Electrification in the automotive industry: The race has begun

AlixPartners, the global business-advisory firm, today unveils a newly developed Electrification Index [APEX 01: Q3’17]

• The pace of global powertrain electrification is increasing, however, there are significant regional and country-specific differences according to the results of a newly developed AlixPartners Electrification Index (‘APEX’).
• Automobile manufacturers appear to be driving electrification of their fleets at very different speeds – with Chinese manufacturers rapidly increasing their offerings, whereas Tesla remains in a league of its own.
• Locally, European countries are driving electrification through state incentive and infrastructure programmes.
• Updated quarterly, the APEX determines both the electrical range (e-range1) of the vehicles sold as well as the degree of electrification (e-share1) of fleets both by manufacturer and region.

London (6 September, 2017) – Electrification in the global automotive industry is starting to have a significant impact on the global automotive industry, according to AlixPartners, the global business-advisory firm. The market share and number of battery-powered, fuel cell and plug-in hybrid vehicles (together electrified vehicles) sold world-wide has increased approximately six-fold since the first quarter of 2013. Over the same period, the overall market share has moved from 0.21% to 1.19% with sales quarterly moving from 41,023 to 260,411 in Q2 2017.

The new AlixPartners e-range measure shows an increase by as much as six times, reaching some 47.5 million kilometres sold (Q2 2017) vs 7.3 million kilometres in Q1 2013. Whereas the AlixPartners e-share measure increased more than fivefold from 0.08% to 0.43% of fleet range over the same period. Although the trend of both measures is clearly upward, the volatility is high. However, AlixPartners states that singular events have significantly hindered the progress of electrification. For example, the sharp decline in both measures in the first quarter of 2017 was due to the temporary suspension of government incentive programmes in China.

A strong Chinese showing

Within the global economic regions of Greater China, Europe, North America, Japan and Korea, which today account for 86% of the global automotive sales market, Greater China significantly leads the e-range measure.

In the second quarter of 2017, vehicles with an e-range of around 22.5 million kilometres were sold, while in Europe this was only 12.6 million kilometres. North America follows with about 10 million. Japan and Korea combined sold two million kilometres worth. In the second quarter of 2017, the e-share measure shows a similar picture with Greater China at 0.70%, Europe at 0.46%, North America at 0.37% and Japan and Korea combined at 0.25%. However, this does not show the pace of change. Under the same measure, Greater China has gone from last to first place over this time period.

"European, North American and Japanese-Korean sales of electric vehicles is in danger of falling behind that of Greater China. This is a major challenge not just for the automotive industry, but also for governments that will need to think even more about incentive and infrastructure programmes in order to support industrial and economic growth", commented Nick Parker, an Automotive expert from AlixPartners.

Small European countries score well

The APEX shows that different rates of change in individual states can be attributed to both regulatory measures and government incentives. Whereas Greater China scores well regionally on both e-range and e-share, on a country-by-country level many European states stand-out. For example, Norway, Iceland, the Netherlands, Austria, Sweden and Switzerland tend to occupy the first six places in the global e-share ranking by country.

The e-share of cars sold in Norway in the second quarter of 2017 was at an absolute peak of 11.86%. By this measure, China ranked only ninth, but is still ahead of the USA (Rank 14) and Germany (Rank 15).

"The success of some European countries shows that the automotive market can be successfully electrified through targeted and coherent state programmes which significantly boost the sales of electrified vehicles“, said Andrew Bergbaum, Managing Director at AlixPartners.

Tesla in a league of its own, Chinese manufacturers pick up

By both the APEX e-range and e-share measures, Tesla leads by some distance. On e-range its 10 million electric kilometres sold in the second quarter of 2017 gives it a global market share of more than 22%. By its very nature, as the only major electric-only manufacturer, its e-share is 100%.

Chinese manufactures rank well by e-range. In the global "Top Ten" of car manufacturers five spots are occupied by Chinese producers – BYD, BAIC, Geely, Zhidou and Jianghuai. Renault-Nissan, the world's third-largest car manufacturer, is ranked second with 6 million kilometres sold, General Motors is fifth (2.6 million kilometres), Hyundai is tenth (1.8 million kilometres), with Volkswagen, the world's largest automotive manufacturer, just missing the top ten (ranked eleven overall).

The progress by Chinese manufacturers is even more pronounced in the e-share measure. Among the "Top Ten" eight spots are occupied by Chinese manufacturers – Zhidou, BYD, Zotye, BAIC, Chery, Jianghuai, Jiangling and Geely.

Little movement with European manufacturers - with one strong exception

A more detailed look at the progress of the European manufacturers shows a split picture. Many European manufacturers have not yet been able to expand their sales of electrified vehicles.

The APEX e-range continues to be dominated by Renault-Nissan. However, BMW’s recent focus has pushed it into second place, with two million kilometres sold in Q2 2017. More strikingly when considering e-share, BMW has now overtaken Renault-Nissan to lead with 0.56%. At Daimler, VW and PSA, on the other hand, there is still little movement on e-share. Overall e-share in European producers only shows a slight upward trend.

"The results of the AlixPartners Electrification Index (APEX) show that the electrification of the automotive industry has arrived and many automotive manufacturers have taken the opportunity to grab market share with increased electrification of their fleet. Although China is a key market for its size, the commitment by some European governments shows that there is a lot to be gained for car manufacturers in Western markets. While Tesla has been a pioneer, many Chinese players are on the road to catch them, and in Europe, both BMW and Renault-Nissan are showing great progress. The pipeline for new electrical models is very strong and we expect the AlixPartners Electrification Index to have some surprises in the coming quarters“, says Andrew Bergbaum of AlixPartners.

About the AlixPartners Electrification Index

The AlixPartners Electrification Index measures the electrification progress in the global automotive industry on a quarterly basis over two measures.

e-range: A calculation of the combined range of vehicles sold, obtained by multiplying the number of electric vehicles sold by the electric range (i.e., not counting any vehicle range derived from a combustion engine or any other non-electric source) of each vehicle.

e-share: A calculation of the degree of electrification of the sold vehicle fleet obtained through the following formula: "Number of electric vehicles sold" ("Electric range (without internal combustion engine)" / 500 km) / "Total number of cars sold"). The weighting of 500 kilometres corresponds to the industrial standard of the range of combustion engines.

The following vehicle types are included in the calculations of the AlixPartners Electrification Index: battery powered electric vehicles (BEV), fuel cell vehicles (FCEV) and plugin hybrids (PHEV); Vehicles with hybrid drive (HEV) without a plug-in option are excluded. The analysis is based exclusively on publicly accessible data, mainly from IHS Markit and EV volumes (global sales of "light vehicles" and electric vehicles). The electrical range of the vehicles used in the calculations is based on data from EV volumes as well as published information from the automotive manufacturers.

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