Indications about the future of mass-market EVs

Will we remember 2017 as the year when electric vehicles took the step to enter the mass-market? Inspired by this question, McKinsey – in partnership with A2Mac1 who’s, a provider of automotive benchmarking services – decided to deepen their work in the field. Here you can see some of their findings.

In 2017, nearly 1.3 million EVs were sold worldwide, and while this only accounts for about 1 percent of the total passenger-vehicle sales, it is still a 57 percent increase over 2016 sales. So far, there is little reason to believe this trend will slow down, as established OEMs have announced launches of more than 100 new battery electric vehicle models by 2024. This will further accelerate automotive and mobility trends and potentially grow EVs’ share of total passenger-vehicle sales to 30 to 35 percent in major markets like China, Europe, and the U.S. by 2030.

Among these new models, there is a sizable share of midsize and volume-segment vehicles, and as such EVs are moving away from previous “niche roles” such as high-performance sports or midrange city cars.  In their report, McKinsey highlight tendencies and findings that indicate a gain in market share for EVs in the future as well as some of steps required to get there. Below you you can see some of these tendencies. For the full overview, read the full article at McKinseys website.

  • OEMs have reached ranges with their EVs that allow them to focus on reducing price points, for example, by increasing design efficiency or reducing manufacturing cost in order to become affordable to more customer segments.
  • Despite higher up-front investments, native EV platforms have proved advantageous over non-native models in multiple ways. For instance, designing the vehicle architecture entirely around an EV concept means fewer compromises and more flexibility on average.
  • There is a continued trend toward EV powertrain integration, with many parts of the power electronics moving closer together and being integrated into fewer modules.
  • EV customers are very tech savvy – and new technologies are largely getting mature enough to be put to practice. This creates a great testing field for the new technologies that OEMs and other players hope to push into cars. But it also almost obligates EV manufacturers to equip their vehicles with the highest levels of technology around advanced-driver-assistance systems (ADAS), connectivity, and other trends that are redefining the driver experience and travel strategies.
  • In an effort to achieve profitability, rigorous design to cost (DTC) will become more important for OEMs to pave the road for EVs to successfully enter the mass market. That is, it could help achieve an attractive price point, while not jeopardizing margins for the OEM.

The content in this article is based on McKinseys article from March 28th, 2018 “What a teardown of the latest electric vehicles reveals about the future of mass-market EVs” by Antoine Chatelain, Mauro Erriquez, Pierre-Yves Moulière, and Philip Schäfer. Read the full article here.