New webinar: The economy behind large batteries in electric vehicles - is bigger, better?
Find out more
Close
Over the course of the last year, motor shows have been postponed, digitised, and cancelled. But as Auto Shanghai opened its doors, the automotive industry got a chance to showcase the latest models up close and in person. Daily Brief editor Phil Curry, senior data journalist Neil King, and journalist Tom Geggus, discuss some of the key unveilings.
To get notifications for all the latest videos, you can subscribe for free to the Autovista Group Daily Brief YouTube channel.
Image: TheNewsMarket
The latest edition of Autovista Group’s whitepaper: How will COVID-19 shape used-car markets? considers the third-wave of coronavirus infections across Europe, and looks at the lessons learned a year since the pandemic first hit the continent.
The whitepaper covers topics including:
Following the emergence of Europe’s automotive sector from COVID-19 lockdowns, a three-speed development of residual values (RVs) has prevailed across the region. Autovista Group’s COVID-19 tracker, which covers 12 European markets, has revealed that residual value (RV) indices for a number of countries have returned to pre-crisis levels. Some, however, are still struggling.
Autovista Group experts discussed the whitepaper findings in the company’s latest webinar – Europe’s used-car markets – recovery from COVID-19. You can watch the presentation below.
Remaining strong
Used-car markets have proven more resilient than expected. In fact, the pandemic has helped some developments over the finish line that have long been in the making. For example, online sales, an advance that the automotive industry was slow to adopt until COVID-19 made it a necessity. Also supply-chain disruption has pushed demand towards the used-car sector.
In addition, the latest whitepaper looks at forecasts for RV development in Europe for 2021 and 2022. Autovista Group experts analyse the latest trends and scenarios for used-car market development across the continent. As countries are hit by a third-wave of infections, economic recovery may yet extend into 2022, even as vaccination programmes pick up their pace.
You can find more information about how different markets are shaping up, and the various economic scenarios across the region, in the latest update of the Autovista Group whitepaper – ‘How will COVID-19 shape used car markets’ – which can be viewed here.
The big news for the UK was the relaxation of some lockdown rules, which began for dealers in early April. Crucially for the car retail industry, this meant that they could once again open their sites to the general public. As expected, this triggered a rise in auction activity as dealers looked to top-up their stock and prepare for the anticipated rise in demand.
We also saw the introduction of the March registration plate (21 plate), which is an event that typically brings a boost to the used car market with an influx of part-exchanges in the latter part of the month. Auction sale volume saw a marked increase compared with February and an even bigger hike compared to March 2020. The first-time conversion rate also rose in March, up 8.1% from February to 82.7%. This was 6.3% lower than March 2020, but still pretty good considering we were emerging from lockdown.
General bidding activity appeared to improve through the month, although cars requiring work or lacking specification still struggled. Convertible values noticeably improved, buoyed by the approach of Spring and, quite possibly, a more positive outlook as more restrictions are expected to be relaxed over the coming weeks and months.
Looking at the used car retail market for March, it is clear why the auction market saw such a rise in activity. The number of observed sales rose by 24.2% from February to March, and were a very impressive 39% higher than for March 2020 – the difference between transitioning out of lockdown rather than heading towards one.
Unsurprisingly, this ramping up of demand led to a reduction in the length of time cars were spending on the forecourt. GlassNet Radar reported that the average for March was 48.7 days, which was an improvement of just over 9 days from the previous month. It is 9.7 days longer than for March 2020 however, but considering the circumstances it is an encouraging improvement.
With April having less pandemic-related restrictions than we have seen for some time, we can expect to see another busy month for both wholesale and retail used car sales. Of course, there may be a degree of pent-up demand that has been released, but with more regions of the UK returning to (relative) normality it is fair to expect that the used car industry will follow suit.
New car registrations will still be down for this year – higher than for 2020 but much lower than we were seeing pre-COVID – which means there will be a shortage of nearly-new stock for some time yet, and this will filter down through the age bands over the next couple of years which should help to ensure values of used cars remain relatively healthy.
The iX3 is BMW’s first pure-electric X model and is the most conventional, being effectively a battery-electric vehicle (BEV) version of the best-selling X3.
The iX3 offers good performance, with strong linear acceleration – as usual for a battery-electric vehicle (BEV). The model also strikes a good balance between power and battery capacity, with competitive electricity consumption. In terms of agility and dynamics, the iX3 is slightly better than its direct rivals overall. As the battery is located under the car, this also explains the good roadholding.
Standard equipment is comprehensive, including three-zone climate control, heated and powered front seats (with memory function on the driver’s side), BMW Teleservices and wireless phone charging. Safety features include emergency-assist and rear cross-traffic alert. The 458km range of the iX3 is second only to the Jaguar I-Pace’s 470km range, and it has the fastest charging time when connected to an 11kw AC wallbox, of 7.5 hours.
In addition to BMW’s strong brand image, the iX3 is supported by the company’s longer expertise in electrification. This started with the i3, which has been on the market since 2013, and was followed by plug-in hybrid (PHEV) engines offered on different models in the range, including one for the brand’s X family.
As the first conventional BEV from BMW, the iX3 compares well against key competitors. It is offered at an attractive entry price point and the popularity of both the brand and the X3 range should ensure plenty of demand. Given that the iX3 is very close to the X3, BMW’s D-SUV range is now available in diesel, petrol, PHEV and BEV versions.
Click here or on the image below to read Autovista Group’s benchmarking of the BMW iX3 in France, Spain and the UK. The interactive launch report presents new prices, forecast RVs and SWOT (strengths, weaknesses, opportunities and threats) analysis.
New car registrations in March showed the first green shoots of growth since August 2020, with 29,280 more units registered compared to the same month last year. This represents an increase of 11.5% according to figures published by the Society of Motor Manufacturers and Traders (SMMT).
However, March is also the anniversary of the first full lockdown caused by the COVID-19 pandemic, so comparisons with 2020 figures will fluctuate wildly throughout the year. If compared to March 2019’s pre-pandemic normal market, March 2021 registrations fell 38%.
Data courtesy of SMMT
The March on March growth figure was not uniform across all sectors. While Fleet volume grew 28.7% or 33,784 units and Business was up 18.6% or 902 units, sales to private consumers fell 4.1% or 5,406. In March 2020, the Fleet and Business sectors suffered larger falls in registrations than retail, so had a lower base point to grow from. Besides, many lease contract extensions have expired, hence an uptick in March registration activity, as company cars are often ordered without any physical viewing. Private consumers are more likely to purchase a vehicle after visiting dealerships first, which is why the April 12 reopening of non-essential retail is so important for the new and used car markets.
Despite March’s rise in registrations, the new car market dropped by 58,032 cars or 12% in quarter one, with sales to private consumers affected most as shown in the chart below.
Data courtesy of SMMT
The shift to alternative fuelled cars is continuing at pace, with plug-ins making record volume. Battery electric vehicles (BEVs) and plug-in hybrid vehicles (PHEVs) took a combined market share of 13.9%, up from 7.3% last year, as the choice available to customers continues to grow. Registrations of BEVs increased by 88.2% to 22,003 units, while PHEVs rose by 152.2% to 17,330. Hybrid electric vehicles (HEVs) also rose 42.0% to reach 21,599 registrations.
For this positive trend to continue, the government needs to maintain customer incentives for new cleaner technologies, whilst planning and implementing improved infrastructure to cope with the increasing registrations.
