The launch of the electric Jaguar I-Pace is already scheduled for the end of 2018.

Even the electrical appliance manufacturer Dyson is planning to produce an electric car. The project has been causing a stir for months, as Dyson has recruited well-known executives from major automotive companies. The company wants to use its own components only, they say. However, it is still unclear whether production will take place in Asia or in Britain.

Infrastructure in Great Britain

According to the online information portal Zap-Map, there were 8,696 charging stations with 14,867 connections at a total of 5,177 locations at the beginning of February 2018. Among them were 1,303 quick charging stations with 2,871 connections. Zap-Map provides a daily update of its overview. The British government is supporting the expansion of the charging infrastructure with several programs worth more than € 500 million. In the same budget plan, the Chancellor of the Exchequer Philip Hammond is also providing a further € 46 million for research and development of the charging infrastructure. In both cases, the costs will be evenly split between the government and private companies.

Electromobility in Norway

Demand in Norway

Thanks to government funding, electric cars are very popular in Norway. On the one hand, electric cars are exempt from sales tax, registration fees and import duties. On the other hand, owners of e-vehicles can use public parking spaces free of charge, they do not have to pay tolls and are allowed to drive on bus lanes. More than every second new car registered in Norway in 2017 had an electric or hybrid drive, not least for these reasons. Compared to the previous year, the BEV portfolio increased by more than 40 % to about 140,000 cars. Purely electric drives thus achieved a market share of 20 %. Plug-in hybrids achieved a share of 18 %.

For 2018, the Norwegian e-vehicle association expects an increase in newly registered BEVs of up to 30 %. The main reason for this is the launch of new models. "140,000 BEVs are already driving on Norway's roads, and we want to increase this number to 400,000 by 2020," Christina Bu, General Secretary of the Norwegian e-car association, told the media. The e-Golf from VW is a big seller. According to the e-vehicle association, 6,600 units of the e-Golf were sold in 2017. The BMW i3 (5,000) and the Tesla Model X (4,700) are also popular.

Production in Norway

Norway does not have a domestic car manufacturer, but Kongsberg Automotive is a major automotive supplier. Paxster, part of Loyds Industri, offers small electric delivery vehicles. As a production site, Norway is insignificant. Only the electric vehicle manufacturer Buddy Electric has a production site there. But the last Buddy has already left the production line in 2015, so that only repairs are carried out. "Since then, we have been trying to sell parts of our old factory and the production rights to countries that can produce cheaper," Oyvind Ursin Kavag, senior consultant and former CEO of Buddy Electric, told Deutschlandfunk Kultur. The company was particularly affected by the high labor and production costs in Norway.

Another Norwegian automobile manufacturer (Think Global) already went into bankruptcy in 2011. In order to improve cooperation between science and industry, Norway has been supporting a cluster of excellence initiative for years. Most of these clusters were established in the vicinity of the capital Oslo.

Infrastructure in Norway

The number of charging connections in Norway is planned to rise to 25,000 by 2020, compared to 10,500 in February 2018. According to experts, the expansion will be possible without significant grid reinforcements. The charging infrastructure has grown considerably in recent years. Above all, however, this is due to the fact that many operators are now also building new high-speed charging stations without public subsidies, especially in the larger cities and along important transport axes.

In Oslo, however, the expansion of the network of charging poles is not keeping pace with the development of new registrations. Norway and the Netherlands are the undisputed leaders in terms of the density of charging stations per inhabitant. Norway currently has a connection density of just under 200 per 100,000 inhabitants. The Netherlands reached 192 in 2017 compared to 30 in Germany.

Electromobility in the Netherlands

Demand in the Netherlands

Of a total of 8.37 million passenger cars in the Netherlands, around 270,000 had an electric drive on January 1, 2018. BEV sales doubled in 2017 compared to the previous year. In contrast, demand for plug-in hybrids has collapsed: In 2017, sales only reached around six percent of their 2016 volume, due to a change in subsidies. Anyone who also uses a business car privately must pay the so-called "bijtelling" tax. It is due for private use of more than 500 kilometers per year and currently amounts to a single payment of 22 % of the vehicle value. In the case of hybrids, a preferential rate of four percent was applied until the end of 2016. From 2017 this will only apply to BEV.

The Dutch government plans that one tenth of all new vehicles in 2020 and, five years later, even half of them are equipped with electric drive trains. From 2030 onwards, only emission-free new cars are to be sold. The country itself has no significant car production, which makes it relatively easy to enforce such a regulation. According to industry experts, the targets are ambitious but realistic. Professor Martin Steinbruch, whose forecasts are used by the industry association Doet, expects that the sale of electric cars in 2018 and 2019 will double compared to the previous years. For 2025, Quarry predicts BEV new registrations of just under 353,000.

Production in the Netherlands

Due to the insignificant automobile industry in the Netherlands, production is limited to a few companies. According to VDL, it has become the Western European market leader in the field of battery-powered buses. At the end of 2017, around 200 electric buses from the manufacturer were in daily use. Until recently, the segment was still seen as an interesting additional project, however, by 2022 VDL expects to sell only electric buses in the Netherlands. In 2018, the supplier also wants to launch an electric minibus with a range of 220 kilometers. E-buses from Ebusco are used in the Netherlands, Germany, Norway and France.

The battery-powered truck segment is still limited to local use in urban distribution. VDL is developing an e-truck, which in 2018 will be used to attract customers in the area of inner-city distribution with a range of 120 kilometers. In the medium term, the electric truck business is expected to have a promising growth potential.

