Article Type: insight

BP becomes third shareholder of EV charging company DCS

Electrification is advancing at a much faster speed than many expected as more electric models enter the market, especially in Europe. This puts viable European charging infrastructure at the heart of the matter as the industry transitions to electrically-chargeable vehicles (EVs).

One company aiming to make the lives of EV drivers easier is Digital Charging Solutions (DCS), which announced that oil giant BP has become its third shareholder.

Convenient charging

DCS was founded in 2017, with its infrastructure solutions promising EV drivers easy access to around 300,000 charging points in 30 countries. Following the closing of a merger and acquisition transaction, BP now holds a 33.3% stake in the startup, the same as fellow shareholders BMW Group and Daimler Mobility.

The deal will see BP provide DCS customers access to 9,000 charging points across Europe, including rapid and ultra-fast chargers. This covers BP’s European charging network, such as Aral pulse in Germany and BP pulse in the UK.

The two companies plan to develop new integrated offers for fleets, including fuel and plug-in services. At the same time, BP aims to expand its global network of public EV-charging points to over 70,000 worldwide by 2030.

‘Our aim is to make charging as convenient as refuelling at the pump – fast, reliable and highly integrated with the vehicle operating system to provide a great customer experience,’ said Richard Bartlett, BP senior vice president, future mobility and solutions.

Pushing electrification

BP, Daimler and BMW are keen to push electrification forward and see DCS as an essential part in driving their strategies. The startup says it offers ‘unrivalled access’ to charging infrastructure, covering more than 85% in 29 European countries. DCS collaborates with high-volume manufacturers to integrate its charging solutions into the vehicles’ operating systems.

For consumers to accept the shift to EVs, a sufficient charging infrastructure is key. With DCS having strong brands such as BP, BMW and Daimler on board, the startup will benefit from an extensive European ultra-fast charging network and retail sites.

‘By forming this strategic collaboration with one of the biggest energy companies in the world, we will provide drivers with increasing access to a convenient and seamless charging ecosystem wherever and whenever they need it, contributing to the electric transformation of our society,’ said Gero Götzenberger, director for strategy and digital mobility solutions at Daimler Mobility.

DCS prides itself on focusing on digitised and customer-oriented services, hoping to make charging as easy as possible. But it also takes into consideration the future of mobility, which is increasingly steering towards autonomous driving. Hence the company also aims to serve the demand for fully-integrated charging services of autonomous cars with valuable data quality.

BP, meanwhile, is growing its global charging businesses and is keen to invest in startups that focus on electrification. Last month, the energy major made its first direct investment in India by leading a $25 million (€21 million) series A funding round in an integrated EV ride-hailing and charging company called BluSmart. It has also recently invested €10 million in ryd, a European in-car digital-payment provider.

Automotive industry a cornerstone of UK’s global economy

The UK government must put the automotive industry at the heart of future global trade negotiations or risk missing out on the country’s most lucrative trade exports.

This is the latest warning from the Society of Motor Manufacturers and Traders (SMMT), which has launched a new report highlighting the economic impact vehicles have on the UK’s trade figures. Export revenues reached £27 billion (€32 billion) last year, making them more valuable to the UK than power-generating machinery and gold, even at a time when the pandemic disrupted trade flows and shut down global markets.

Including imports, the automotive market generated a total of £74 billion in trade revenue during 2020. This was down on the five-year average of £97 billion. However, considering the difficulties posed by COVID-19, including prolonged manufacturing shutdowns and slower sales, the sector remained a crucial part of the UK economy.

Source: SMMT

More than 80% of cars and 60% of light-commercial vehicles (LCVs) built in the UK were destined for export. In total, 53.5% of automotive products sent abroad last year went to the European Union (EU), while 17.7% was shipped to the US and 7.6% to China.

Yet, there is currently no trade deal in view with China, while discussions with the US are ongoing. In addition, negotiations are continuing with Australia, which received 2.1% of total UK automotive exports, while deals are being renegotiated with South Korea (1.7%) and Canada (1.5%).

‘As the world re-emerges from the pandemic, the diversity and importance of the UK’s automotive industry is the country’s competitive advantage for restarting growth, creating jobs and tackling climate change,’ commented SMMT chief executive Mike Hawes. ‘With automotive at the heart of future trade policy, and negotiations focused on removing both the tariff and non-tariff barriers that stifle growth, we can drive forward the growth of “Global Britain” and sustain our place as an economic, industrial and environmental leader.

Slow recovery

According to the Automotive Trade Report 2021, the UK economy recorded its worst performance for more than 300 years in 2020. However, it staged a ‘better than expected’ recovery in the latter part of the year. Total output shrank by 9.8% in 2020, compared with 2019. This contraction was worse than the 1921 slump following the First World War and Spanish flu, and almost as bad as during the Great Frost in 1709 when the UK was an agricultural economy.

During the first lockdown, UK GDP was 25% lower in April 2020 than it was only two months earlier. The economic turbulence caused by COVID-19 has, however, only added to the uncertainty faced by the automotive sector.

Vehicle manufacturers and parts suppliers have had a difficult few years with a push for vehicle electrification, strict CO2 emission targets set by the EU, Brexit, and a collapse in the diesel market. Although the economy is recovering, these issues persist for the automotive market. Additionally, purchasing a car is an expense many cannot afford at present, meaning registration figures are slumping in 2021, even though dealerships are open and lockdown restrictions lifted.

Trade required

With hopes rising worldwide that the pandemic is now in retreat, the SMMT state that the UK’s trade policy must now take advantage of the opportunities from a post-Brexit, post-fossil fuel world to restore growth and jobs with automotive central to this ambition.

With the global car market expected to grow significantly in regions such as Asia and Eastern Europe, the industry body is calling for future trade deals to include dedicated automotive annexes and provisions to reduce tariffs and regulatory barriers. It also recommends establishing rules of origin that will reflect the UK’s future supplier base as manufacturing moves away from the internal-combustion engine, as well as ensuring manufacturers can recruit top talent from around the world to drive growth.