As we look ahead to the second quarter, it is logical that the new car market will catch back some of the ground lost in Q1, as the market was effectively closed in April and May last year due to Lockdown-1, with only just over 24,400 cars registered in the two months combined.
New car registrations increased by 11.5% in March according to figures released by the Society of Motor Manufacturers and Traders (SMMT). Sales to private individuals fell 4.1% with ‘click and collect’ hampering sales rate. Fleet and business registrations more than made up for that shortfall, increasing 28.7% and 16.6% respectively, with physical transactions less common in these sales channels, so the lockdown restrictions had less impact.
Although an 11.5% increase to 283,964 registrations is a positive result in the current climate, it is significantly below 2019’s registration tally of 458,054, and for context, 2019’s total was the lowest for five years.
There was a marked improvement in wholesale trading conditions in the latter half of March, as dealers began filling gaps on forecourts in preparation for the reopening of sites to physical customers on 12 April. Overall conversion rates returned towards seasonal norms and hammer prices began rising. The percentage of cars selling on the first time of asking was 82.7% which is up 6.2 percentage points from February but still over 6 points behind March last year.
Glass’s expects a very buoyant period of retail activity from 12 April, with wholesale trading following a similar pattern as dealers replenish stock more regularly. Somewhat unexpectedly, one of the national auction groups has announced the return of some physical auctions from 12 April, with buyers welcomed back into auction halls, but adhering to social distancing measures. It will be interesting to see how the other national auction companies respond or whether they will remain on their current course of online-only sales programs.
On the face of it, an impressive 85.5% increase in light commercial vehicle registrations in March 2021 reflects a market that saw its largest ever rise since the introduction of the two plate system in 1999. This figure masks a market that is 10.9% down on the 2015-2019 average and reflects the struggles this industry has had during the pandemic. Delayed pipeline orders and cash-rich businesses replacing vehicles at the end of the tax year boosted registrations in March, with all sectors enjoying large increases. A year-to-date total of 97,356 registrations is a rise of 43.4% overall versus 2020.
SMMT data indicates that the 56,122 March registration total is 25,875 units more than in March 2020, the first month of the COVID-19 pandemic.
Breaking down the results reveals that there were increases for all sectors. Demand for vans under 2.0 tonnes rose by 96.1% whilst registrations in the between 2.0-2.5 tonne and 2.5-3.5 tonne sector improved by 31.5% and 101.0% respectively. The Pickup sector also recorded an 85.7% increase.
The Ford Transit Custom resumed its number one position, outselling its big brother, the Ford Transit in second spot by more than two-to-one. Ford managed to place four of its product ranges in the top ten for the second month running. In addition to the Ford Transit Custom and the Ford Transit, the Ford Ranger was fourth and the Ford Transit Connect was eighth. The registration top ten also saw Toyota’s Hilux pick-up feature in ninth position.
Top five LCV registrations
The effect the pandemic has had on the automotive industry over the last twelve months cannot be underestimated. Further lockdowns in many European countries continue to stymie vehicle production and the wider supply chain and does little to encourage business confidence.
In the UK, those who rely on incentives as essential to making battery electric vehicles affordable have derided the decision to reduce the Plug-in Van and Truck Grant. By the end of 2022, most van manufacturers will be able to offer a battery-electric vehicle (BEV). Instead of making BEVs an attractive and affordable proposition to UK businesses, the latest grant reductions place the country even further behind other markets who are at this time, increasing their subsidies. The eligibility change has already wiped out all-bar-one PHEV from the approved list, whilst the grant reduction is likely to affect the supply of BEVs to the UK. This at a time when commercial vehicle operators were beginning to show confidence and a desire to buy electric vehicles.
March used Light Commercial Vehicle (LCV) overview
March has seen the used market in resilient form overall, driven mainly by the expanding home shopping market and the construction industry. Prices have remained strong and first-time conversion rates high for anything that is retail ready.
The minibus sector has struggled badly during the pandemic due to COVID restrictions, but as children return to schools around the country, there has unsurprisingly been an increase in demand. This demand has predominantly come from private sector operators fulfilling education authority contracts, rather than the schools themselves.
Buyers are actively avoiding damaged stock on the open market, whilst prices have continued to hold strong over the month. A steady trickle of new stock into the used market has seen buyers continue to haggle over the best examples, with sub-two-year-old stock attracting additional interest from franchised dealer groups running low on new stock. With less availability in this age bracket in March, prices increased across all sectors. There is more duplication available at auction currently as some utility companies start to de-fleet older stock.
In March less than 50% of all sales were in the zero to 4-year-old age bracket, whilst more vehicles in the over six-year-old age bracket were sold than in February and at higher prices. Medium-sized vans again proved the most versatile and popular overall during March with 37.7% of all sales. Small vans followed with 26.7% and large vans were third (26.0%).
With the SMMT reporting a strong March new plate registration month, there will be vehicle de-fleets that find their way into the wholesale market over the next weeks and months. This should slowly start to ease supply and demand issues, although prices look set to remain high for the best stock well into the second half of 2021.
With global vaccinations on the increase, the easing of lockdown measures has seen some of the smaller auctions return to physical sales. Others who have benefitted from operating solely as an online business during the pandemic have decided to continue this way, with a view to reassessing the situation later in the year.
March in detail
Glass’s auction data shows the overall number of vehicle sales in March increased by 12.8% versus February 2021, whilst first-time conversion rates increased by 3.0% to 87.2%.
Average sales prices paid in March increased slightly by 0.86% versus February and are now a third higher than the same point last year. The average age of sold stock increased from 69.0 months in February to 70.8 months in March and was 3.8 months younger than the same point last year.
Average mileages exceeded 80,000 miles for the first time in twelve months, increasing from 79,936 miles in February to 86,603 miles in March. This mileage was 6,073 miles higher than in March 2020.
Glass’s continues to monitor the LCV market closely and has an open dialogue with auction houses, manufacturers, leasing and rental companies, independent traders and dealers as well as the main industry bodies. This information, combined with the wealth of knowledge in our CV team ensures Glass’s valuations remain relevant in the market place.
Originally written for Commercial Fleet
The automotive industry is undergoing a monumental period of change. Megatrends like digitisation, sustainability, and electromobility are transforming how a car is designed, built and powered. This means suppliers are also changing as carmakers require more advanced and specialist know-how.
A primary example is the accelerated computing company Nvidia, which first made its name at the turn of the century in the PC-gaming market. Now it is working with Volvo Cars, Zoox and SAIC on the next generation of AI-based autonomous vehicles. Its Omniverse platform is even being used by BMW Group to plan complex manufacturing systems. As Jensen Huang, founder and CEO of Nvidia, said: ‘Transportation is becoming a technology industry.’
254 trillion operations per second
Volvo, Zoox and SAIC have joined the growing number of transportation companies using the latest Nvidia Drive system. The tech company’s pipeline for the system now totals more than $8 billion (€6.7 billion) over the next six years, which it says reflects the growing range of next-generation vehicles.
‘Besides having amazing autonomous driving and AI technologies, vehicles will be programmable platforms to offer software-driven services. The business models of transportation will be reinvented,’ Huang said. ‘Our design wins demonstrate how Nvidia is partnering with one of the world’s largest and most impactful industries to help revolutionise the future of mobility.’