Solar car prototypes are being developed at the country's technical universities. The Eindhoven Solar Team has developed a five-seater family car that was officially registered in the summer of 2017. On sunny days, this car has a range of up to 1,000 kilometers. Five developers of the Eindhoven Solar Team contributed their knowledge to a new company and presented the Lightyear One model in June 2017. The plug-in hybrid with solar cells is said to have an annual range of 10,000 kilometers.

Infrastructure in the Netherlands

The Netherlands has the second densest loading infrastructure in Europe after Norway. According to the International Energy Agency, about 12 % of all public charging stations worldwide are located in the Netherlands. With 15,382 public and 17,594 semi-public charging poles, the charging infrastructure nearly covers the entire country. Dutch companies have become market leaders in charging solutions in recent years. New Motion operates Europe's largest network with 50,000 charging stations in 22 countries.

EV-Box is the world's largest supplier of charging solutions and additional services for electric vehicles. The company now operates around 48,000 charging stations in about 980 cities worldwide. EV-Box is responsible for the entire charging infrastructure in Amsterdam and Rotterdam and is working with various partners on further expansions throughout Europe. At the end of 2017, the fast-charging network consisted of 761 charging connections. The charging capacity of the systems is also evolving. While the current generation is designed for a maximum of 120 kilowatts, new high-speed charging stations offer 150 kilowatts and ultra-fast charging stations offer 350 kilowatts of power.

Electromobility in Mexico

Demand in Mexico

Sales of electric and hybrid vehicles in Mexico are still extremely low. In the first three quarters of 2017, a total of 7,283 electric passenger cars found a buyer. Sales were divided into 7,086 hybrids and 197 electric cars. This corresponds to only 0.7 % of total passenger car sales. Guillermo Rosales, deputy managing director of the automobile dealer association Amda (Asociacion Mexicana de Distribuidores de Automotores), expects sluggish sales in the coming years: "We expect annual sales growth of around 20 %. However, this means that the share of total sales will continue to lag behind industrialized countries such as the USA." Rosales sees the main reason for this still higher price. "The average price for a new car in Mexico is around € 14,000, which is far below the price of electric vehicles," the expert points out.

BMW together with Siemens, however, held an event on electromobility in Mexico City in September 2017. In various workshops, the participants developed a series of proposals on how to better promote e-vehicles. In December, these proposals were presented to the Ministry of the Environment under the title "Agenda 2020". In Mexico, there is no direct subsidy for the purchase of electric or hybrid vehicles, and the state is more likely to opt for indirect subsidies based on tax cuts. For example, there is no tax on new vehicles and owners of such vehicles do not pay any motor vehicle tax. Imported electric cars have been exempt from import tax since February 2017.

Production in Mexico

Mexico is the seventh largest automobile manufacturer in the world. Among the major car manufacturers, however, only Ford has plans to build electric vehicles in Mexico. As became public in December 2017, the company plans to start manufacturing a small SUV at its plant in the Estado de Mexico in 2020. The model was originally designed for production at the Ford Flat Rock plant in Michigan. In the future, however, the development and production of autonomous vehicles is to be pushed ahead there, which is why the electric model will move to Mexico. In addition to the conventional versions of the Q5, Audi is also planning to assemble a hybrid version in Mexico. The plant, which was opened in Puebla State in 2016, is currently preparing for this step. The factory has an annual capacity of 150,000 vehicles.

Although the Mexican automotive industry is dominated by foreign companies, there are some domestic approaches to electromobility. Motores Limpios launched the two-seater Zacua in mid-2017. Weighing 380 kilograms, the vehicle has a range of 195 kilometers and a maximum speed of 95 km/h. Moldex, a subsidiary of the bakery giant Bimbo, announced that it was developing an electrically powered taxi model together with the Mexican company Giant Motors. It is to be launched in 2018.

Vehiculos Electricos Corporativos (VEC), another Mexican company, is developing electrically powered commercial vehicles. Together with the Universidad Autonoma Metropolitana (UAM), the company presented the prototype of a transport vehicle at the beginning of 2017. Its battery only needs 60 minutes to be charged and offers a range of 100 kilometers. The sales price of approx. € 30,000 is low compared to other commercial e-vehicles. There is no information about the exact date for its market launch.

Infrastructure in Mexico

In Mexico, sales of electric and hybrid cars are only slowly gaining momentum. The charging infrastructure is relatively well developed, but strongly concentrated in the capital region. Mexico's largest network of charging stations (Chargenow) offered a total of 434 stations in February 2018. Most of the stations are located on plots of land belonging to hotels, shopping centers and individual shops. Chargenow is a cooperation between Nissan, BMW and the state-owned power company CFE, which is currently installing 30 stations. The charging technology of the Chargenow network comes from Schneider Electric and General Electric. Most loading units are open to the public and can be used free of charge.

Tesla, the US carmaker, operates the second largest network of charging stations in Mexico. The company offers around 410 charging stations nationwide, which are also mainly located at hotels and shopping centers. To what extent the Mexican charging infrastructure will expand is still uncertain. "We expect the charging network to be expanded in line with demand," says Guillermo Rosales. According to Rosales, however, this means that more battery-powered vehicles will have to be sold first, which in turn depends on whether manufacturers can reduce their prices.

This article was first published by Next Mobility