Navigant Research Blog

Are E-Bicycle Sales Reducing Car Sales in Europe?

— May 7, 2013

The European Cycling Federation (ECF) recently said that for every car sold in Europe, almost two bicycles are sold.  Car sales in the EU27 in 2011 were 13,146,770, according to the European Automobile Manufacturers’ Association (AECA), while Coliped reports that 20,039,000 bicycles were sold that year.   Additionally, ECF data shows that between 2010 and 2011, e-bicycle sales grew by 22% while car sales declined by 2%.  In 2012, car sales declined an additional 8%.  Perhaps worse news for automakers, AECA is reporting that 1Q 2013 sales were down almost 9%.

Annual Bicycle, E-Bicycle, and Passenger Car Sales, European Union: 2000-2012

(Sources: European Automobile Manufacturers’ Association, Coliped, Navigant Research)

Navigant Research expects the growth of e-bicycles in Europe to continue.  According to our recent report, Electric Bicycles, the market in Europe is on track to grow to between 1.0 million and 1.2 million sales in 2013.  But the question remains: Does this mean that Europeans are shunning cars for bicycles and e-bicycles?

On its own, the sales data is not necessarily an indication of the causal relationship between car and bicycle purchases.  However, it can’t be ignored that riders in Europe are using their bikes more for transportation.  Even the French market, where all bicycle sales are down 9%, saw the smallest decline in city bicycles (-4%) while e-bicycles increased 15%.  The increasing use of bicycles and e-bicycles designed for cities or commuting clearly hits at the one of the core points of passenger cars.

Cyclists Have More Fun

Perhaps more compelling is the fact that bicycle mileage is increasing.  CBS (Statistics Netherlands) data shows that e-bicycles in the Netherlands have contributed to a 9% increase in the distance cycled, surpassing train mileage in 2011 to rank second behind cars.  The bicycle rental service OV-Fiets saw a 32% increase in round trips between 2010 and 2011, reaching 1.1 million.  While the Netherlands is often considered a somewhat special case because of its massive advantages in bicycle infrastructure, the developments there are not considered unusual in other parts of Europe.

This points to two important trends: More people are using traditional and e-bicycles than have in the past, and those that use e-bicycles are likely to travel further than traditional bicycles (3 km further, according to research completed in 2008).  Add to that the many efforts in Europe to make bicycle travel easier, such as the increasing bicycle-friendliness of trains, and the result is likely moving European commuters out of the driver’s seat and into the saddle.  This doesn’t spell the end of the European car market, but it does point to increasing challenges in getting back to the 15 million sales mark of the mid-2000s.  Or perhaps we are overthinking this, and people just want to have more fun while they commute.


A Car for the Smart City

— May 7, 2013

As cities get smarter to cope with the challenges of ever-increasing urbanization, transportation is an area of primary focus.  If people and goods cannot move around freely, the city grinds to a halt.  Heavy traffic powered by internal combustion engines also generates a lot of pollution.  Los Angeles has been battling with smog since 1943.  The rapid economic growth in China has resulted in serious, and seemingly insoluble, air pollution problems.

Smart transportation solutions can keep the traffic moving and help to reduce the number of vehicles on the roads, but a shift to electric vehicles (EVs) would at least address air pollution issues if not those of traffic congestion.  The problem is that the component technology (primarily battery packs) is too expensive and the driving range falls short of what people are used to.  While plug-in electric vehicle (PEV) sales are actually higher than hybrids were at a similar development stage, they are not taking off in the volumes necessary to make a difference in rapidly growing cities.

One option is the introduction of electric car sharing systems, such as the Autolib program in Paris.  Another example is Daimler, which introduced its all-electric car sharing program through its subsidiary Car2Go in Amsterdam and San Diego in November 2011.  Autolib uses specially designed EVs from Bollore, while the Daimler program uses an electric drive version of the smart fortwoFord announced in March 2013 that it will pilot a carsharing service called FORD2GO through its dealer network in Germany, although the system will initially offer conventional vehicles.   BMW’s DriveNow carsharing service was launched in San Francisco in September 2012.  Toyota is planning an electric car sharing service in Grenoble starting in 2014.  Fleet operations offer a good way for OEMs to learn about the operating and maintenance costs of new technology.

Lighter, Slower, Better

There is another reason for cities to encourage EV ownership and use, and that is to use the vehicle batteries as temporary energy storage.  This could be as part of a smart grid deployment or a microgrid – for example, in a business park or a housing development project.  If vehicle owners all plug in when they get home and specify when they next need their cars, a smart grid can charge when overall electricity demand is low and potentially use some of the stored energy for load balancing on the grid if required.  This is particularly useful if energy is being generated from renewable sources.