Volvo will expand its collaboration with the company to use its Nvidia Drive Orin system-on-a-chip (SoC) technology. This will work with software developed in-house by the carmaker and its own software company Zenseact, to power autonomous-driving systems in its next-generation models. The SoC is capable of carrying out 254 tera (or 254 trillion) operations per second (TOPS), which will be essential given the enormous amount of computing power needed for autonomous driving.
Volvo will deploy Orin based on its SPA2 modular vehicle architecture, with the upcoming XC90 front-lining what the SoC can do. The carmaker’s new platform will be available as hardware-ready for autonomy from the beginning of production. Highway Pilot, Volvo’s ‘unsupervised autonomous driving feature,’ will be activated when verified as safe for individual geographic locations and conditions.
‘We believe in partnering with the world’s leading technology firms to build the best Volvos possible,’ said Henrik Green, chief technology officer. ‘With the help of Nvidia Drive Orin technology, we can take safety to the next level on our next generation of cars.’
Robotaxis and EVs
Robotaxi company Zoox is also developing with the help of Nvidia’s technology. The ‘mobility-as-a-service’ (MaaS) provider recently unveiled its Nvidia Drive-powered, purpose-built, bi-directional robotaxi designed for urban areas.
Chinese MaaS provider, Didi, also announced it is adopting Nvidia Drive for its entire autonomous driving test fleet. These two companies will join the ranks of other robotaxi builders already developing on these advanced systems, including Pony.ai and Auto X.
An increasing number of new companies will also use Nvidia Drive Orin to build software-defined vehicles, including Chinese carmaker, SAIC. Its R Auto family will feature the R-Tech advanced intelligent assistant, powered by Orin to run perception, sensor fusion and prediction for automated driving features in real-time. Its premium IM brand will deliver long-range electrically-chargeable vehicles (EVs) with help from the system. This line-up will include a sedan and an SUV with autonomous parking and other automated-driving features.
Virtual factory planning
Nvidia is also working with BMW to create a new approach to planning manufacturing systems with its Omniverse platform. This virtual factory mapping tool integrates planning data and applications, allowing for real-time collaboration.
‘Together we are about to make a huge leap forward and open up completely new perspectives in the field of virtual, digital planning,’ said Milan Nedeljković, BMW board member for production. ‘In the future, a virtual representation of our production network will allow us to realise an innovative, integrated approach to our planning processes. Omniverse greatly enhances the precision, speed and, consequently, the efficiency of our planning processes.’
While virtual factory planning is nothing new, it does require the import of data from various applications. This can be time-consuming as well as complicated owing to compatibility issues. In future, the platform will allow live data to be collected and collated from all databases to create a joint simulation. A new level of transparency will enable teams to plan complex systems with greater speed and accuracy.
Developers at BMW will be able to visualise the entire planning lifecycle for every plant in the global production network. This will be supported by a wide range of AI-capable applications, from autonomous robotics to predictive maintenance and data analysis.
‘I am delighted that BMW is using Nvidia Omniverse to connect their teams to design, plan and operate their future factories virtually before anything is built in the physical world,’ said Huang. ‘This is the future of manufacturing.’
Spain introduced the new MOVES III incentive scheme for electrically-chargeable vehicles (EVs) on 10 April, which includes hydrogen fuel-cell vehicles (FCHVs) for the first time.
All FCHVs, as well as battery-electric vehicles (BEVs) and plug-in hybrids (PHEVs) that cost less than €45,000 (excluding VAT), are eligible, with the price ceiling rising to €53,000 for vehicles with eight or nine seats. Used EVs that are less than nine months old are also eligible.
It is worth noting that across Spain and the major European markets, the residual-value (RV) disadvantage of BEVs compared to petrol cars has widened since March 2020. The greatest divergence has occurred in Germany, where the gap has widened by just under four percentage points (pp) and stood at 10 pp in January 2021. The divergence accelerated notably following the introduction of enhanced incentives on 1 July 2020.
Cautionary tale
This is a cautionary tale for Spain as it rolls out this new scheme. All governments should look into providing incentives to encourage used-BEV ownership, but these do not need to be straightforward purchase incentives. Lower energy costs for charging BEVs and visible expansion of the charging network would also be powerful signals.
‘The biggest potential risk for pressure on RVs stems from the purchase incentives for EVs. A positive and moderating effect comes from the longer-term ownership tax reduction and a lack of company-car tax benefit,’ commented Ana Azofra, head of valuations and insights at Autovista Group in Spain.
As detailed in the table below, private buyers of EVs with an electric range of at least 90 km are entitled to a subsidy of €4,500 in Spain, which is reduced to €2,500 for EVs with a range of 30 to 90 km.
Source: IDAE
For small and medium-sized enterprises (SMEs), the incentives amount to €2,900 for EVs with an electric range of at least 90 km, reducing to €1,700 with a range of 30 to 90 km. For large companies, the incentives are €2,200 for EVs with an electric range of at least 90 km and €1,600 with a range of 30 to 90 km.
Source: IDAE
The scheme runs until the end of 2023, with an initial budget of €400 million, rising to €800 million dependent on its success. This is significantly higher than the original funding allocation of €100 million for the MOVES II scheme that came into effect in June 2020, which the Spanish government extended by €20 million early in March.
‘We have chosen to start with those actions that families, SMEs, the self-employed and, ultimately, the entire fabric of the country can benefit from,’ explained Teresa Ribera, vice president of Spain and minister for the ecological transition and the demographic challenge, in the presentation of the MOVES III plan.
‘It is crucial to keep pace with the actions promoting the value chain of the automotive sector in our country, with the creation of employment and new business models,’ Ribera added.
Unlikely improvement
The new incentives are slightly higher for private buyers but lower for companies. However, the benefits are much greater if a used vehicle over seven years of age is traded in for scrappage. For private buyers, the incentive increases up to €7,000, and up to €4,000 for SMEs and €3,000 for large companies.
‘MOVES III constitutes the most ambitious line of support for electric mobility that our country has proposed and will allow and contribute to the economic reactivation in the short term, accompanying the necessary transformation of the industrial model of our country with the economic and environmental objectives,’ Ribera said.
Nevertheless, the new scheme is unlikely to significantly improve the fortunes of Spain’s new-car market. Registrations grew 128% in March compared with a year ago, but the comparison is distorted by the pandemic. Spanish dealerships closed from 14 March 2020. A more realistic comparison with March 2019 shows the new-car market contracting by 30%. Sales in the first quarter dropped 14.9% against last year’s figures, and were 41.3% down on figures from two years ago.
EV uptake should increase, especially among private buyers, but without an improvement in consumer confidence, and a return of tourism, the Spanish market will continue to struggle overall. Autovista Group forecasts that demand will recover from the 32% loss in 2020, albeit by only 6% to about 900,000 units in 2021.
New-car registrations in Germany increased 35.9% in March, according to the latest figures from the Kraftfahrt-Bundesamt (KBA).
The figure was inflated due to the country’s first COVID-19 lockdown closing dealerships from mid-March in the previous year. However, at that time, registrations performed well compared to other countries. While Spain, France and Italy posted losses of 69.3%, 72.2% and 85.4%, respectively, Germany only saw a decline of 37.7%.
At the end of the first quarter, new registrations totalled 656,452 units, down 6.4% compared to the first three months of last year. This is despite dealerships being closed. The country’s market also suffered due to a VAT increase, with taxes rising from 16% to 19% at the beginning of the year. Autovista Group estimates that around 40,000 registrations were pulled forward into December last year as a result.
