Navigant Research Blog

Battery Makers Moving from Supporting to Lead Actors in EV Industry

— March 30, 2016

Accumulators and batteries close up.While General Motors (GM), BMW, Audi, and others are in hot pursuit of Tesla Motors for the media’s attention, the battery makers that power their cars are becoming more prominent as industry leaders. LG Chem and the other top-tier battery suppliers are expanding relationships with the automakers that will lead these companies to selling more of the technology found inside a plug-in electric vehicle (PEV).

Most notably, South Korea-based LG Chem is now supplying not only battery packs, but also motors, inverters, and onboard chargers to GM for the upcoming Chevrolet Bolt. LG Chem expects its automotive battery business to reach $1 billion annually this year, and the company is pushing harder into stationary energy storage as well.

LG Chem committed early to the EV battery market, and Navigant Research (then Pike Research) ranked the company as the leader in the industry as early as 2012. It retained its position during the November 2015 Navigant Research Leaderboard Report: Lithium Ion Batteries for Transportation.

EV Battery Manufacturer Rankings, January 2012 (Left) and November 2015 (Right)

John Blog Charts

(Source: Navigant Research)

LG Chem recently won a contract to supply batteries for the upcoming Chrysler Pacifica plug-in hybrid. The company has the most diverse group of customers in the industry, supplying EV batteries to Daimler, Ford, Renault, and Volvo.

Meanwhile, competitor Panasonic is expanding in the burgeoning Chinese EV battery market  by forming a joint venture with Dalian Levear Electric Company to start producing batteries in the country, according to Automotive News China. Panasonic was the world’s largest supplier of EV batteries in 2014 with a 38% market share, according to Navigant Research’s Advanced Battery Tracker 4Q15 report. Panasonic is partnering with Tesla Motors to build the gigafactory, a $5 billion battery manufacturing plant that currently under development in Nevada. Tesla Motors recently canceled the larger 10 kW version of its pricey Powerwall home energy storage system, which was using batteries manufactured by Panasonic. Panasonic also supplies EV batteries to Audi, Ford, Honda, and Volkswagen.

Samsung SDI, LG Chem’s neighboring competitor in South Korea, said it will begin shipping batteries this year to enable a 300 km (186 mile) driving range for EVs, and it’s intent on doubling that range by 2020. Samsung will continue to sell batteries to BMW for the soon-to-be-upgraded i3, as well as the i8 sports car, and to Fiat for the 500e.

The quality and performance of the battery can make or break a PEV, and battery makers such as LG Chem will continue to benefit from that importance to further leverage their relationships with automakers.

 

 

Used PEVs Open Price-Sensitive Buyer Market

— March 7, 2016

moving white carOne of the challenges of increasing sales of plug-in electric vehicles (PEVs) has been their lack of affordability for the majority of car buyers. However, the new generation of PEVs is becoming more economical, and the increasing inventory of used PEVs for sale is opening the technology to a broader spectrum of car buyers.

PEVs originally sold in 2012 are coming to the used market after their leases have completed or their owners have upgraded to newer electric models with longer driving ranges. Used PEVs, which generally have reduced maintenance costs due to fewer mechanical parts to wear out while relying on a much cheaper fuel source, can be an affordable first or replacement car for cost-conscious buyers who closely monitor their monthly expenses.

For example, many used 2012 model year Nissan LEAF ($10,000-$12,000), Mitsubishi I-MiEV ($8,500-$10,000), and Chevrolet Volt ($15,000-$18,000) cars can be found on Carmax.com that fit within a much greater percentage of budgets than a new PEV. While only in Colorado can used PEV buyers get a state tax credit, pre-owned PEVs are around half the cost of a new model—even after all incentives are factored in.

Results from Navigant Research’s 2015 survey of American consumers found that 77% expect to spend $30,000 or less for their next car. This expectation excludes them for considering nearly all of the PEVs on the market—even after factory, dealer, or government incentives are included.

Consumers’ Expected Purchase Price for Next Vehicle

John Blog March                                                                              (Source: Navigant Research)

However, more economically diverse consumers that become aware of the benefits and savings from owning a used PEV may consider staying electric with a new vehicle purchase as their incomes allow. This should enable sales of PEVs in future years to grow even more quickly, as experience with a PEV greatly increases the desire to own one.

Addressing Affordability

Automakers continue to address affordability with their PEV pricing strategies. Due to disappointing sales in China of its localized version of the Nissan LEAF (thought to be linked to its higher price), Renault-Nissan will develop a less expensive battery electric vehicle (BEV) for the Chinese market, according to Automotive News Europe.

The PEVs that will be released in the next 18 months in the United States promise greater value through longer driving ranges at a lower cost per mile. Unfortunately for companies like Tesla that are looking to address more cost-conscious consumers, they may start to run up against the 200,000 vehicle cap on customers being able to collect the full federal tax credit. Middle-class car buyers receiving a smaller tax credit for a $35,000-ish Tesla than was available for a nearly six-figure vehicle could be an unintended irony of the current federal tax rebate structure.