Another idea is to develop a city car that is significantly smaller and lighter than a conventional vehicle.  Affordable EVs limited to city use could be a radical option for future transport needs.  The great advantage of this is that the car could be much lighter than existing vehicles, which are designed to carry up to five occupants at high speed and protect them from harm in crash situations.  Lighter, simpler cars can get acceptable range from smaller batteries.  Even more flexibility can be offered if wireless and/or fast charging becomes widely available.

The major OEMs have shown such concept vehicles at various motor shows in recent years.  Examples include Hyundai, Toyota, and GM, as well as new companies such as Edison2 with its Very Light Car.

The major drawback is that city cars don’t meet all the existing road safety standards.  For them to be practical, cities might have to designate areas restricted to these light city EVs, and national certification organizations would have to develop new standards.  The vehicle may be prohibited from freeways and restricted to travel on urban surface streets.  Light, cheap, and electric could well be the transportation solution for smart cities of the future.


Slowly, EV Ecosystem Takes Root

— May 7, 2013

The electric vehicle (EV) industry got off to a slow restart in 2010 and has had its share of highly publicized missteps (e.g., Fisker, CODA, and A123), but it has already made many contributions to the economy.

First off, sales of plug-in electric vehicles in the United States generated revenue of around $1.7 billion in 2012, and Tesla Motors alone generated revenue of more than $300 million in the fourth quarter.  Sales of plug-in vehicles are up 145% this year compared to the first quarter of 2012, with more than a dozen models on the market.

Then there’s the investment in charging infrastructure equipment, which was around $92 million in 2012.  That does not include payments to electric contractors for installation work or the permitting fees that go to state and local governments to get approval for installation.  Expenditures on commercial and residential electric vehicle supply equipment (EVSE) are expected to exceed $172 million in North America and more than $713 million globally during 2013, according to data from Navigant Research.

Total Installed Commercial EVSE Stations by Accessibility and State, Top 10 U.S. States: 2012

(Source: Navigant Research)

EV charging is now available across the United States at more than 20,000 locations, which are bringing in money every day through pay-for-charging events.  Not all of the equipment providers will survive – consolidation is natural in any rapidly growing industry – and any companies that fall by the wayside should not be viewed as indicators of the broader failure of the industry.  While some of the seeds of the Department of Energy-funded EV infrastructure did not take root, the investment has been critical to increasing consumer adoption of EVs.

Another beneficiary of the EV industry is the solar industry.  As outlined in Navigant Research’s recent report, Solar and Electric Vehicles Cross Marketing Strategies, many car dealerships, including Chevrolet, Ford, and Nissan dealers, are installing solar as a visible sign to consumers that they are environmentally conscious and so that they can offer emissions-free charging to EV customers.   Many of the early EV adopters live in single-family homes and are installing solar arrays to offset their energy consumption.  In many cases the solar panels are capable of providing more than enough electricity for their EVs throughout the year.

It is easy (and headline grabbing) to focus on the failures, but that ignores the many jobs that have been created and the new and established business ventures that are poised to take off now that the industry has made it through its rough infancy.


CODA Automotive Joins Ranks of Failed EV Makers

— May 2, 2013

CODA Automotive has been a poster child for how challenging it is start a new car company in America.  Despite using “gliders” from Hafei and installing their own drivetrain, the company has struggled to get production vehicles launched, resulting in a 2-year delay from their first announcement of a launch in the fall of 2010 (it actually launched in May 2012).  The style and crashworthiness of the vehicles have been loudly questioned.

After the company endured low sales, significant layoffs, and supplier problems over the last several months, it comes as a surprise to few that CODA Automotive has formally declared bankruptcy.  CODA’s demise proves that, even if an automobile company is successful in raising funds (almost $600 million in CODA’s case), it ultimately can’t compete without actually selling large numbers of vehicles.  An automaker’s success, whether cleantech or old tech, is ultimately reliant on moving metal: the car has to be good –very good.  That’s the reason Hyundai and Subaru are growing while Dodge struggles to find its footing and Suzuki said goodbye.

CODA’s combination of tired styling, questionable safety, and little evidence of reliability made for a big challenge in attracting mainstream buyers.  Tesla has prospered because the company now has 3 years of history for exciting products in unique niches.  Fisker had the potential to follow Tesla’s playbook with a killer product, but slow production, quality challenges, supply chain problems, and lack of products in the pipeline have most likely doomed Fisker, as well.

The few owners of CODA vehicles are now stranded.  After shelling out $40,000, they now have a vehicle with little to no dealer and repair shop support.  Not only is this is a problem for these owners, but it also could dampen the spirits of potential buyers of innovative vehicles from other start-ups.  Many drivers are willing to take a risk on a piece of cool technology from a new company, but rarely does that technology cost almost as much as the average annual income in America.


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