The Dilemma facing Vehicle Manufacturers
As an industry we are learning more about electric vehicle batteries as each month goes by. Recently I attended an interesting webinar on the subject organised by AutoVista.
Intuitively, we know that battery performance is improving. Research supports this: overall battery range has improved by 28% in the last three years from 182 miles in 2021 to 233 miles today. Further, charging speed has improved by 25% over the same period.
Photo by Sue Winston on Unsplash
Battery size has increased by 14% to help achieve this improved performance although overall fuel consumption has decreased by 9%. This is due to battery size being reduced to make some vehicles cheaper to acquire. In contrast, those vehicles delivering an extended longer range have increased in price, and the trend towards larger batteries continues for both battery electric vehicles and plug in hybrid vehicles. As an example, the Tesla Model Y Long Range transaction price has increased by 9%.
Everyone agrees that the price of electric vehicles needs to reduce to offer sufficient incentive for the private buyer to purchase these vehicles. The advent of a significant number of new Chinese brands into the European market will no doubt assist vehicle affordability. It was suggested that 25 new brands are planning European launches.
The manufacturers’ dilemma is do they continue to increase the range with a corresponding increase in vehicle price, or do they aim for price reductions which will compromise battery range growth?
The conclusion was that cost reduction is critical for the future of European manufacturers due to the impending Chinese competition. This means that continued increases in battery size to extend range needs reappraisal. In addition, the consequences of larger batteries impacting on increased tyre wear and SMR costs also needs consideration.
Therefore, manufacturers should concentrate on becoming smarter by extracting increased range from existing battery size rather than continuing to opt for larger batteries. They should do this by focusing on obtaining greater efficiency from engine, running gear and battery performance.
Author: Ian Hare, Managing Director, Motor Management
