The Electrification of Transportation and Mobility

Overview

Options for both basic transportation and more flexible human mobility are now being electrified, with an increasing number of all types of traditionally fossil-fueled vehicles making the transition to electrification.  ARC Advisory Group research indicates that this trend will continue to accelerate well into this decade.

While more all-electric vehicles (EVs) are now hitting the personal vehicle market, the growth is also surging in trucks, buses, and industrial/agricultural vehicles. Companies like Amazon have announced plans to purchase thousands of electric delivery trucks, with the intention to move to an all-electric fleet in the next few years. The US Postal Service is also planning a fleet of thousands of EVs. Even truck manufacturers are rolling out long-haul electric trucks that will change the face of interstate commerce. While electric buses and trains have been in service for decades now, electrification is moving into new areas ranging from agricultural equipment to scooters. We are also witnessing EV technology moving into electrified aircraft, enabled by a new generation of powerful, lightweight electric motors.

The rapid surge in the growth of e-retail, driven in large part by the current pandemic, has sparked a critical need for more delivery vehicles of all types, from large delivery vans, to electric delivery bikes for first and last mile pickup and delivery. This is rapidly changing the face of logistics and appears to be the “new normal” going forward.

Another critical factor is the emergence and growth of a comprehensive and ubiquitous electric charging infrastructure. Just as the rise of internal combustion engine (ICE) vehicles in the early 20th century required a network of gasoline filling stations, electric vehicles will need access to an equally ubiquitous network of charging stations. Of course, with technological advances in batteries, range and power will also become less of an issue.

Automotive and other mobility manufacturers are stepping up to meet the growing demand for electric vehicles in personal, commercial, and industrial markets. Ultimately, this will help reduce net greenhouse gas emissions to slow global warming. Many car makers are pledging to electrify most, if not all, of their current vehicle models. The signals from the demand side are also growing stronger, with fleet owners increasingly switching to zero-emission models as they become available.

For car makers to develop the next generation of electric vehicles, they require design/build technology that extends to all elements of EV design. This includes the electric powertrain, electrical/electronic system architecture, vehicle engineering, battery and thermal engineering, and so on.  Appropriate simulation tools are needed for every stage  of EV development. PLM market leaders like Dassault Systèmes and Siemens Digital Industries Software now provide electrification design tools and solutions that span all areas of EV design, development, and engineering.  

The Electrification Imperative

The electrification of mobility and transportation will continue to accelerate because industry, business, and society at large must eventually move away from burning fossil fuels to reduce CO2 and other greenhouse gas emissions. In 2019, the electrification of mobility and transportation appeared poised to reach a market tipping point.  With more than two million EVs sold around the world, electric cars accounted for a record 2.5 percent of the global light-vehicle (LV) market. Moreover, there is a significant emerging market demand for other modes of EVs, such as trucks for light duty, delivery vans, and long-haul trucking. 

When the COVID-19 pandemic hit, factories were shut down, severely reducing workforces and disrupting supply chains. The resulting economic slowdown has had significant impact on the overall auto industry, including a rapid decline in light vehicle sales.

While the 2020 pandemic has unquestionably impacted the overall global LV market, analysis of long-term market dynamics in automotive sales indicate that the recovery for the global EV market will be quicker, especially in China and Europe where strong growth is projected post-pandemic. While the US market for EVs is projected to be significantly slower, US car companies like Ford have recently announced plans to electrify their entire model line.  GM has announced plans to invest $27 billion in EV technology through 2025.   Fiat Chrysler America (FCA) has also announced ambitious plans for EVs.  These and other efforts should further expand EV options for consumers in North America and thus help spur increased demand.

Electrification of Mobility Will Continue Despite Market Disruptions

Despite the current global pandemic-related economic crunch, it appears that the prospects for electric mobility are better than ever.  While global auto sales have plunged during the COVID-19 crisis, the electric mobility market has remained remarkably resilient in some countries.

As auto OEMs prepare to ramp up production, some are re-prioritizing EV production lines to meet the expected strong demand and fulfill regional regulatory requirements, such as the EU’s strict target for CO2 emissions. While the overall number of EV sales has declined in China and Europe during this crisis period, the actual market share for EVs has risen, and post-pandemic demand is expected to take off. China is by far the largest EV market in the world, with 1.2 million EVs sold in 2019.  The country’s aggressive response to the pandemic and associated economic rebound have contributed to a robust and growing EV ecosystem. Many EV startups are pushing new, mostly locally designed EV models into the market.

EU leaders have maintained a strict fleetwide CO2-emission target of 95 grams of CO2 per kilometer by 2021. Many major EU-based OEMs have publicly committed to reaching that target and have rolled out an unprecedented number of battery-powered and plug-in hybrid EV models. Additionally, EU governments have introduced new purchase subsidies, tax credits, or a combination of incentives to encourage EV adoption. These incentives, combined with the increase in EV models, have led to an upsurge in consumer demand.

In contrast, in the US, EV sales had already been slowing before the pandemic, which further slowed EV market growth due to economic uncertainty and bottomed out prices for petroleum prices, which make ICE vehicles cheaper to operate. The Trump Administration’s lax attitude toward climate change certainly hasn’t helped proliferation of EVs in the US either, initiating regulatory changes that would decrease the targets for both fuel economy target and CO2 emissions.  Whether or not these changes actually take place will depend on how aggressively the new administration  and Federal government as a whole will work to mitigate climate change in the near term.

ARC Advisory Group clients can view the complete report at   ARC Client Portal    

If you would like to buy this report or obtain information on how to be-come a client, please   contact us

Keywords: Electric Vehicles (EVs), Electric Truck Fleets, Batteries, EV Engineering and Design, CO2 Emissions, Integrated Electrical Systems, Dassault Systèmes, Siemens, Ford, GM, FCA, PLM, ARC Advisory Group.