For the next decade, electric powertrain technology will maintain its pace of development. At the moment, boosted by legislation in China and Europe electric vehicle sales are growing. However, cost increases caused by a powertrain technology shift threaten margins and profitability in the next decade. In our new Powertrain Study, we have looked at electric vehicle sales in Europe, China and the US and have analysed how powertrain technology and costs evolve. In order to stay profitable in the new powertrain age, OEMs need to focus on cost-optimised powertrain platforms and a customer-oriented powertrain portfolio now.
Top findings:
- The electrification trend is accelerating and unstoppable, driven by legislation and popular sentiment. To achieve European CO2 fleet targets, an electrified vehicle (“xEV”) share 35% to 45% will be required in 2030.
- As OEMs struggle with on-costs for xEVs, profitability and contributions margins are under threat. This is due to the new roll-out of xEVs to the volume segment, and the economic downturn caused by COVID-19.
- Batteries are the largest cost driver of electric powertrains - costs will fall further, yet this fundamental point will still apply.
- The often discussed turning point when BEVs become more economic than ICEs is not a discrete point in time. It depends largely on vehicle segment, power, and range (battery size). BEVs will become economic for several segments, but extended ranges (600 km+) will not be viable with BEVs.
- Based on the customer value proposition for powertrains, variants should be reduced to enabled focused development capacities, while core competencies need to be revised.
- Given that profitability is precarious (due to COVID-19) but xEV sales are growing, OEMs need to focus on cost-optimised powertrain platforms and a customer-oriented powertrain portfolio to improve margins and profitability.
