German automotive industry transformation observation: electric vehicle Station construction is still a short board
Since Karl Benz built the first single-cylinder three-wheeled car in 1886, the century-old automotive industry has come to a crossroads of transformation. The rapid development of science and technology, the continuous improvement of emission reduction requirements, and people's higher pursuit of travel experience have brought unprecedented transformation pressure to the automotive industry. It is foreseeable that the future automotive industry will no longer be just a part of the traditional manufacturing industry, but will become a complex of many traditional and frontier fields such as manufacturing, energy, communication technology, Internet, artificial intelligence and so on.
As the leader of the global automotive industry, Germany is naturally on the cusp of this wave of transformation. Where the German automotive industry goes will largely lead the transformation of the global automotive industry.
The three major automakers have proposed new targets
At the end of 2020, EU countries decided to reduce greenhouse gas emissions by 2030 to 55% of 1990 emissions, a 15% increase from the previous 40% target. This "ambitious" emission reduction target underscores the EU's commitment to tackling climate change. Correspondingly, the European Union will introduce new vehicle emission standards this year. The technical details of the latest Euro 7 emission standard are still being studied. The industry believes that this standard will have a decisive impact on the development of the European automotive industry. Some people in the industry even believe that this emission standard will directly announce the end of the era of fuel vehicles in Europe.
According to the new standard under discussion, greenhouse gas emissions from new models must be significantly reduced. This means significant R&D and compliance costs for automakers. The new emission standards have put a lot of pressure on the European auto industry, forcing European car companies to act ahead and accelerate the pace of transformation.
Germany, as the leader of the global automotive industry, already feels the urgency of transformation. Data show that in 2019, the automotive industry created more than 830,000 jobs in Germany and achieved annual sales of 438.8 billion euros, making it the most important industrial sector in Germany. The influence of the German automotive industry on the German and world economies is self-evident. In recent years, the German automobile industry has experienced a series of crises and challenges, and the "tail valve" has brought heavy damage to the German automobile industry, and it is facing fierce competition from China and the United States in the development of new energy vehicles. In this context, the German automotive industry must show enough courage to face the challenge. Müller, president of the German Federation of the Automotive Industry, said at the beginning of this year that this year will be a key year to determine the future development of the German automotive industry. Despite the impact of the new crown pneumonia epidemic, the German automotive industry will unswervingly promote industrial transformation and upgrading. By 2025, the German automotive industry will invest 150 billion euros in electromobility and digitalization.
The three major German automotive companies, Daimler, BMW and Volkswagen, have recently proposed new transformation goals. Two years ago, Daimler Group put forward its "Vision 2039" and is committed to completely eliminating fuel models by 2039. This year, Daimler also proposed to realize the plan to completely eliminate fuel models in advance. Daimler Group Chairman Kang Linsong recently said that Daimler cannot wait for change, but should lead it. He also said that on the road of the transformation of the automotive industry, we must not be afraid of challenges, but be challengers. In order to achieve the transformation goal, Daimler hired 3,000 new software engineers this year to develop the new model.
BMW will focus its product line on new energy vehicles from 2025 and achieve electric vehicle production in half of its total production by 2030. Not long ago, the BMW Group also announced a new "three-step" transformation plan, which plans to launch a total of 12 pure electric models by 2023 and achieve at least one electric model for each product line in 90% of market segments.
The Volkswagen Group aims to achieve its goal of 70% of its vehicles sold in Europe as new energy vehicles by 2030, double the original target of 35%. To this end, Volkswagen plans to invest around EUR 46 billion in electric vehicles and hybrids over the next five years. In addition to increasing investment, the Volkswagen Group plans to launch at least one pure electric model every year in the future to seize the increasingly competitive market.
German Foreign Trade and Invest automotive industry expert Dibidonto believes that German car companies have been preparing for transformation in the past few years. Although the current European electric vehicle market is still relatively limited, the technology and production capacity of car companies have well adapted to the requirements of transformation. The German automotive industry has done its homework quite well in terms of transformation. It is foreseeable that with its technical strength in related aspects, the German automotive industry is expected to lead this round of automotive industry transformation.
The construction of electric vehicle Station is still a short board
German car companies have been eager to try, investing a lot of financial resources and full technical preparation in the transformation of new energy vehicles, and sales of electric vehicles in Germany and Europe have increased significantly since last year. Data shows that the total number of registered electric passenger cars in Europe exceeded 1.36 million last year, a year-on-year increase of 142%. In December alone, Europe sold 281,000 electric vehicles a month. Data analysis shows that European electric vehicle sales are showing an accelerating upward trend, especially in Germany, France, Italy, the United Kingdom, Norway and other countries achieved a high growth rate of 100% to 300% last year.
European governments have vigorously subsidized electric vehicles, coupled with the intensive launch of new models by major car companies in recent times, which has effectively driven consumers' enthusiasm for buying. In particular, a series of new electric vehicle plans of German car companies have drawn a beautiful blueprint and greatly increased the market's expectations for the coming period. However, the analysis of relevant data shows that the overall market share of electric vehicles in Europe is still at a low level. Last year, European electric vehicle sales accounted for only about 11% of total sales, of which pure electric vehicle sales were only 6.2%. The analysis believes that whether the sales of electric vehicles in Europe can maintain a high growth trend for a long time mainly depends on whether infrastructure construction such as electric vehicle Station can keep up with the speed of electric vehicle development, and whether it can be coordinated with the accelerated transformation of German car companies.
