Last month, Ducker Managing Director, Hélène Wagnies discussed how the electrification trend is moving ahead in her keynote delivery at the Aluminum Digital Talk in Dusseldorf, Germany.
Q&A with Hélène Wagnies:
To put the electrification trend into context, is it important to point out that the automotive industry was strongly hit by the COVID-19 crisis?
- Yes, car production in the EU27+UK decreased by 23% in 2020 as compared to 2019. This decrease was directly linked to the sanitary situation and the hard lockdowns, which prevented both demand and supply to run at a normal pace
- Production is progressively recovering now; LMC expects the industry to be back to pre-covid production level in 2022
- We won’t have a full recovery this year already, partly due to supply chain disruption issues – for electronic components in general, and specifically for semi-conductors used for chipset production
Did COVID-19 stop, or slow down the vehicle electrification trend?
- No – on the contrary, we witness an acceleration of electrification.
- We used to have 96% of what we call ‘ICE only’ in 2018 in European car production – meaning 96% of vehicles with an internal combustion engine and no form of electrification. We still had about the same share of ‘ICE only’ in 2019, but in 2020 there was a sudden boost toward electrification.
- In 2021, LMC expects ‘ICE only’ to have already dropped to a 70% share and further projections predict no more than 17% for ‘ICE only’ by 2028 – that is definitely a drastic change.
What has been the main driver for the sudden acceleration of electrification in 2020?
- Obviously the stricter CO2 emission regulation (EURO 6d) which came into force in 2020. It limits the CO2 tailpipe emissions to an average 95 g/km, as compared to 130 g/km in 2015
- In order to comply with European regulation, the automotive industry has made tremendous investments toward electrification. It translated into nearly 70% of the new car models that were launched in 2020 being electrified (these were 83 out of 122 new models)
Knowing that electrification is accelerating, how does the electrification trend impact the Aluminum industry?
It does – by modifying the aluminum content needed in a car
- The two dominating electrification forms will be the mild hybrids (MHEVs) and the battery electric vehicles (BEVs): currently 14% MHEVs and 7% BEVs in European car production – forecasted to grow to 39% MHEVs and 30% BEVs by 2028!
- Mild hybrids are very similar to ICE only vehicles – they have a few additional components, but it does not significantly change the aluminum content in the vehicle
- What really change the equation are the heavy batteries found in BEVs. And because the strong acceleration in the electrification trend is largely in favor of BEVs, it makes it even more important to track the evolution of BEV production and BEV aluminum demand
- The comparison between previous LMC forecast from Q2 2018 and the latest forecast from Q1 2021 shows that the expected BEV market share for 2028 is 11 pp higher now than it used to be 2 years ago (vs. only 4pp higher for MHEVs, and 1pp for PHEVs)
How is the average aluminum content in cars evolving?
- Ducker is the industry benchmark to track the evolution of the aluminum content in cars on an ongoing basis – we do the tracking and forecasting for the European and North American Aluminum Associations, as well as for industrial corporate clients along the value chain
- Based on our latest internal analyses, we estimate the current per vehicle aluminum content for cars being produced in Europe at 187 kg today (2021). We forecast it to increase by 24 kg over the next 6 years (bringing it to 211 kg in 2027)
- This means that the average aluminum content in cars is further increasing, following a strong dynamic, and one of the main drivers for this increase are the Battery Electric Vehicles
How does the average aluminum content per car differ between a BEV and an ICE?
- Through the heavy batteries, BEVs have a high need for lightweighting. Currently a BEV contains on average 101 kg more aluminum than an ‘ICE only’:
- there are 62kg less aluminum in a BEV due to ICE powertrain & transmission components no longer needed,
- but there are also 163 kg aluminum more needed for the battery, the electric powertrain, and additional lightweighting measures – mainly in the BiW, closures, and chassis
Why do BEVs have a high need for lightweighting while they have zero tailpipe emissions?
- First, the range. Lightweighting allows improvement of the range in order to meet consumer expectations.
- Second, the vehicle handling. Limiting the vehicle mass is also beneficial to the riding behavior.
- And third, to avoid secondary costs that are generated when a vehicle gets significantly heavier (e.g. need for more robust brakes, for more robust suspension, etc.)
Looking ahead beyond 2028, how sustainable is the electrification trend? Do we head toward a full BEV future?
Electrification is here to stay, driven by regulation strongly pushing BEVs as zero emission vehicles. However, it is reasonable to doubt that a 100% BEV penetration can ever be achieved. A 100% penetration would require that:
- Raw materials needed for battery production would be available in a sufficient amount and at an affordable price.
- The electricity needed to fuel an entire fleet made of BEVs would be available in a sufficient amount, and at the right time (dealing with charging peak hours).
- Requirement of battery recycling technologies to be able to recycle all materials of the batteries (not only the cathode but also the anode) for re-use in Automotive
- A dense public charging infrastructure be implemented.
- All of this would have to take place without significantly increasing BEV production and operation costs in order to ensure affordability.
This all means that without a game-changer, the BEV penetration will have to plateau at some point. What could be a game-changer?
- Solid-state battery technology would be an important and likely one – with an energy density twice as high as current technology, shorter charging time (100% charge within 10 min) and expected higher cell stability (meaning lower risk for cell runaway and fire).
- Solid-state would be a strong enabler for BEVs to gain further market shares by displacing the raw material limitations. However, it is still uncertain if and when this technology will reach series maturity as no solid-state battery prototype exists as of today.
- SOLID POWER and SAMSUNG SDI are the most advanced with regards to solid-state technology, with first prototypes announced for respectively 2022 and 2023 (NIO made announcements about semi solid-state applications), meaning first series applications possible at the earliest from 2027, and potential larger adoption after 2032.
What will happen if the series introduction of solid-state battery doesn’t prove to be possible or gets postponed?
It will increase the chances for alternative decarbonization technologies such as hydrogen and eFuels to gain traction and capture more market shares, earlier. Further R&D is required to improve these technologies and reduce the associated costs, but both eFuels and hydrogen have the advantages that:
- The existing refueling infrastructure can be utilized – no tremendous infrastructure investments required.
- They do not imply longer refueling or charging time as BEVs do.
- Low-carbon hydrogen production can be achieved with local production at refueling stations, avoiding the need for hydrogen transport.
- And eFuels have the huge advantage that no investment is required on the vehicle itself – they can be used in ICE vehicles without any major modification.
What is the most tangible outlook in a 15 to 20 year timeframe?
A mix of several decarbonization technologies:
- with BEVs relying on solid-state batteries
- with fuel cell electric vehicles using low-carbon hydrogen
- and hybridized ICE vehicles running on eFuels (or still on fossil fuels in some regions of the world)
How can the industry deals with all these uncertainties related to the evolution of technologies, the associated costs, the availability of raw materials, the regulation, etc.?
- This highlights how crucial it is for industry participants across the value chain to monitor and anticipate what happens with markets, technologies and OEM design decisions.
Ducker’s Automotive & Transportation team is at the forefront of key trends impacting the industry. Ducker is here to help navigate changing markets, help de-risk strategic decisions, and support the development of strategies for the near and long term. We help our clients re-allocate their capacity, and/or re-orientate their capabilities to be best aligned with the parts and technologies they should focus on in a currently very fast changing industry.