Supply issues dampen improvement in EU new-car registrations in September

As COVID-19 severely disrupted the automotive market in the EU last year, Autovista24 senior data journalist Neil King examines the latest new-car registrations data against 2019 figures to offer a meaningful comparison.

September saw new-car registrations in the EU contract by 20.7%, with the volume 188,000 units lower than the same month in 2019, according to European Automobile Manufacturers’ Association (ACEA) figures. A total of 718,598 new cars were registered, marking the lowest number of registrations for a month of September since 1995.

Nevertheless, the tally was a significant improvement on the 34.4% decline in August and the third-best comparative monthly result this year, behind the contractions of less than 20% in March and June. There was an additional working day in most EU member states last month and Autovista24 estimates that, on an adjusted basis, the true contraction was about 24%. However, there was an additional working day in most countries during August too, including France, Italy, and Spain, compared to 2019. Accordingly, Autovista24 surmises that the market declined by about 37%.

Despite the comparative improvement, the ongoing shortage of semiconductors is impacting production and supply, dampening the market recovery. This is disconnecting weakened sales – as COVID-19 persists and derails consumer confidence and rising inflation squeezes household budgets – and new-car registrations. There are even signs that the delivery delays are deterring consumers from ordering cars, further reducing underlying demand.

Most EU markets suffered double-digit declines in September, with the big four countries suffering an average contraction of 23.9%. The exceptions were Cyprus, Estonia, Greece, Ireland, Romania and Slovakia, where registrations volumes increased. Hungary and Poland only endured single-digit declines of 1.4% and 6.3% respectively. Outside of the EU, both Iceland and Norway enjoyed phenomenal growth of over 60% compared to September 2019. However, many countries registered more than 20% fewer cars last month than two years ago, with Bulgaria, Lithuania, and the Netherlands all contracting by more than 30%.

Forecast downgrades despite improvment

In the first three quarters of 2021, the EU new-car market contracted by 24% compared to the same period in 2019. This marks a modest improvement on the fall of 24.4% in the first eight months.

The majority of markets have endured double-digit declines thus far in 2021, except for single-digit contractions in Cyprus (down 9.6%) and Sweden (down 6.2%). Outside of the EU, this was also the case in Iceland, whereas the volume of registrations in Norway so far this year is 16.5% higher than in the same period in 2019.

The fortunes of the EU market will improve once sales orders can be more quickly translated into registrations. However, with the semiconductor shortages expected to persist into 2022 and possibly even 2023, this will continue to dampen any recovery in the coming months. Accordingly, Autovista24 has downgraded its forecasts for France, Spain, and Italy this month, as well as Germany and the UK.

ACEA has previously forecast that the EU new-car market would grow by 10% this year but Autovista24 now envisages growth of about 5%, which would equate to a contraction of roughly 20%, or 2.6 million units, compared to 2019.

Downside risks

A risk of rising COVID-19 rates in the winter months may yet lead to localised restrictions later in the year. Furthermore, high energy costs will further erode disposable incomes and consumer confidence. There are also concerns that solutions to the semiconductor shortage will take longer to materialise and that global supply issues may worsen further, especially approaching Christmas.

The downside risks to the registrations outlook are therefore greater than the upside potential. Autovista24 will continue to monitor and report on key developments and revise market forecasts accordingly.

This content is brought to you by Autovista24

The social divide – who can afford a BEV?

Is there a risk that regulation and electric mobility will result in only the relatively wealthy being able to afford electric vehicles? Dr Christof Engelskirchen, chief economist at Autovista Group, explores who will be able to afford a BEV and how governments can address emerging inequalities.

Capitalism and inequality are evident where there is economic success in the world’s most powerful nations. What is more, COVID-19 has widened the wealth gap. Societies would struggle to stimulate investments without the outlook to secure substantial profits. Those businesses that compete for the best workers are prepared to pay higher wages for better, more skilled, more productive employees. Democratically-elected governments are often tasked to moderate these inequalities. Typical areas for government intervention are in health care, regulation of monopoly power, access to education, and taxes.  

It is clear that the COVID-19 pandemic has further widened the wealth gap. According to the Global Wealth Report from Credit Suisse, the number of millionaires globally rose by 5.2 million to over 56 million in 2020. One driver has been the rebound in property prices and the stock market, following the continued loose monetary policy of many central banks. Overall, the strategy seems to have paid off so far: economies have rebounded.

Regulation and fiscal policy, alongside governments trying to meet climate change targets, are driving markets towards electric mobility, not a technological superiority of the powertrain. Battery-electric vehicles (BEVs) are heavier, have lower ranges and are currently more expensive to produce. Governments, and the societies that elect them, have set their hearts and minds on carbon neutrality. Some governments are adopting powerful industrial policies to combat climate change, which will benefit society. So far, so good, but this type of regulation and fiscal policy is contributing to a greater social divide.

‘Green’ incentives target new vehicles

Government incentives are largely targeted towards new-car buyers, who usually belong to the more affluent part of a society. In many countries, these incentives have made the total cost of ownership (TCO) profile of the battery-electric vehicle (BEV) and even the plug-in hybrid electric vehicle (PHEV) advantageous compared with an internal-combustion engine (ICE) equivalent. The wealthier part of a society also benefits from incentives to install charging infrastructure at home, which de facto requires them to have a home with suitable parking access to be able to charge an EV. This excludes those living in flats and those with houses but no driveway or allocated parking outside the property.  For some, these requirements can trigger investments in terms of groundwork, but they can increase the value of a property.

The European Green Deal and government incentives have also reduced the supply of used ICE vehicles hitting the market, which in turn has resulted in rising prices. Selling a used car has become lucrative. Buying one has become very expensive. Used-car prices in the UK have risen by 19% on average since February 2019 (see table below). These days, used-car buyers are not only challenged by the ongoing supply-chain issues, but also by the regulation-driven drop in ICE vehicle supply.

Many markets are speeding up the transition of energy production to carbon-neutrality. This has resulted in rising costs for electricity. In Germany, the price per kWh, including taxes, was 30 cents in 2020 and around 19 cents in France. Bulgaria is at 10 cents. One reason for this is the prevalent energy mix.

