Economists: Electric cars to break current European auto industry
Senior ING economists Max Erich and Jurjen Witteveen have written a report predicting a massive upheaval in the European auto market thanks to the continued improvements in battery electric vehicles (BEV). The report, titled “Breakthrough of Electric Vehicle Threatens European Car Industry,” cites faster charging and increased range due to better battery technology as key factors in making BEVs more competitive with internal combustion engines (ICE).
These factors are important because as faster charging and greater range improve, so will customer adoption and costs. Erich and Witteveen predict that, starting in 2020 when new battery technology starts to assuage consumer expectations about BEV range, other aspects will start to follow. And because of BEVs general lower cost of operation, they should be cost competitive with ICEs by 2024.
“Once BEVs beat ICEs on price and quality, transition can move fast,” say the report’s authors. “A growth path in which BEVs near a 100% share in new cars by 2035 is increasingly realistic. This challenges Europe’s automotive industry, which holds close to 25% of global car production.”
According to the report, European car manufacturers are currently at the forefront of internal combustion engines (25% market share), but their share in lithium-ion production used in electric cars is only 3%. Therefore, it is likely that both Asia and North-America will get a bigger foothold in the European car market due to their great supply of resources. To compensate, the European automotive industry will need to transition from the current business model that draws value from production and sales to one that “offers value in facilitating efficient and affordable car usage.”
Visit https://www.ing.com/Newsroom/All-news/Electric-cars-will-take-over-threatening-European-car-industry.htm to view the full report.