Brand increases
All domestic brands showed positive growth in March 2021, the strongest being Smart with a 304.4% increase. Double-digit increases were recorded by Opel (75.1%), Mini (58%), Porsche (55%), Volkswagen Passenger Cars (VW) (39.1%), Mercedes (36.7%), Audi (17.6%) and BMW (17%). VW claimed the largest share of new registrations, taking 19.3% of the market.
Alfa Romeo showed the most significant increase among the imported brands, up by 114.6%. Fellow Stellantis stablemate Peugeot saw sales grow 78.4% while Tesla enjoyed a 63.6% boost. However, Honda (-33.3%), Mitsubishi (-30%) and Jaguar (-10%) were among those to see sales decline in the month.
Electric closes the gap
In terms of fuel type, the market for battery-electric vehicles (BEVs) achieved a significant increase of 191.4%, with a market share of 10.3%. With German car brands such as VW and BMW increasing their focus on electrification, there now seems to be an appetite for the technology amongst buyers. Plug-in hybrid (PHEV) models achieved a 12.2% market share, with sales increasing 277.5% in the month.
The swing to electric drives is more evident when internal combustion engines (ICE) sales are considered. New registrations of passenger cars with petrol engines increased by 7.1%. However, the market share was just 39.4%. The sale of diesel models continued to decline, with 5% fewer in March 2021 for a 22.1% market share. For the second successive month, diesel sales were outpaced by those of hybrids. When including standard and PHEV models, this powertrain type took 27.8% of the market.
The figures, therefore, show that 38.1% of registrations in Germany during the last month were non-ICE models. This is just 1.3% below the market share of petrol in March. It may not be long until sales of these vehicles outpace those of more traditional powertrains.
Germany extended its lockdown period to 18 April following a spike in infection cases. However, the Federation of Motor Trades and Repairs (ZDK) argued that vehicle dealers should be allowed to reopen fully. The group’s main argument is that while a hairdresser, with a floor space of 10m2, is allowed to have one customer, car showrooms with a floor space of 500m2 cannot open.
As the days get longer and warmer and the garden furniture is dusted down, many people are drawn to the idea of owning a convertible to achieve that wind in the hair driving experience. However, Is the draw as strong as ever for these cars that are often impractical, expensive but rare and stylish?
During the 1990s, manufacturers realised the potential in this profitable segment after the success of the Mazda MX-5. They set about designing new models to increase their ranges, expanding not just to the traditional two-seater roadster but also to four-seat coupe versions of their popular saloon and hatchback models. Then came the advent of the folding “tin-top” roof to make the Convertible an all-year-round proposition.
However, did the extensive choice of Convertibles grow so large that the exclusivity factor diminished, and have consumers turned to other segments that have become more fashionable?
Up until the year 2000, the number of Convertibles registered new each year was around 2% of the whole market, according to data from the Society of Motor Manufacturers and Traders (SMMT). The peak year was 2004 where Cabriolet and Convertible registrations reached 116,500, equating to 4.6% of the new car market. The numbers have dropped to less than 2% for the last 5 years running and were only 1.2% in Coronavirus hit 2020.
What about the choice during the last twenty years? The chart below shows the number of ranges available by year.
The peak in the number of different ranges was in 2007. This has dwindled in recent years as models such as the Mercedes SLK/SLC, Volkswagen Golf and Beetle and Fiat’s 124 disappear. Many manufacturers no longer offer a convertible in their range.
Manufacturers are reacting to the fall in consumer demand for convertible versions of two-seater sports and small cars, as demand switches to other more popular body styles. There is no need to look beyond the SUV/Crossover segment to see where customer demand has shifted over time.
In 1998 there were 35 different SUV models available according to data gathered by Glass’s, and they fell into two distinct types. There was the large and expensive end of the market like the Land Rover Range Rover and Toyota Land Cruiser, or more utilitarian models from Isuzu, Mitsubishi and Daihatsu.
With the growing popularity in this segment, more manufacturers were taking note. Honda released the smaller CR-V and HR-V in the UK to rival the RAV4 from Toyota, and so the smaller SUV started to become more recognised on UK roads. They were often cheaper, but still retained the high driving position and four-wheel drive.
It soon became apparent that these cars were not often taken off-road, so new models launched featuring two-wheel drive, bringing costs down whilst also lowering CO2 emissions. The Nissan Qashqai typified this new wave of Crossovers, and by 2010 the number of SUV/Crossover models available had jumped to 60.
Mainstream manufacturers continue to increase offerings as the lines between body types blur more and more, and so we saw at least 100 different models available in 2020. Even sports car manufacturers recognize the opportunity, with Porsche launching the Cayenne in 2003, and in later years Maserati, Lamborghini and Aston Martin have joined the party along with Bentley and Rolls Royce.
As expected market share has grown too, otherwise manufacturers would not continue to grow their stable of SUV/Crossovers, as can be seen in the chart below where market share has grown from 4% to 35% of the UK market in 2020.
With no likelihood of these trends ending soon, the return of the convertible to niche status seems inevitable, while the Crossover continues to sweep all rivals aside. That is not to say they have lost their appeal, in 2020 Glass’s average residual value for Convertibles rose significantly due to an uptick in demand as shown in the chart below. This will have been helped by extremely good weather, but also possibly due to people treating themselves to something as the global COVID-19 pandemic affected other areas considered a luxury, like overseas holidays.
More needs to be done to support the private uptake of electrically-chargeable vehicles (EVs) in the UK, according to the Society of Motor Manufacturers and Traders (SMMT). New figures show businesses are twice as likely to make the switch from petrol and diesel.
Analysis of new-car registrations in 2020 shows that just 4.6% of privately bought cars were battery-electric vehicles (BEVs), compared to 8.7% for businesses and large fleets. This equates to 34,324 private registrations and 73,881 corporate ones.
In response to this, the SMMT has unveiled a new blueprint to deliver a greater retail uptake. With the UK government planning to ban the sale of petrol and diesel vehicles by 2030, the body believes now is the time to change people’s attitudes towards EVs.
‘While last year’s bumper uptake of electric vehicles is to be welcomed, it is clear this has been an electric revolution primarily for fleets, not families,’ commented SMMT chief executive Mike Hawes. ‘Manufacturers are committed to the consumer, reducing costs and providing as wide a choice as possible of zero-emission capable vehicles with many more to come.
‘To deliver an electric revolution that is affordable, achievable and accessible to all by 2030, however, government and other stakeholders must put ordinary drivers at the heart of policy and planning.’
Increasing availability
According to the SMMT, as of March 2021, manufacturers have brought more than 150 BEV, plug-in hybrid (PHEV), hybrid and hydrogen fuel-cell electric vehicles (FCEVs) models to the UK market. BEVs and PHEVs alone account for 25% of all available car models.
However, current higher costs of components’ raw materials mean these vehicles are inherently more expensive to manufacture. This implies an EV will retail for more than its fossil fuel equivalents.
Manufacturers are working hard to bring the cost of production down. Yet, they are constrained by lower demand and battery production costs, which have yet to reach the economies of scale required. Batteries have the biggest overall impact, representing 30-45% of the total production cost the SMMT states. BEVs are not expected to reach purchase cost parity with their internal combustion engine (ICE) counterparts across all car segments in the next few years.
The area where EVs benefit their drivers is in terms of running costs. This is of particular interest to businesses. In addition, company car drivers currently receive stronger and longer-lasting motivation through reduced purchase-taxes and fiscal incentives compared to consumers.