As European consumers become more enthusiastic about buying electric vehicles, there are concerns about the ease of charging electric vehicles. Relevant data show that as of early March this year, a total of 35,076 public ordinary electric vehicle Station and 5,730 public fast electric vehicle Station in Germany were connected to the grid. According to the current German electric vehicle ownership, every dozen electric vehicles can share a public charging pile, which is obviously unable to meet the charging needs of users.
According to the assessment of the German Federation of the Automotive Industry, if the construction of charging infrastructure in Germany is not greatly accelerated, it will not be able to meet the charging demand brought about by the growth of electric vehicles. Kang also criticized the EU's slow progress in infrastructure such as electric vehicle Station. He believes that by 2030, at least more than 3 million electric vehicle Station will be needed in the EU to meet people's daily travel needs, and the number of electric vehicle Station is now less than one-tenth of this number. BMW President Zipzer recently said that European car companies are currently making every effort to transform to electric vehicles, but Europe's charging infrastructure has not kept up with demand.
Market analysts generally believe that the slow construction of electric vehicle Station is still an important obstacle to Europe's transition to electric vehicles. Low satisfaction with infrastructure is one of the important reasons why consumers are on the sidelines when buying electric vehicles. If the EU cannot solve this problem well, the electric vehicle market will lose the momentum of sustained growth, and the transformation process of the automotive industry will inevitably be affected. Recently, the European Union for Transport and Environmental Protection and other organizations proposed to the EU that 1 million public electric vehicle Station should be built in the EU by 2024, and this number should reach 3 million in 2029. According to the German government's plan, Germany will build 1 million public electric vehicle Station and 100,000 fast electric vehicle Station by 2030. To achieve this goal, Germany will now need to install 2,000 charging stations per week. But at present, the rate of new charging stations installed in Germany is only 200 per week.
In order to solve the problem of insufficient charging infrastructure, the German government has introduced a series of incentive policies since 2017, hoping to accelerate the progress of infrastructure construction such as electric vehicle Station through the coordinated linkage of the government, car companies and individuals. First of all, the German government has taken out 300 million euros of special funds to support the construction of public electric vehicle Station, and local governments and businesses can apply. While vigorously promoting the construction of public charging facilities, the German government also subsidizes the installation of electric vehicle Station by individuals. German households can receive subsidies of up to 900 euros per charging station when installing private charging stations. In addition, the German government also encourages German car companies to participate in the construction of electric vehicle Station.
Recently, Volkswagen's brand Audi plans to cooperate with Porsche and invest 1 billion euros to build its own charging stations in major European cities. Ionity, a charging pile company jointly formed by Volkswagen, BMW, Daimler, Ford, Hyundai and other car companies, has begun to expand its network of charging facilities in Europe. The company has already built more than 400 charging stations on European highways, and the next step is to increase financing to extend the charging station business to cities.
It is not difficult to see that car companies have realized the negative effects of infrastructure construction such as electric vehicle Station on the transformation of the automotive industry, so they have taken action to make up for the shortcomings. The participation of car companies in the construction of electric vehicle Station can fully mobilize market vitality, integrate electric vehicle sales and infrastructure construction more closely, and will become an important part of electric vehicle infrastructure in the future, which is conducive to promoting the transformation of the automotive industry.
Self-sufficiency in battery packs is a long way off
The new energy transformation of the automotive industry is not only related to the car company itself, but also involves the entire industrial chain. As the core component of electric vehicle production, battery packs have become a hot "hot commodity". The Volkswagen Group estimates that its demand for electric vehicle batteries could double in the next 10 years than previously expected. In the face of such high capacity demand, the development of the European battery industry is slightly slow. German car companies currently rely heavily on third-party suppliers from Asia and the United States for their battery supply. Market analysis believes that as the European electric vehicle market continues to grow in the future, car companies may face battery supply bottlenecks, which seriously restrict the production of electric vehicles.
The EU and Germany are fully aware of the importance of self-sufficiency in the production of electric vehicle batteries. Not long ago, European Commission Vice President Sefkovic said at the EU "Battery Summit" that the EU will accelerate the production layout of electric vehicle batteries and strive to achieve annual production in 2025 to meet the battery demand of 7 million to 8 million electric vehicles. By then, the EU will become the world's second largest producer of electric vehicle batteries after China, and will create a large number of new jobs within the EU.
The EU has set such an "ambitious" goal, not only to solve the bottleneck of the battery supply chain of automotive companies, but also to take the initiative in the tide of industrial transformation. In order to further support the EU's battery industry, the EU has raised up to 20 billion euros, led by Germany and France, with more than 60 companies from 12 member states participating. Germany alone invested 13 billion euros in this area. According to the EU target, the EU's electric vehicle battery production capacity will account for 30% of the global battery market share by 2030. Although the goal is ambitious, the current EU battery production capacity construction is still in a relatively early stage, and it will take time to form a breakthrough in production capacity and occupy a place in the global industrial chain. Therefore, in the short term, the dependence of the European automotive industry on third-party battery supplies will continue.
In addition to policy support and subsidies, car companies are also actively taking action to try to seize the initiative in battery production. Recently, the Volkswagen Group announced that it plans to invest 1 billion euros to establish the first battery factory in Germany, which will be the first time that a German car company participates in battery production and establishes its own production capacity.
For years, car companies have had a simple task: to build cars. In the era of new energy and digitalization, the task of car companies is not limited to such a narrow field. The participation of automotive companies in the integration of the value chain will surely become the development trend of the automotive industry in the future. When automotive companies face supply chain capacity or technical bottlenecks in the process of transformation, only by participating in technological innovation and production can they fundamentally solve the problems faced by the entire industrial chain. From building its own battery factory to cooperating with the power grid to build a charging platform, this series of actions is all car companies are preparing for the unprecedented transformation of the automotive industry.