 

U.S. Federal Government Expands EV Charging Infrastructure Support

— February 1, 2016

EV RefuelingThe FAST Act transportation bill that became law in December 2015 contains an important provision to increase the coordination of activities of all players in the electric vehicle (EV) charging infrastructure ecosystem. Thanks to funding reauthorizations in the law, individuals and organizations that purchase EV charging equipment in the future will receive a federal tax credit for either commercial and residential chargers, as reported by Green Car Reports. This incentive is expected to spur additional sales of charging infrastructure that reduces range anxiety and increases sales of plug-in electric vehicles (PEVs).

More significantly, the Act requires the U.S. Department of Transportation (DOT) to “designate national electric vehicle charging and hydrogen, propane, and natural gas fueling corridors,” as well as to identify “standardization needs for electricity providers. …”

Increasing Installations

Since 2009, there has been considerable effort to increase the installation of publicly accessible EV chargers. These include the federal EV Project and ChargePoint America programs, as well as recent collaborations such as those between BMW and Nissan—notable because they support different fast charging standards—and Nissan’s growing effort in using multiple charging networks to provide free charging to customers as they roam.

The U.S. Department of Energy’s (DOE’s) EV Workplace Charging Challenge, a voluntary program for employers that install EV infrastructure, continues to progress rapidly, as highlighted in the program’s recently published interim report. According to the report, individuals whose employers offer workplace charging are 6 times more likely to own an EV than the average person. And workplace chargers aren’t just sitting idle; the report states they are delivering an average of 9.6 kWh of power per day.

Thus far, however, there has not been a national effort that adds utilities, state governments, and other key players to the development of charging networks and infrastructure. The FAST Act is looking to greatly encourage coordination by requiring the Secretary of Transportation to engage with stakeholders to include:

  • The heads of other federal agencies
  • State and local officials
  • Representatives of:
    • Energy utilities
    • The electric, fuel cell electric, propane, and natural gas vehicle industries
    • The freight and shipping industry
    • Clean technology firms
    • The hospitality industry
    • The restaurant industry
    • Highway rest stop vendors
    • Industrial gas and hydrogen manufacturers

The DOT has 1 year to identify these corridors, a not insignificant task that will require analyzing EV sales data, forecasts for future purchases for both plug-in hybrid and battery electric vehicles (BEVs), and the expected required volume of charging infrastructure, analysis of vehicle miles traveled by region. Identification of locations (using geographic information systems mapping) of the logical linkages between EV hotbeds where roadside charging is likely to be most beneficial is also a needed step. The corridors will require primarily DC fast chargers to enable BEVs to travel longer distances by recharging in under an hour, as well as some Level 2 chargers for extending the electric range of plug-in hybrid EVs that don’t have fast charge capabilities.

If these corridors are successfully electrified, we can expect greater concentrations of EVs in adjacent cities, ultimately resulting in improved urban air quality and reduced CO2 emissions.

 

U.S. PEV Market Looks to Bounce Back in 2016

— January 26, 2016

EV RefuelingThe plug-in electric vehicle (PEV) market in the United States took a step backward in 2015, with sales falling off after 5 years of strong growth. A surprising decline in the price per barrel of crude oil along with customers waiting for refreshes of existing PEV models such as the Nissan LEAF and Chevrolet Volt contributed to the slump. However, a bevy of new model launches and improvements in vehicles and charging infrastructure provide hope that 2015 was only a speed bump along the journey toward vehicle electrification.

The slowdown enabled China to surpass the United States as the largest PEV market in 2015, and according to Navigant Research’s recently published Electric Vehicle Market Forecasts report, the Asia Pacific region is expected to pull away from North America in the coming years. According to Automotive News China, total production of EVs and plug-in hybrids grew by 300% during the first 11 months of 2015, climbing to 279,200 commercial and passenger vehicles.

However, by 2017, American consumers will have more variety and total choices in PEVs as Ford, Audi, Tesla, General Motors, BMW, and others are set to launch new models in multiple segments. This will likely prompt a rebound in PEV sales growth, especially if the cost of gasoline returns to pre-2014 levels.

Addressing Inconvenience

According to survey data from Navigant Research, consumers in the United States see the availability and inconvenience of charging PEVs as the main reasons not to switch from gasoline to electric powered cars. More than a third (36%) of consumers who responded to an open-ended question about the primary drawback to owning a PEV cited a lack of infrastructure or other vehicle charging-related hassles. Of the small sample size (14) of those surveyed who currently own a PEV, three mentioned the lack of infrastructure availability as a drawback to owning a PEV, while none mentioned the range of the vehicle itself.

Automakers are increasingly addressing the perceived lack of charging infrastructure, and several now include a free year of access to charging at dealerships and other locations when a PEV is purchased. While the number of public, workplace, and private Level 1 and Level 2 chargers continues to grow, increased fast charging is viewed as a necessity in growing the PEV market. BMW and Nissan recently teamed up to deploy 120 DC fast chargers across the United States. This partnership is particularly interesting since each of these two companies back a different fast charging standard, with Nissan supplying its vehicles with CHAdeMO ports and BMW offering SAE Combo ports on its cars. Each of the fast chargers deployed will included charging cables for both standards, so agreeing to disagree while contributing financially to equipment that supports all PEVs is an important development for automakers. Many EV charging companies now offer chargers that support both fast charging standards, and that trend is another reason to believe the PEV sales will rebound in 2016.

 

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