Grants changing
Last week, the UK government announced it will reduce the plug-in car grant and lower the price threshold for eligibility. This effectively adds £500 (€583) to the purchase price of all qualifying EVs under £35,000, and £3,000 to the price of those above £35,000.
By comparison, private buyers in Germany receive a €9,000 grant towards a new BEV, while Dutch drivers do not pay VAT on BEV purchases, equivalent to a purchase cost saving of around a sixth.
The SMMT estimates that maintaining the grant and similarly exempting consumer EV purchases from VAT would increase uptake by almost two-thirds by 2026 compared to current predictions.
Charging locations
The blueprint also calls for more to be done to expand the UK’s EV infrastructure. Private-buyer acceptance remains low because of affordability concerns, charge point availability and infrastructure reliability, according to the SMMT. Around one in three households have no dedicated off-street parking, leaving them disproportionately dependent on public-charging points.
The SMMT’s projections suggest that most drivers will choose to charge their vehicle at home if they can. Therefore, they estimate there would need to be around 2.7 million public-charge points in service by 2030 to provide adequate coverage and tackle range anxiety. The SMMT believes there are around 40,000 charging points in the country, most of which are in London.
This means more than 700 new charge points would have to be installed every day until the end of the decade. By comparison, the current installation rate is approximately 42 a day, according to information provided to the SMMT from charge-point mapping service ZapMap. Funding this expansion is estimated to cost around £17.6 billion.
‘We need incentives that tempt consumers, infrastructure that is robust and charging points that provide reassurance, so that zero-emission mobility will be possible for everyone, regardless of income or location,’ stated Hawes. ‘When every market is vying for these new technologies, a clear and collaborative strategy engaging all would ensure the UK remains an attractive place both to manufacture and market electric vehicles, helping us achieve our net-zero ambition.’
With the ban on the sale of new diesel and petrol light commercial vehicles (LCVs) coming into force in 2030, there has never been a more challenging or exciting time to be involved in the automotive industry.
From the billions of pounds spent by manufacturers on the research and development of new products, to an improving charging infrastructure and battery manufacturing, the electric revolution is sparking into life. In this article, Glass’s Chief Commercial Vehicle Editor, Andy Picton, takes a look at the challenges, opportunities and innovations surrounding the switch to electric vehicles (EVs).
Vehicle cost, availability, range, charging times, long-term reliability and infrastructure requirements are just some of the factors that need to be addressed. On top of this is getting the ‘buy-in’ from the vehicle drivers. Every operator will have different criteria to fulfil and different limiting circumstances to work within. Negative stories always spread more quickly than good news stories, so its vital drivers have confidence in the products and their capabilities.
Unfortunately, the UK is not blessed with excess space on which to develop state of the art stand-alone charging hubs, and many of our business premises and associated land need additional permissions before electrical upgrades can even commence. Even if space and permissions are available, a fleet establishing a charging hub will find that it is not a cheap process. Dependent on where the power supply is coming from, civil engineering costs can run into hundreds of thousands of pounds.
Availability of product is a rapidly improving situation. In 2019, electric van choice was limited in the UK, with the majority sold by Renault and Nissan. Fast forward to the end of 2020 and no less than fourteen different manufacturers were offering 17 different electric or hybrid vans in the UK:
By the end of 2021, at least another 7 new vans will be available and by 2023 it is estimated that a further 20 new models will enter the market. In 2019, 3,204 electric LCVs were registered and a further 5,492 registered by the end of 2020 an increase of 71.4%. Today the market share is small. At around 1.9% for 2020, with growing interest in the market and major utility companies now placing orders, that share is set to grow significantly.
Lingering concerns over initial vehicle cost have not been helped by the recent decision by the DfT to reduce the Plug-in Van Grant from a maximum of £8,000, to a limit of £3,000 for vehicles with gross vehicle weights up to 2.5 tonnes and £6,000 for vehicles between 2.5t-3.5t. Unfortunately, this is sending the wrong message to all those contemplating a move away from diesel. If the UK Government is serious about reducing the size of the carbon footprint and being a leader in zero-emission mobility, grants remain necessary to continue to kick-start the movement.
Higher purchase prices of electric vans remain a prohibitive hurdle to EV ownership to many potential owners. A persistent question is whether the key to large scale adoption is leasing these vehicles rather than outright purchase. Not only can the costs be spread evenly over the term of a contract, it enables regular fleet renewals, allowing vehicles to keep track of new technologies and vehicle developments.
The whole life cost of running an electric van is less than an equivalent ICE model. Although the upfront purchase price is higher, once depreciation, servicing, maintenance, taxation and running costs are taken into account, electric vehicles are cheaper to run. A large portion of the potential cost-saving is fuel, with UK electricity prices significantly lower than diesel. Additionally, as there are fewer working parts on an EV, this minimises vehicle downtime and delivers lower price servicing and repairs ensuring the vehicle is off the road for less time.
One new technology already being worked on is by StoreDot, an Israeli battery company. They are pioneering extreme fast charging (XFC) battery technology. This technology will potentially allow five-minute EV charging as a commercial reality.
Another development is the supply and production of battery components and the batteries themselves. The UK doesn’t have a gigafactory at present, but as battery costs fall and EV range improves, demand will increase. Currently, in the UK, there is only small-scale battery assembly at Nissan in Sunderland with the facility making enough battery cells for approximately 50,000 40kWh Leaf models a year.
While current demand doesn’t justify a big plant, it soon will. Britishvolt, a start-up battery manufacturer has selected Blyth in Northumberland as the location for the UK’s first gigafactory. Built adjacent to the Blyth Power Station, the plant plans to be producing batteries by the end of 2023.
A partnership of 19 vehicle manufacturers, local authorities, universities, colleges and industry research bodies is also developing proposals for a gigafactory to be built at Coventry Airport, potentially creating 4,000 jobs and could be operational by 2025.
An equally big part of the green change is the end of life recycling, with OEMs in particular, creating roadmaps for battery reuse, recycling and sustainability that will address climate-change concerns. Renault, for example, recently joined forces with Veolia and Solvay to establish a circular economy for recycling cobalt, nickel and lithium from batteries to reduce the environmental footprint.
At the beginning of 2021, Volkswagen Group (VWG) began recycling batteries at their Salzgitter plant. A circular process of reusing usable battery modules to give a second life in mobile energy storage systems utilising a ‘pyrometallurgical process’. Through dismantling, crushing and sieving components, up to 90% of each redundant battery is recycled. This means that despite there being limited raw materials, mass production can still be achieved.
Nissan on the other hand has taken used Leaf car batteries to power automated-guided vehicles (AGVs), to help bring components at the factory to the workers. Around 4,000 AGVs are in use in Nissan factories globally, saving time and increasing efficiency.
Moving towards 2030, registrations of petrol and diesel vehicles will steadily decline as fleets have to renew their fleets with EVs. These will be driven by several positive factors including:
Negative factors are accelerating fleet decisions including:
Demand is growing exponentially as more product becomes available and pressure mounts on LCV operators to make the switch. For every fleet, large or small, the tipping point will be slightly different. The chances are that the switch for many will be staggered, with small numbers added to the fleet at a time and allocated to specific operational roles. The belief that the days of an identical fleet of vehicles performing all transport roles are numbered. Taking its place will be specific vehicles completing specific tasks built around location, route, payload and hours on the road.
Advanced automotive systems including connected cars, autonomous driving, shared vehicles, and electromobility (CASE), are experiencing exponential development as OEMs undergo digitalisation. While many of these technologies might be associated with high-end luxury passenger cars, manufacturers are also exploring commercial vehicle applications.