If we take the argument one step further, many eastern European countries struggle with carbon-neutral energy production, charging infrastructure and provision of much lower or non-financial incentives to switch to BEVs. All of this washes through to lower demand for BEVs. Eastern Europe will depend on the ICE much longer. With ICE vehicle supply falling off a cliff, eventual spikes in prices for used ICE vehicles will be painful to absorb for households that are dependent on individual mobility solutions in the form of a used vehicle. Already today, used-car prices have risen by between 12% and 15% for ICE vehicles in Poland (see table).

Price-index development 28 August 2021 vs. 2 February 2020 in %
by fuel type across age groups

Source: Autovista Group

There are good reasons why those that can afford to are asked to fund innovations first. The first successful BEVs targeted innovators and early adopters at the luxury end of the market. Mass-market BEV production had failed previously. However, this is changing, as OEMs are beginning to announce lower-cost BEV models. BEVs are making a serious attempt not to be a third car in a household but a second and eventually a first.

The inequality argument

We are now at a point where governments must consider the inequality argument around individual mobility solutions, particularly as lower-income households could miss out. Home-office jobs are hardly an option for those doing manual labour. This means that governments and OEMs need to think hard about what they can do to limit inequalities and increase the potential market for the BEV.

Key actions that should be on OEM and government to-do lists:

  • Every new car becomes a used-car, and if there is little demand for a particular used-car, supply meets lack of demand, and the loss in value is dramatic. In turn, this prevents the model from being successful as a new car. Every sale would have to be subsidised heavily to compensate for the loss in value. Stakeholders would do well to consider every lever to make a new car successful as a used car. Our top 10 mistakes when launching a new model apply to the BEV in the same way as for any other car. For the BEV, there is a key mistake that stakeholders should not make: OEMs should hold off launching a lower-range variant alongside normal or longer-range ones. There are two reasons for not varying ranges right now. First, it avoids focusing the buyer’s attention on a particular weak spot of the BEV; secondly, as range advances, the lower-range variants will be particularly lame ducks on future used-car markets. 
  • Governments and cities should stimulate demand for used BEVs by incentivising not just the purchase, but also their ownership. Besides addressing the infrastructure challenge, there is a need to compensate for the lower suitability for daily use compared to a used ICE vehicle. Ideas range from access to restricted lanes or city areas, tax exemptions, lower electricity prices, free or reduced parking costs, or straightforward purchase incentives.
  • OEMs should focus a lot of attention on bringing list prices down for the BEV, e.g. by launching no-frills affordable model variants that excel in terms of range and connected services but less elsewhere. These models could attract a lot of attention on used-car markets.

We are at a tipping point in electric mobility adoption. The technological advancements are reputable, and the industrial policy is substantial. Electric mobility could see an unanticipated push back if we forget to stimulate its relevance on used-car markets. There are different buyer profiles and disposable incomes on used-car markets, compared to new-car markets, which represents a particular challenge for the technology. This can be addressed and moderated, but requires more attention by governments and OEMs, than it currently gets.

What is driving consumer awareness of EVs?

From new technologies to improved infrastructure and external influences, car buyers are becoming more alert to the potential of electrically-chargeable vehicles (EVs). The Autovista24 team discusses what is boosting awareness, including the current fuel ‘crisis’ in the UK.

https://soundcloud.com/autovistagroup/what-is-driving-consumer-awareness-of-evs?utm_source=clipboard&utm_campaign=wtshare&utm_medium=widget&utm_content=https%253A%252F%252Fsoundcloud.com%252Fautovistagroup%252Fwhat-is-driving-consumer-awareness-of-evs

You can listen and subscribe to receive podcasts direct to your mobile device, or browse through previous episodes, on Apple, Spotify, Google Podcasts and search for Autovista24 Podcast on Amazon Music.

Show notes

What is an EV?

Rolls-Royce plans first BEV for 2023

Lucid Motors to launch in Europe

Nio to bring ET7 premium electric sedan to Germany

Saddling up for the EV-technology gold rush

Are EVs as green as they seem?

Germany mandates EV charger card readers

Could apps help guide consumers to electromobility?

RHA: A report on the driver shortage

RAC: Pump prices over time

Saddling up for the EV-technology gold rush

The automotive industry is undergoing a historic transition, moving from the internal-combustion engine (ICE) to electromobility. This is creating a gold rush as companies develop new electrically-chargeable vehicle (EV) systems.

TAE Technologies states that, by 2030, the energy-storage and electromobility markets are estimated to be worth a combined $1.2 trillion (€1 trillion) annually. Increasing its presence in this world, the fusion-energy company is forming a new power-management division.

Elsewhere, Silver Power System (SPS) has partnered with Imperial College, London EV Company, and JSCA to develop a programme to predict a battery’s lifespan. Meanwhile, Mahle Powertrain and Allotrope Energy has unveiled battery technology that offers ultra-fast recharging.

An end-to-end powertrain

TAE’s new power-management division will operate in the mobility and energy-storage sectors. According to the company, this new venture is already in advanced discussions with automotive manufacturers and fuel retailers. It is expected to begin generating revenue next year through licensing and partnership work.

The division will develop EV-powertrain technology capable of providing reduced costs, more design flexibility, greater efficiency, longer battery life, better charging and improved safety. If this new venture is capable of putting such a system together, it will most certainly have struck gold.

‘I am very excited by TAE’s power-management technology, which is truly ground-breaking. It will completely transform the EV mobility market while significantly reducing operating costs,’ said David Roberts, the division’s new CEO. ‘Not only has it enabled tremendous strides in accelerating commercial fusion, the immediate applications for such technology also stand to advance everything from utility transmission to EV efficiency.’

Predictable power

Since January, battery-analytics company SPS has been working with roughly 50 LEVC TX all-electric taxis and a new sports car made by Watt EV Company. These vehicles have travelled a collective 50,000km, each fitted with a data-collecting device. Powered by the internet of things (IoT), these devices constantly communicate with the company’s cloud-based software.

