What is driving the change in the automotive today and key factors behind the growth of EV? Impact of electrification on weight lightening?
China Government is leading the transformations in depth at high speed
- Improving pollution emission, secure the energy resources needed to power China's economic development and taking the lead on these new electrical technologies and become global electrical manufacturers are the key drivers.
- On December 26th Chinese government has confirmed incentives until 2020 to promote and support EV (purchase subsidies, tax and license plate exemptions). A carbon trading program will be phased in starting in 2019 this will push OEM to add more EVs to their product mix in order to avoid a tax penalty. On December 30th Government have decided to phase out of production 553 polluting vehicles in 2018.
- EV market is growing rapidly in China and is now outpacing its Western counterparts with 700000 units sold in 2017, 5 mn EV cars should be in circulation in China by the end of 2018 (1.7 to 2 mn EV cars expected to be sold in 2018). China is also the largest car market for many global automakers, including Volkswagen, BMW, General Motors and Mercedes-Benz. it is becoming essential for these companies to follow China's mandate to electrify transportation
- EV market is growing rapidly in China and is now outpacing its Western counterparts with 700000 units sold in 2017, 5 mn EV cars should be in circulation in China by the end of 2018 (1.7 to 2 mn EV cars expected to be sold in 2018). China is also the largest car market for many global automakers, including Volkswagen, BMW, General Motors and Mercedes-Benz\ it is becoming essential for these companies to follow China's mandate to electrify transportation
- National OEM are concentrating their energy to create new giants (FAW – DONGFENG - CHANGAN) capable to address all these challenge at a different scale
- Chinese EOM are willing to export their premium cars to the US and Europe and Crash test requirements (small overlaps and Pole test) will lead to new approach on the designs and materials choices for the BIW.
Emerging disruptors (Nio, Byton), hardware innovators (Tesla, BYD) and traditional experimenters (VW, Ford) are now competing with ecosystems and car sharing as new drivers.
- Competing in this new business model is no longer just about the engineering of physical hardware, but also includes the capability of building a digital ecosystem relationship with consumers. Baidu, Alibaba and Tencent are actively investing in future mobility technologies around connected, electric and autonomous cars. Within 2025 software will represent 30% of the value of the vehicle VS less than 10 % today. (Baidu invested USD 1 billion in Weltmeister Motor. Alibaba buy 10% stake in Xpeng while Tencent led a funding round in NIO)
- Car sharing will prevail in multiple cities. Didi Chuxing, China's top mobility service provider (co funded by Tencent and Alibaba) has also partnered with NEVS, a Sino-Swedish venture that will manufacture electric vehicles in Tianjin. With 150 mn people having driving license but no car China is the perfect place to develop car sharing, hailing services are 8 times more developed than in US (UBER) and there are today 12 times more taxi as in US