Toyota Motor Corporation (Toyota) recently announced it would combine its CASE technologies with the commercial vehicle foundations cultivated by Isuzu Motors (Isuzu) and Hino Motors (Hino) as part of a new collaborative effort. Meanwhile, Renault’s light commercial vehicle (LCV) offering is undergoing its own energy transition, emphasising electric and hydrogen drivetrains for its upcoming models.
A commercial CASE
Through their new partnership, Toyota, Isuzu and Hino hope to accelerate the adoption and implementation of CASE technologies. As well as addressing various difficulties facing the transport industry, the three companies hope their collaboration will help the progression towards a carbon-neutral society.
In a press conference, the manufacturers explained small commercial-purpose trucks would be used to help develop battery electric vehicles (BEVs), electric platforms, and fuel-cell electric vehicles (FCEVs). Given the expensive developmental costs of BEVs and FCEVs, this collective approach makes sense. Toyota, Isuzu and Hino are also planning to advance the implementation of infrastructure. This will include introducing FCEV trucks to hydrogen-based society demonstrations in Japan’s Fukushima Prefecture.
The partnership will also look to accelerate the development of autonomous and other advanced systems. By building a connected technology platform for commercial vehicles, they hope to provide logistical solutions to improve transport efficiency as well as reducing CO2 emissions.
‘CASE technologies can only contribute to society once they become widespread,’ the companies explained. ‘Commercial vehicles can play important roles in dissemination, as they travel long distances for extended periods of time to support the economy and society and can be easily linked with infrastructure development. And from the standpoint of carbon neutrality, commercial vehicles can especially fulfil a key function.’
Forming new ties
To promote the partnership, the manufacturers will form a new business called Commercial Japan Partnership Technologies Corporation. This new company will be focused on mapping out CASE technologies and services for commercial vehicles. Moving forward, the collaboration will not only deepen, but open up to other like-minded partners.
Isuzu and Toyota have also agreed on a capital partnership to advance their collaborative efforts. Through a cancelation of treasury stock through a third-party allotment, Toyota is scheduled to acquire 39 million shares of its common stock worth a total of ¥42.8 billion (€332 million).
This will leave Toyota with 4.6% ownership of Isuzu in terms of total issued shares as of the end of September 2020 and a post-allotment voting rights ratio at Isuzu of 5.02%. Isuzu also plans to acquire Toyota shares of the same value through a market purchase.
Renault’s zero-emission solutions
Meanwhile, Renault is renewing and expanding its LCV range, with new versions of the Kangoo, the Express, the Trafic Combi and the SpaceClass. The manufacturer is also developing its Renault Pro+ services, offering turnkey digital and connectivity solutions.
Through this work Renault is looking to support the transmission to zero-emissions. The new Kangoo Van E-TECH Electric is expected by the end of 2021, picking up where the Kangoo ZE left off. It will be equipped with a 44kWh battery, offering a range of 265km. The OEM also offers fleet charging solutions with its subsidiary, Elexent.
Before the end of the year, Renault will unveil the Master ZE Hydrogen, an alternative to the diesel Master. With its hydrogen partner Plug Power, the manufacturer is looking to capture 30% of the European hydrogen LCV market by 2030.
Smart zero-emission vans promise greater development of green and connected technology for the wider automotive sector. Commercial vehicles spend their lives on the road, meaning any new drivetrain and technology must be well-designed and long-lasting. This know-how can then be utilised by the passenger-car segment, as these systems are stress-tested.
However, these technologies must first be adopted. As demonstrated by the European Automobile Manufacturer Association’s (ACEA’s) latest figures, diesel still reigned supreme last year in the new-LCV segment. Accounting for 92.4% of the van market, the fuel type was leagues ahead of electrically-chargeable vehicles (EVs) which garnered a 2% share. In reality, the adoption of these new drive trains will likely be mandated by zero-emissions policies created at national and international levels.
Senior data journalist Neil King and Daily Brief journalist Tom Geggus discuss some of the biggest automotive news topics from the past fortnight. The pair consider leasing by Lidl, the semiconductors shortage, Shell’s electricity-storage system and battery-recycling initiatives.
Show notes
Lidl supermarket chain offers car leasing online in Germany
Germany extends lockdown measures to 18 April
Semiconductor factory fire in Japan adds to global shortage
Europe sets sights on semiconductor production
Shell trials on-site, battery-powered, electricity-storage system
At the beginning of February, it was still unclear how long this latest lockdown would continue, or how restrictions would be lifted or eased once it ended. Crucially for the UK used car industry, there was, therefore, no indication when showrooms and sales sites could open to “physical” customers.
The use of online selling and suitably distanced handovers has certainly helped dealers achieve more sales than would have been considered possible twelve months ago, but for many buyers, there is no substitute for actually seeing the car they are buying before they sign on the dotted line.
Therefore, it should come as no surprise that the used car wholesale market in February was relatively steady. Auction sale volume was slightly lower than in January, yet understandably was significantly lower than February 2020. Similarly, the first time conversion rate of 76.5% was only 1.7% lower than January’s score but over 12% lower than a year ago.
Charts based on a representative sample of current UK auction data but excludes observations from British Car Auctions
As usual, the cars that sold best were the ones in good condition, with the desirable specification. Without the need for restocking, there was even less desire than usual to buy cars that need work. It was noticeable that demand increased right at the end of the month following the announcements regarding the route out of lockdown.
Whilst February’s used car auction market was relatively steady, the used car retail market performed fairly well despite the ongoing lockdown. The number of observed sales were up almost 14% compared to January, as was the average sale value, albeit only by 2.3%. Unsurprisingly, the number of sales were almost 13% lower than for February 2020 but still promising given the challenging circumstances.
The length of time a car spends on the forecourt is a good indication of its retail popularity, and it is one of the pieces of data that GlassNet Radar records. February’s average of 57.8 days was 6.1 days higher than for January and almost 15 days higher than the average stay in February 2020. This is not surprising given the current situation and is likely to improve once sales sites can open fully.
The announcement towards the end of February of the phased lifting of lockdown restrictions led to an improvement in used car auction activity, and it is reasonable to expect that this will continue through March. The introduction of the new registration plate usually leads to an increase in auction activity towards the end of the month, however, Glass’s expects registration volumes to be significantly lower than in 2019 (the last “COVID-free” March!), and even last year, so demand may well exceed supply which should lead to a strengthening of hammer prices.
The UK Government is lowering the plug-in vehicle grant offered to consumers buying an electrically-chargeable vehicle (EV). It is also imposing a list-price limit, reducing the number of models eligible for the new incentive amount.
From 18 March, only vehicles priced below £35,000 (€40,906) will qualify In addition, the total amount consumers can claim towards the cost is reduced by £500, to £2,500. The government claims that implementing this lower grant and the price cap can spread the funds available across a larger number of EV sales over a longer period.
The move has been met with disappointment by the country’s automotive industry. With dealerships closed until at least the middle of April due to COVID-19 lockdowns, vehicle sales in the UK have suffered. The government is also pushing forward with plans to ban the sale of internal-combustion engine (ICE) models by 2030. Cutting grants now could hamper both a sales recovery and the adoption of an emerging market.