Working alongside Imperial College’s battery researchers, SPS’s machine-learning platform (EV-OPS) has built a digital twin of real-world batteries. This allows for real-time analysis of performance and health, but also the potential to predict lifespan.

‘This really is the holy grail,’ explained Pete Bishop, CTO of SPS. ‘Understanding how an electric vehicle’s battery is performing right now – and predicting how it will perform over the coming years – is absolutely critical for many sectors. But to date, there has been a lack of data and predictive modelling has been largely lab-based.’

These digital doppelgangers could be an enormous step forward for an electrifying industry. Manufacturers could gain better insights into performance, allowing them to accelerate the development of EVs. At the same time, fleet operators could get a better breakdown of performance, while fleet owners could better predict future residual values based on battery health.

Supplementing with supercapacitors

Mahle and Allotrope’s new battery technology combines the benefits of supercapacitors and lithium-ion batteries, enabling recharging times that rival the speed of ICE refuelling. The cells, known as Li-C, are free from rare-earth metals, fully recyclable, and not susceptible to thermal runaway.

‘Range anxiety is often quoted as the main barrier to electric vehicle adoption. But if the battery could be recharged in the same time it takes to refuel a conventional IC engine vehicle, much of that worry goes away,’ said Dr Mike Bassett, Mahle Powertrain’s head of research.

He turned to urban delivery vehicles to explain the technology’s potential. Petrol-powered mopeds have seen increasing popularity alongside the expanding on-demand economy. ‘Decarbonising these deliveries has so far proved difficult without maintaining a stock of expensive interchangeable batteries or switching to a larger, heavier electric vehicle with increased energy consumption.’

But working with Allotrope, Mahle has explored how electric mopeds could be powered by an inexpensive, small capacity, lithium-carbon battery that could be recharged between stops in 90 seconds. ‘With ultra-fast charging, the size of the battery can be optimised to suit the scenarios the vehicle will be used in, and that leads not only to weight savings but also cost reductions that further lower the barriers to decarbonisation,’ Bassett pointed out.

With charging anxiety replacing range reluctance, a battery capable of ICE-challenging refueling times would be enormously valuable. So alongside TAE, SPS and innumerable other businesses, Mahle is in on the electric gold rush. But only time will tell whether each of these technologies will pan out.

Autovista24 webinar – The EV subsidies gamble: Impact on new- and used-car markets

Sales of electrically-chargeable vehicles (EVs), including battery-electric vehicles (BEVs) and plug-in hybrids (PHEVs), are growing rapidly across Europe. Yet many countries are relying on incentives to drive this adoption. Does this gamble help or hinder the burgeoning EV sector in the new- and used-car markets?

Autovista24 looked at this issue in its latest webinar, The EV subsidies gamble: Impact on new- and used-car markets. The topics discussed included:

  • The state of Europe’s EV market
  • The market-adoption conundrum – new vs used
  • What can Europe learn from Norway, the continent’s leading EV market.

Autovista24 editor Phil Curry is joined by Dr Christof Engelskirchen, chief economist of Autovista Group, Roland Irles, managing director of EV-Volumes, Robert Madas, head of valuations & insights Austria, Switzerland, and Poland at Eurotax, and Geir Kristoffersen, managing director of Rødboka Norway, to discuss the EV situation.

Find the full slide deck for the presentation below. Available for viewing and download.

The EV Subsidies Gamble webinar slidesDownload

Sign up to the free Autovista24 daily email to be alerted of future webinar topics and dates, together with the latest articles, videos and podcasts discussing important automotive industry topics.

Do autonomous vehicles support the quest for sustainable mobility?

Managing the technological challenges around automotive megatrends is a mammoth task. The sector’s entire ecosystem has been facing change and disruption that many thought was not possible a couple of years ago. There are further stipulations that will stretch us: investments into new technologies, like the autonomous vehicle, must be sustainable. Dr Christof Engelskirchen, chief economist of Autovista Group, explores the sustainability conundrum of the autonomous vehicle.

Risks of green-washing accusations

Sustainability is one of the most frequently used concepts in an automotive CEO’s speech. At the same time, there has been a new appreciation of the dangers of green-washing. Capital markets are paying closer attention to sustainable investments and a green agenda is a powerful argument in the search for key staff.

It does not come as a surprise that IAA Mobility 2021 emphasised sustainability as a major theme. The exhibition used to focus on the car and its suppliers. But this year, bicycles, multi-modal mobility, public transport and car-sharing commanded a substantial share of attention. Autonomous-vehicle technology will receive more attention, dependent upon whether it is harmful or helps to create sustainable mobility solutions.

Individual autonomy is not sustainable

Societies have begun serious attempts to withdraw a substantial number of cars from city centres. Imagine a world where one third of cars have left urban zones and city planners leverage the new space for bicycles lanes, sidewalks and improved public transport. Likewise, autonomous shuttles and buses will demand more space, if operated in a safe, non-mixed traffic situation.

The autonomous car could be detrimental to this scenario if use cases focus on individually owned cars. These would take users to the city centre in the morning and then drive themselves home before picking users up again in the evening. Not only would that result in more traffic, it would also increase the number of cars on the road, energy consumption, mobile data traffic and demand for cloud space. Furthermore, people might choose to live further away from their place of work as they now have the autonomous means to leisurely commute longer distances.