‘With a stretching 2030 target in place to phase out sales of new petrol and diesel cars and vans, we must avoid sending mixed messages to consumers and businesses. Switching to an electric vehicle still has many barriers, including high upfront costs and availability of reliable charging points,’ commented Matthew Fell, chief UK policy director at the Confederation of British Industry (CBI).
‘The decision to slash the plug-in car grant and the van and truck grant is the wrong move at the wrong time,’ added Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT). ‘New battery-electric technology is more expensive than conventional engines, and incentives are essential in making these vehicles affordable to the customer.’
Increasing choice of vehicles
The government states the number of EV models priced under £35,000 has increased by almost 50% since 2019 and that half the models currently on the market will still be eligible for the reduced grant.
According to the government’s website, a total of 36 cars qualify for the new grant. Most of these are in the small and compact-car segments. In its statement, the Department for Transport (DfT) singled out the Hyundai Kona 39kWh and MG ZS EV as examples of ‘family cars’ that are still available with the new £2,500 incentive. However, both these models, and other small SUVs on the list, have a range of around 160 miles. They are not as suitable for long-distance driving.
Those who need to travel long distances are, therefore, being priced out of receiving a grant. The government believes that these models ‘are typically bought by drivers who can afford to switch without a subsidy from taxpayers.’
Reducing emissions
The plug-in vehicle grant scheme was renewed last year, with £582 million of funding available until 2022-2023. It also cut the amount offered to consumers from £5,000 to £3,000 while also introducing a price ceiling of £50,000.
‘Measures to encourage people to switch to electric vehicles are working, with nearly 11% of new cars sold in 2020 having a plug,’ the government states. ‘This was up from just over 3% in 2019 – and battery-electric car sales almost tripled over that same period.’
‘We want as many people as possible to be able to make the switch to electric vehicles as we look to reduce our carbon emissions, strive towards our net-zero ambitions and level up right across the UK,’ commented transport minister Rachel Maclean.
‘The increasing choice of new vehicles, growing demand from customers and rapidly rising number of charge points mean that, while the level of funding remains as high as ever, given soaring demand, we are refocusing our vehicle grants on the more affordable zero-emission vehicles, where most consumers will be looking and where taxpayers’ money will make more of a difference.’
The wrong move
The announcement comes at a time when a vehicle-sales recovery is required following three-and-a-half months of lockdown. The industry is also attempting to transition away from ICE technology. The news of the grants cut has, therefore, been met with disappointment.
Ford’s upcoming Mustang Mach-E, is its first foray into the mass-produced battery-electric vehicle (BEV) market. The model will be priced around £40,000 in the UK, making it ineligible for the government grant. As the country’s market leader, Ford will have hoped for a strong sales performance of its new model. However, with no incentive to purchase, sales may be impacted.
‘Today’s news from the UK Government that plug-in grants for passenger and commercial vehicle customers are being reduced is disappointing and is not conducive to supporting the zero-emissions future we all desire,’ commented Graham Hoare, Ford of Britain chairman.
‘Robust incentives – both purchase and usage incentives – that are consistent over time are essential if we are to encourage consumers to adopt new technologies, not just for all electrics but other technologies too like plug-in hybrids (PHEVs) that pave the way to a zero-emissions future.’
The move could also impact shipments of EVs to the UK when the industry is finding its feet again following Brexit upheaval. Manufacturers could concentrate their production for countries where sales are likely to increase, especially with higher government support.
‘Cutting the grant and eligibility moves the UK even further behind other markets, markets which are increasing their support, making it yet more difficult for the UK to get sufficient supply,’ commented Hawes. ‘This sends the wrong message to the consumer, especially private customers, and to an industry challenged to meet the government’s ambition to be a world leader in the transition to zero-emission mobility.’
BMW is increasing its focus on new-technology powertrains. The carmaker aims to grow deliveries of battery-electric vehicles (BEVs) by 50% annually while also developing hydrogen and eFuel options.
Additionally, BMW has stated that Mini will introduce its last internal combustion engine (ICE) model in 2025. It plans for the marque to become a full-electric offering by 2030. Mini joins the growing list of manufacturers pledging to focus on battery technology. However, like similar multi-brand businesses Volkswagen (VW) Group and Jaguar Land Rover (JLR), BMW Group is keeping its options open when it comes to other zero-carbon propulsion technologies.
During the company’s annual financial performance conference, BMW chairman Oliver Zipse stated that 2023 is a crucial year for the German carmaker in terms of e-mobility. By this time, it plans to have 13 BEV models on the roads, with 90% of the market segments it serves to feature a BEV option.
‘Positioning our BEVs in the high-volume segments will enable us to ramp up quickly and achieve swift market penetration,’ commented Zipse. ‘To this end, we have empowered our structures in recent years. Others focus on individual market segments and niches. We, on the other hand, are taking a targeted approach across all market segments.’
BMW plans for BEV penetration in segments from the compact car to ultra-luxury models. The carmaker could also pull ICE models out of specific segments if it helps to meet various regulations, such as CO2-emission targets and Euro 7 standards. The company is keen, however, to keep an optimal balance between product offerings and profitability.
‘I want to make it quite clear: if demand in certain markets shifts entirely to fully-electric vehicles within the next few years – we will be able to deliver,’ added Zipse.
Increasing EV share
By the end of 2025, BMW states it will have delivered around two million BEV units to customers. The carmaker wants to grow its share of sales appropriated to BEVs in the coming years, aiming for 50% of vehicles sold to be battery electric by 2030.
The carmaker has not committed to going fully electric itself but is following the models set by other automotive groups in designating a brand to focus solely on the technology. Daimler is using Smart, JLR is pitching Jaguar as electric only, while Volkswagen has Bentley going down this route.
By adopting this strategy, carmakers can still appeal to the millions of customers who are not sure about electrically-chargeable vehicles (EVs) while exploring the market with a dedicated electric brand. It also means they can explore other zero-carbon technologies, keeping their options open should one prove better than the other.
For BMW, using the Mini brand as a focus for BEV-only sales is a good move. The marque sold just over 211,000 units in 2019 (the last year of non-COVID impacted sales), a fifth of total group sales. Most of its products sit in the small-car segments, which are likely to be used for local journeys and short-range trips. BMW can leverage interest from the brand to sell-up to premium vehicles when the time is right.
‘Mini is perfect for the city and e-mobility,’ added Zipse. ‘We will be releasing the last model with a combustion-engine variant in 2025. By the early 2030s, Mini will be exclusively fully electric.’
BMW also stated that it would be launching some Rolls Royce models using battery-electric technology in the coming years.
Hydrogen and eFuel
BMW is one of the carmakers committed to exploring hydrogen fuel-cell vehicles (FCEVs), with a model scheduled for launch in 2022. The carmaker remains open to exploring other avenues of propulsion as well.
‘As an industry, we will only be able to meet current and future mobility needs with an open-technology approach for all drivetrain forms,’ said Zipse. ‘This includes eFuels as well as hydrogen, which will be an alternative worldwide.
‘Next year, we will be releasing a small series of the BMW i Hydrogen NEXT. We could also imagine it as a production vehicle. That is why we are supporting the creation of the necessary infrastructure here in Germany.’
New-class sustainability
As part of its growth, BMW has set itself three phases to move through. It is currently in phase two and aims to enter the third and final phase in 2025. At this time, the company will launch a ‘new class’ of vehicle development focused on sustainability.
Alongside the increase in BEV sales, the group has set itself clear decarbonisation targets up to 2030. This is across the entire lifecycle of its products, including supply chain, production and end-of-life. In every aspect of theits activities, carbon emissions per vehicle are to be reduced by at least one third compared to 2019.
At the same time, the BMW Group is also cutting back on its use of critical raw materials. It has reduced the cobalt amount in the cathode material for the current fifth-generation battery cells to less than 10% and increased the amount of secondary nickel it uses by up to 50%.
With the UK in lockdown throughout February, it comes as no surprise to see another drop in new car registrations, with dealers having to rely on ‘click and collect’ and telephone transactions only. A total of 51,312 new cars were registered in February, down 35.5% from last year, according to data published by the Society of Motor Manufacturers and Traders (SMMT). Underlining how poor February’s total was, the SMMT reported it was the lowest for the month in 52 years.
February’s deficit was a slight improvement on January’s 39.5% reduction. However, that is little comfort on such a small volume, in what is usually the quietest month of the year for sales, as consumers await the new plate in March.
Plug-in vehicles continued their upward trajectory with Battery Electric Vehicles (BEVs) and Plug-in Hybrid (PHEVs) taking a combined 13.0% market share for the month, up from just 5.7% in February 2020. BEV registrations increased by 40.2% to 3,516, and PHEVs by 52.1% to 3,131 as the motor industry continues to improve the choice and supply for consumers.
The contraction in registrations in February was more severe in the retail sector, down 37.3%, while fleet volume was down 33.5%. The fast disappearing business sector fell 56.6% to just 637 units. Over the first two months, the retraction in volume has been even across both private and fleet as shown in the chart below.
On 22 February, The Prime Minister outlined a roadmap for easing restrictions in England, with non-essential retail, including car showrooms, able to reopen no earlier than 12 April. In Scotland, this is expected from the last week of April. A review of restrictions in Wales conducted on 12 March was expected to announce that non-essential retail would be able to reopen as soon as 15 March, however, although some restrictions were relaxed, non-essential retail will remain close until 12 April. A timetable for easing restrictions in Northern Ireland has not been announced, although a review is planned for 16 March.
Glass’s expects another poor set of results for March 2021, which is usually the busiest month of the year. We may not see a huge percentage drop versus last year as March 2020 heralded the start of the first national lockdown, with dealerships closing towards the end of the month, which impacted registrations.
From April, as the economy opens back up, there is an expectation that we will see pent-up private consumer demand released, together with an uptick in fleet activity as many extended lease contracts end. This will provide a significant boost to registrations for the second quarter, kickstarting dealers 2021 new car campaigns.
Volkswagen (VW) Group has presented its technology roadmap for batteries and charging up to 2030. The carmaker has also indicated that by ramping up its plans, jobs will need to be sacrificed.
The OEM will establish six gigafactories in Europe with a total production capacity of 240GWh by 2030. It will also expand its public fast-charging network, having announced cooperation with BP in the UK, Iberdrola in Spain and Enel in Italy.
Its new roadmap aims to significantly reduce both the battery’s complexity and cost, making electrically-chargeable vehicles (EVs) attractive and viable for consumers. At the same time, it will shorten its supply chain and control as much of the EV production of as possible.
‘E-mobility has become core business for us,’ commented Herbert Diess, chairman of the VW Group board. ‘We are now systematically integrating additional stages in the value chain. We secure a long-term pole position in the race for the best battery and best customer experience in the age of zero-emission mobility.’
Manufacturing control
As the market leader in Europe, VW Group knows it is responsible for delivering affordable electromobility as the industry transitions away from internal-combustion engine (ICE) technology. While some carmakers have announced plans to go EV-only, the carmaker is creating a sub-brand for its Volkswagen marque. Stablemate Bentley is choosing to focus on battery-electric vehicles (BEVs), and Porsche is investigating eFuels. All VW Group brands will feature electrification in some way. This means the carmaker will need an excessive amount of batteries, both for BEV and plug-in hybrid (PHEV) models.
‘Together with partners, we want to have a total of six cell factories up and running in Europe by 2030, thus guaranteeing security of supply’, explained Thomas Schmall, VW Group board member for components.
To achieve its aims, VW Group will increase its order of batteries from its supplier Northvolt by €14 billion. It will focus production of premium cells at its factory in Skellefteå, Sweden, which will see manufacturing begin in 2023 and increase gradually to an annual capacity of 40GWh. The carmaker will also purchase outright the joint venture it has with Northvolt for a gigafactory in Salzgitter.
‘Volkswagen is a key investor, customer and partner on the journey ahead, and we will continue to work hard with the goal to provide them with the greenest battery on the planet as they rapidly expand their fleet of electric vehicles,’ said Peter Carlsson, co-founder and CEO of Northvolt.
The company is considering potential sites and partners for the other factories.
Cheaper batteries
As well as increasing production, VW Group wants to lower the cost of batteries, making vehicles more affordable as a result. ‘We aim to reduce the cost and complexity of the battery and at the same time, increase its range and performance,’ added Schmall. ‘This will finally make e-mobility affordable and the dominant drive technology.’
Therefore, by 2023, the company will introduce a ‘unified cell’, which will feature in 80% of all EVs in the group by 2030. This plan will allow the carmaker to introduce different chemistries into a standard battery-cell design, which will reduce costs while ensuring that each model retains a unique power or range attribute.
Further savings will be delivered by optimising the cell type, deploying innovative production methods, and consistent recycling.
VW Group will gradually reduce battery costs in the entry-level segment by up to 50% and in the volume segment by up to 30%. ‘We will use our economies of scale to the benefit of our customers when it comes to the battery too. On average, we will drive down the cost of battery systems to significantly below €100 per kilowatt-hour. This will finally make e-mobility affordable and the dominant drive technology,’ said Schmall.
Expanding charging infrastructure
In order to facilitate mass-adoption of its EVs, the OEM is also looking to expand its fast-charging network and has partnered with local providers in key markets to achieve this.
Along with its partners, the company intends to operate about 18,000 public fast-charging points in Europe by 2025. This represents a five-fold expansion of the fast-charging network compared to today.
The carmaker wants to establish about 8,000 fast-charging points throughout Europe together with BP. With a charging capacity of 150kW, the fast chargers will be installed at 4,000 BP and Aral service stations, with the majority of these in Germany and Great Britain. In cooperation with Iberdrola, Volkswagen will cover the main traffic routes in Spain. In Italy, it will collaborate with Enel to establish a fast-charging network both along motorways and in urban areas. The carmaker will also continue its activities as part of the Ionity joint venture.
Job losses
While the roadmap promises cheaper EVs with increased production, the carmaker is also poised to cut jobs to reduce costs.
In agreement with its works council, the group will freeze its workforce size at the January 2021 level and open up an extensive retirement package. It will offer partial retirement to employees born in 1964, as part of the digital transformation roadmap. It will reopen partial retirement for those born in 1961 and 1962, and launch an early-retirement programme for those born between 1956 to 1960.
‘Disciplined cost management will continue to be necessary to finance the required investments in the future, to remain competitive and, above all, to make it possible to safeguard jobs in the long run,’ commented Gunnar Kilian, chief human resources officer of Volkswagen AG. ‘The measures set out in the guidelines provide the right solution for this. We are strengthening the internal transformation of our workforce and creating jobs in forward-looking areas – through training and targeted external recruitment. For this purpose, we are also increasing our training budget by €40 million to a total of €200 million.’
Based on experience, the company expects up to 900 employees to volunteer for the short-term early-retirement models, with a low four-digit figure for partial retirement.
Search