The sustainability conundrum

Autonomous technology can add value to a sustainable mobility, but not if we are simply adding it to our current mobility mix. When effectively utilised, the technology should reduce the inefficiencies in car usage. Furthermore, we should not abuse the autonomy to increase the product of ‘individual miles travelled’ times ‘space occupied by the vehicle’. The following levers could address the challenges around the sustainability conundrum of the autonomous vehicle:

  • Capital markets reward sustainable investments. Green-washing has become a tangible threat. Therefore, autonomous-vehicle use cases require an assessment as to their contributions to sustainable mobility.
  • Cities will not allow public transport to be cannibalised by the autonomous car. They have already applied the brakes on car-sharing (more space occupied, more cars on the road) and the excessive use of eScooters as a micro-mobility solution. Where autonomous-vehicle technology helps to increase the capacity of public-transport solutions or efficiencies in individual car usage, they will be welcome.
  • Seek out urban or rural areas that have weak public transport infrastructure and develop pilots around autonomous technology in such areas.
  • Individually operated autonomous vehicles represent a particular sustainability challenge. They will likely represent a niche player. Besides the arguments laid out above and their high costs for the individual holder, the higher frequency of servicing and maintaining the technology adds to the bill.
  • Automated parking is arguably an expensive use case but one that can reduce the space needed to ‘store’ a car. Imagine large hub-like parking garages that have the means to absorb individual cars and provide access to convenient public-transport infrastructure.
  • Mixed traffic of autonomous and non-autonomous vehicles, even if technologically feasible, would not mix well. The more defensive approach of the autonomous vehicle paired with the more opportunistic driving style of many human drivers would result in gridlock. Therefore, autonomous-vehicle technology should concentrate on non-mixed traffic scenarios or highly controlled environments.
  • Physically separated lanes for autonomous vehicles, driving at lower speeds from hub to hub, could increase capacity utilisation, even if driven individually.
  • Collaboration, particularly relating to building a common database of miles driven, with real-life traffic incidents captured at the appropriate level of data granularity, will be crucial for the technology to advance quickly in a sustainable fashion.
  • To address the sustainability conundrum and advance this megatrend, attention should be focused on which mobility scenario we would like to achieve as a society and how autonomous vehicles can help. This will be more fruitful than simply exploring how the technology can improve current mobility use cases.

Many use cases but unclear timelines

Autonomous driving has been facing some disillusionment, but this is common for emerging technologies. Mixed traffic, adverse weather conditions, high costs for equipment and R&D all add to the bill. There are exciting use cases and breath-taking investments into the technology, but timelines remain unclear around the deployment and the economy of such use cases. Over time, autonomous driving will likely be tied to physically separated lanes or compounds, to hub-to-hub freight transportation with trucks, and to highly controlled environments.

As we have seen with electrification, we will benefit from a strong political will in the form of a powerful industrial policy focused on autonomous-vehicle technology. This will unlock exciting and sustainable investment cases, which ensure that investors, societies, and the environment will all benefit.

Not all lights are green for fleet decarbonisation

The British Vehicle Rental and Leasing Association (BVRLA) has revealed ‘dangerous gaps’ in the fleet market’s road to decarbonisation. Some sectors have been accelerating towards the UK’s 2030 internal-combustion engine (ICE) phaseout, but others appear stuck at a red light.

The BVRLA’s Road to Zero Report Card 2021 assesses the decarbonisation trajectories of the UK’s car, van and truck fleets. Progress is measured by scoring battery-electric vehicle (BEV) supply, demand and infrastructure with a traffic-light system.

Cars are cruising

The association’s 2021 report points to a very mixed picture of progress. There is a more positive outlook for cars. The huge demand for BEVs received a ‘green – cruising’ score. The BVRLA reflects that most fleet-car segments are enthusiastically embracing electromobility. This is thanks in no small part to a favourable tax regime, continual new model rollouts and a growing charging network.

Examining August’s UK new-car registration figures, BEV demand does indeed appear to be climbing ever higher, even though the market is contending with substantial supply shortages. These fully-electric cars accounted for 10.9% of registrations in the UK last month. Looking ahead, the Society of Motor Manufacturers and Traders (SMMT) estimates that BEVs will account for 9.5% of registrations this year. This would mark a year-on-year increase of almost 44% from the 6.6% market share the drive type held in 2020.

Under 0.7% of the UK’s car parc is currently zero-emission, but 22% of salary-sacrifice cars, 8% of company cars, and 7% of car-club cars are BEVs, the association points out. But the car-rental sector’s BEV fleet currently stands at just 0.6%, reflecting the unique decarbonisation challenges it faces.

The BVRLA ranked the decarbonisation of car supply and charging at ‘amber – accelerating.’ Infrastructure is getting developed and deployed increasingly quickly. Nissan recently partnered with Dreev to launch a bidirectional-charging offering in the UK. Meanwhile, Shell has confirmed plans to install 50,000 on-street charging points across the country by the end of 2025. However, the pace of this development must keep up with demand for BEVs, otherwise confidence in the ecosystem will take a severe blow.

No greens for larger vehicles

The BVRLA does not paint such a green picture for the van sector. Infrastructure, supply and demand all received an ‘amber – brakes-on’ rating. The association points to growing concerns around a shortage of suitable electric vans for many use cases, as well as problems with public charging and insufficient government support, such as grants or tax incentives. Just 1% of the current leased LCV market is made up of BEVs, in turn making up only 0.4% of the wider van parc. The rental market is behind here too, with 0.1% of its fleet powered by batteries.

But the report points to heavy-goods vehicles (HGVs) as the greatest cause for concern. ‘With the government poised to issue a 2035-2040 phase-out deadline, the sector receives a blanket ‘red– parked’ rating,’ the BVRLA states. ‘There is precious little momentum in this fleet segment, with no phase-out delivery plan, no technology roadmap, no mainstream vehicles and no charging infrastructure.’

‘Every fleet is on the ‘road to zero’, but the task ahead is easier for some than others,’ said BVRLA chief executive, Gerry Keaney. ‘There are “sweet spots” where the tax incentives, total cost of ownership and typical journey patterns make going zero emission an attractive choice. Elsewhere, progress is much slower as fleets grapple with a shortage of appropriate vehicles and eye-watering charging-infrastructure costs.’

BMW considers lifecycle of a vehicle with fully-recyclable car

‘What will move us next?’ is this year’s motto at the IAA Mobility 2021 in Munich, and it seems BMW might have come up with one possible answer to that question.

At the event, the German car manufacturer presented a fully-recyclable car – the i Vision Circular, which it plans to launch in 2040. The four-seater not only received attention for its futuristic looks but also its approach to sustainability. The recyclable city car is made entirely from both old and renewable raw materials. A design that uses 100% recyclable materials, including the battery pack, underlines BMW’s ambitious plans to ‘become the most sustainable car company in the world.’

Electromobility and climate neutrality

With Greenpeace activists protesting outside the IAA’s gates, the automotive sector is facing numerous challenges to improve its environmental image and adopt a greener approach. During the next 10 years, BMW plans to put 10 million battery-electric vehicles (BEVs) on the road. And by 2030, half of global BMW Group sales will be BEVs. While the future of mobility might rely on electrification, the industry cannot solely depend on electromobility to achieve climate neutrality.  

Whereas electric cars do not produce local emissions, their batteries charge on power from the electric grid, which is often generated by non-renewable energy. There have also been questions around how energy-intensive it is to manufacture a BEV or an electric battery.

The market also relies heavily on primary sources – such as steel, aluminum and plastic – all of which have an environmental impact, including air emissions. Furthermore, the raw-material demand for BEVs remains high. CO₂ emissions are thus becoming more of an issue related to the supply chain and this correlates with the depletion of scarce natural resources. Decarbonisation, a major theme at the IAA, is on top of the agenda for many car companies as the onus to reduce air emissions has shifted increasingly onto manufacturers.

Carbon-neutral production

BMW has pledged to cut CO2 emissions and aims to increase its use of secondary materials. This includes their use in production and the upstream supply chain. By 2030, CO2 emissions per vehicle and kilometre driven will be halved from 2019 levels, the company announced earlier this week. BMW has aspiring plans and said all its production sites will be net-carbon neutral ‘from 2021.’

‘How companies are dealing with CO2 emissions has become a major factor when it comes to judging corporate action. The decisive factor in the fight against global warming is how strongly we can improve the carbon footprint of vehicles over their entire life span,’ said Oliver Zipse, chairman of the board of management at BMW.

A circular design

BMW’s recyclable i Vision Circular shows great potential when it comes to combatting some of these issues by focusing on the entire lifecycle of a car. Production will rely less on primary sources, and overall, BMW has pledged to increase the share of secondary materials in its vehicles. The manufacturer said its current vehicles use almost 30% of recycled and reusable materials. In the future, the company aims to raise this figure to 50%, which will also be more cost-effective for the group.

‘We have included circularity in our concept right from the start when designing the BMW i Vision Circular. That’s why this visionary vehicle is full of innovative ideas that combine sustainability with new and inspiring aesthetics,’ said Adrian van Hooydonk, head of BMW Group Design.

A fully-recyclable car might have sounded like something out of a science-fiction novel a decade ago, but in our current climate, it could indeed move us next.

Thriving used-car markets across Europe? Yes, but not for every powertrain

COVID-19 has stimulated demand for the used car; the semiconductor shortage has restricted supply. No doubt, used-car markets across Europe are performing exquisitely. Dr Christof Engelskirchen, chief economist of Autovista Group, explores which powertrain types are the winners, which the losers, and why.

Europe’s used-car markets have come through the recent crises that have beset the automotive industry rather unscathed. After an initial dip in prices, which was more pronounced in Sweden and Finland (see chart below) that had no or a very limited lockdown of dealers due to COVID-19, all markets recovered swiftly and are performing above pre-pandemic levels. Trends are still pointing upwards. In the charts and tables below, we show the price index for used cars, controlling for changes in mix. They capture the evolution of prices for the same selection of vehicles from week to week. Rising curves show that retailers are able to command more money for the same car.

Price-index development from February 2020 to August 2021– weighted across powertrain types/age groups

Source: Autovista Group Residual Value Intelligence

The UK presents the most elastic used-car market, as Brexit and supply-chain challenges unique to this import market have added fuel to the fire. Used-car prices are up 19% in the UK vs. 18 months ago.

Prices in Poland have been rising steeply (+13%) due to a swift economic recovery and the continued supply shortage of used cars, which were available in abundance before 2020.

Not at the same magnitude, but still consistently across Europe, pent-up demand and an economic recovery are heating up used-car prices. All European markets have seen a substantial rise, but at levels around 5- 9%, typically. This correlates with the speed of economic recovery post lockdowns and with unmet pent-up demand.

Record prices for diesel and petrol cars

Diesel and petrol cars still account for roughly 95% of used-car transactions in Europe. While diesel market shares fall swiftly for new cars, their share on used-car markets is coming down at a much slower pace. Diesel models still make up nearly half of used-car transactions in many markets. If you look at how their prices have been developing over the past 18 months, you can see that they are the true winners of the pandemic (see chart below).

In Austria, prices for diesel cars are up 7% vs. pre-pandemic levels and petrol cars 6%. The direction Austria has been taking is representative of what we see happening in many markets. The magnitude of each of the trends varies across markets, though.

It also shows that used-car buyers have not yet adopted electrically-chargeable vehicles (EVs) as an alternative to the internal-combustion engine (ICE).

Price-index development from February 2020 to August 2021 in Austria – by fuel type across age groups

Source: Autovista Group Residual Value Intelligence

Going one level deeper, older used-cars (54-90 months) and budget cars (91 months and older) are still under particularly high demand and driving these curves up. 

Difficult times for BEVs on Europe’s used-car markets

Dealers have faced challenges selling battery-electric vehicles (BEVs) over the past 18 months. With the exception of the UK (see table below), where BEV prices rose by 2.8%, prices have come under pressure. This is not surprising and occurs due to a combination of factors:

  • BEVs are facing a higher lifecycle depreciation on used-car markets as new models enter the market. These offer higher suitability for daily use at similar list-price levels. We have recently explored these BEV remarketing challenges in more detail
  • High incentives for BEVs in many markets compound the issue. Austria, France, Germany, Spain and many other markets offer substantial and direct purchase incentives, which brings transaction prices down. This price pressure washes through to used-car markets instantly
  • Used-car markets have not (yet) adopted the BEV as an alternative to ICE vehicles. This will only be a matter of time, but it requires attention by governments and stakeholders as a rising number of BEVs will soon hit Europe’s used-car markets.

Price-index development 28 August 2021 vs. 2 February 2020 in % for selected countries – by fuel type across age groups

Source: Autovista Group Analysis

More incentives for BEV ownership

Europe’s green agenda is one of the strongest industrial policies we have seen in a while. Therefore, electrification is an automotive megatrend that is easier to forecast than other trends. In the coming years, we will continue to observe the phase-out of pure ICE vehicles as OEMs seek to comply with the toughening CO2-thresholds. We expect that this will manifest itself in stable, and possibly rising, residual values for ICE vehicles over the coming years – for both petrol and diesel variants. These are still in high demand across many European markets, in particular in those where economies are recovering swiftly and that have been reliant on used-car imports to meet their mobility demands.

Governments and cities should stimulate demand for used BEVs by incentivising not just the purchase but also their ownership. There are plenty of ideas and case studies out there – not just in Norway – which can serve as blueprints of how to drive used-car market adoption of BEVs.

We now have valuable evidence at what transaction-price levels the demand for EVs is stimulated. OEMs need to work hard to hit those transaction prices without relying much longer on government subsidies. They are bound to be phasing out as well over the next decade.

We will revisit this topic and the blueprints for stimulating EV used-car market adoption during our next Autovista24 webinar on ‘The EV-Subsidies Gamble – Impact on New- and Used-Car Markets’ on 22 September.

Beware of the BEV and its remarketing challenges

Dr Christof Engelskirchen, chief economist at the Autovista Group, reviews the data and facts around the remarketing of battery-electric vehicles (BEVs) and assesses whether related fears are justified.

Battery-electric vehicles (BEVs) are enjoying popularity at the moment with demand outstripping supply. This is no surprise as national and regional policies on sustainability clearly point to BEVs being the future for at least next 20 years. Furthermore, strongly government-incentivised BEVs are very competitive from a total cost of ownership-perspective and they are fun to drive.

However, there is a disconnect between new- and used-car markets – almost none of the advantages that new-BEV owners benefit from exist for used-BEV owners. This has translated into anxiety about the remarketing risks for BEVs, the majority of them being in a leasing/ PCP-type arrangement.

Minimising the effects of aging

The first used cars that hit the market after the launch of a new vehicle often create very strong remarketing results – a honeymoon effect. However, cars do not only lose value as their mileage and years on the road increase, they also age over the model’s lifecycle. Consequently, a three-year-old used vehicle that is hitting the used-car market for the first time will cost more than a three-year-old used vehicle that has been available for five years or longer as a used car.

The chart below shows this effect: when the new BMW 1-series (marked with the rhombus at the top green line) hit the market in 2019, it yielded a strong 10%-points uplift in used-car values. Following this launch effect, the line begins to decline swiftly. It is still ahead of its predecessor, but is closing in. It then crosses the Golf’s RV performance line (black line).

Residual value development for selected C-segment competitors in Germany, forecasts, Jan 2017 – Jul 2021


Source: Autovista Group Residual Value Monitor

In contrast, the Volkswagen (VW) Golf (black line) is known for ‘aging well’ and being particularly ‘timeless’ as a model, and this translates into comparatively smaller lifecycle effects. The Golf evolution is stable over time and the launch effect has been smaller (5.5 percentage points). The Ford Focus (purple line), on the other hand, shows a 10 percentage-point launch effect and features a very pronounced lifecycle depreciation.

Commercially, it is always better to minimise lifecycle depreciation than maximise launch effects, as stronger residual values (RVs) over the entire lifecycle require less subsidies and discounts on new-car markets for the model to sell. Those OEMs that are able to deliver a more favourable lifecycle depreciation pattern for their models dip into a combination of the following from their toolbox:

  • No or low discounts;
  • Less aggressive channel mix than the market average
  • Timeless model design
  • Effective lifecycle management via equipment
  • Packaging; and
  • Special editions of a strong brand

BEVs age faster than ICE

Almost any brand could have been selected to contrast BEV models – the list price evolution below features various Golf models over time. During 2017, the e-Golf received a powertrain/ battery update, and prices rose slightly. In September 2019, VW cut prices for the e-Golf in anticipation of the more advanced ID.3.

List price development e-Golf, Golf petrol, Golf diesel between Jan 2015 and May 2020, Germany

Source: Autovista Group

The effects on the lifecycle depreciation pattern of the e-Golf compared to its internal-combustion engine (ICE) variants are evident (see chart below): the battery upgrade in 2017, which represents a powerful move in lifecycle management for a BEV, increased RVs. Irrespectively, and sticking to the left side of the red vertical line, lifecycle depreciation is higher for the e-Golf than for the two ICE Golf-variants. This is largely due to competitors launching BEV models with better ranges.

The price cut with the introduction of the ID.3 (marked with the red vertical line) initiated a further substantial decline in RVs for the e-Golf. Arguably, the latter is a unique effect but it does show how sensitive used-car prices for BEVs are to advances in technology, in particular of range, and competitive action, in this case from the designated successor within the own company.

Residual value development (forecast/ 36m/60tkm/ trade) e-Golf, Golf petrol, Golf diesel between Jan 2015 and May 2020, Germany

Source: Autovista Group

BEVs perform below ICE competitors in %-RVs

When considering some of the main passenger-car segments (B/B-SUV, C/C-SUV, D/D-SUV) in the chart below, referencing again Germany,  the more pronounced lifecycle effects of BEV technology are again confirmed. The green line, which represents the weighed RV performance of all BEVs, falls more steeply than petrol or diesel. Some of the more recent decline links to the substantial government discounts offered on new-car markets for BEVs: €9,000 for a new BEV, representing a quarter of the list price in some segments. The green line for the BEV is more volatile, reflecting the frequent change of mix in the market. In the table to the right, only 1.3% of used-car transactions represent BEVs, when expressing their share in relation to the total of petrol, diesel, and BEV.

Residual value development, in % of list price, Germany, for B/B-SUV, C/C-SUV, D/D-SUV segments, weighted, 36m/60tkm

Source: Autovista Group Residual Value Monitor

BEVs currently perform at the same level as petrol cars when looking at the absolute RV  performance in EUR (not shown), despite the still significant list price differences.

Those that are anxious about RV formation for BEVs over the coming years have a point but should not panic. There are a number of actions and market aspects to consider:

  • Current used-car values for BEVs are already at a low point and reflect the high discounts offered in many markets and the anticipated technological advancements. It is unlikely that discounts will rise. They will therefore not add additional pressure.
  • It is likely that lifecycle depreciation will continue to be stronger for BEVs than for ICE over the coming years, as long as range improves with new model generations. It is simple to reflect that factor in RV setting for a model as it ages. It will have to be based on investigating a model’s and brand’s competitive performance.
  • Our experts expect slightly more RV pressure for BEVs over the coming years than for ICE due to an oversupply of used BEVs, in particular in the high-subsidies markets. Equally, ICE residual values will likely benefit due to a supply shortage as new-car markets shift to electric.
  • To minimise RV risks for the BEV (and to maximise remarketing opportunities for the ICE), a highly professional cross-border approach to remarketing will be highly beneficial.
  • Any advancements with regard to assurance of battery quality via a battery certificate, and continued extended warranties for batteries of used BEVs will support RV formation for the used BEV.
  • Transparency around the cost to repair or to replace the battery and proceeds from a sale of the battery into its second life would support RVs for BEVs as well.
  • Overall, the more diversified portfolio of leasing companies will add financial value as well.

For more exploration of this topic, join the Autovista24 webinar on ‘The EV-Subsidies Gamble – Impact on new- and used-car markets’ on 22 September.



Highways England unveils plan for net zero roads by 2050

Highways England has unveiled its roadmap to net zero by 2050. The transport agency, responsible for roads across England, will look to decarbonise motorways and A-roads.

The new plan builds on the agency’s work in reducing carbon output since 2015. It sets out a comprehensive roadmap to rapidly decarbonise the strategic-road network (SRN) in England. This will help the country to meet its climate targets, as it looks towards a net-zero future.

While much is made of the need to reduce fleet emissions or cut carbon output in manufacturing, road networks will also play a crucial part in reducing overall pollution from the automotive industry. Maintaining these networks goes alongside the power consumption for lighting and services in causing high-emission output.

Highways England plans to achieve decarbonisation through three key commitments; achieving net zero for its own operations by 2030, delivering net-zero road maintenance and construction by 2040, and supporting net-zero carbon travel on roads by 2050. 

Contractors and suppliers will also be required to act,  including commitments to reduce carbon year on year using the latest technologies so that by 2040 road maintenance and construction are near-zero emissions. 

The future of road travel is a zero-carbon one, powered by renewable electricity, hydrogen and biofuels.

Net zero highways: Our 2030/2040/2050 plan

Highways England has been progressing with its net-zero plans for some time. The organisation has introduced plug-in hybrids (PHEVs) to its fleet, and installed LED lighting on the M62. It also used recycling and solar power for resurfacing on the A590.

The report highlights that while many see cars as a problem when it comes to the climate emergency, 80% of families in England own a car. Road travel will decarbonise fast, thanks to the rollout of battery-electric vehicles (BEVs) and the UK government’s plans to ban new petrol and diesel sales by 2030. The government’s Transport Decarbonisation Plan puts the country on a trajectory to do the same for heavy-goods vehicles from 2040.

‘Highways England recognises the threat of climate change and the risks it poses for us all. That is why we are pledging to take effective action to take carbon out of roads,’ said Nick Harris, acting chief executive of Highways England. ‘Today, roads are a convenient, efficient and low-cost way to travel, which is why nine out of 10 passenger miles and 79% of all freight moves on roads. Our plans set out how emissions from our own operations, our construction and our customers will reduce over the coming years.’

Achieving net zero

To achieve its aims, Highways England has set itself deadlines for various targets. By 2025, the organisation has made a Greening Government Commitment (GGC) to reduce its own carbon emissions by 75% compared with the 2017/18 baseline.

By 2030, the body will be net zero for its own emissions. This includes switching roadside lighting to LED – with a projection of 70% completion by 2027, changing its vehicle fleet to BEV models and planting up to three million trees. By 2040, all construction and maintenance activities on the SRN will be net zero.

In addition, in the next road period (2020-2025), the organisation will be taking steps to ensure zero-carbon transport can travel freely on the network. It will be increasing the charging infrastructure and create a blueprint of on-road services for electrically-chargeable vehicles (EVs). There will also be a training programme implemented to ensure traffic officers are able to stay safe when recovering broken down or crashed EVs.

Building the future

Construction and maintenance of the SRN is a large contributor to emissions. According to the report, around 734,000 tonnes of CO2 came from this area during 2020. Without additional action, this will drop to 350,000 tonnes by 2040.

But pushing for net zero offers the opportunity to push the construction industry to deliver on the Committee on Climate Change’s call for the construction industry to be largely decarbonised by 2040. Highways England will focus on the asphalt, cement and steel sectors to decarbonise the construction process. It will use a carbon-management system to embed approaches that minimise emissions, including lean construction practices and the principles of the circular economy. There is also the opportunity to use digital technologies to increase the capacity of its existing network minimising new construction.

‘Our members recognise their responsibilities to protect current and future generations from the impact of climate change,’ said Alasdair Reisner, chief executive at Civil Engineering Contractors Association (CECA). ‘How we build and maintain our roads naturally plays a key role in meeting net-zero goals. Roads form a critical backbone of the UK economy, supporting our personal journeys and contributing substantially to economic growth.

The issue of road building and its contribution to air pollution was highlighted recently by the Welsh government, which has cancelled all new road projects while it runs a review of the process.

The Wales New Transport Strategy, published earlier this year, included a modal shift target for the first time. This requires the country to aim for 45% of journeys to be by sustainable forms of transport by 2045, up from 32% currently. Ministers hope that by cancelling road building, for the time being, money can be shifted into public transport. Both these decisions will, it believes, help the shift to reductions in traffic, and therefore pollution.

What is total cost of ownership?

What is total cost of ownership (TCO)? Daily Brief editor Phil Curry explains the terminology and its importance as a cost-comparison tool.

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Show notes

TCO advantages of D-segment BEVs highlight absence of key players

What is residual value?