Will we see the current Tier One car manufacturers dominating the electric car market or will it be innovative new entrants that will lead the way?
Let’s look at some of the tier one manufacturers approaches
BMW have developed a new sub-brand for their electric cars – the i-brand, their i3 and the i8 under that brand are radically different to their mainstream non-electric cars. High volume manufacturers such as VW & Ford are offering electric variants to their existing vehicles (e-up! and e-Golf from VW and the Focus Electric from Ford ). Nissan have slotted the Leaf electric car directly into their full range of mainly conventional cars. While others such as Mitsubishi have taken a traditional vehicle and radically changed it internally – the conventional diesel Outlander has a very alternative petrol plug-in hybrid version. Toyota have taken their popular Prius hybrid and produced a plug-in hybrid version with a bigger battery. Renault seem to be hedging their bets on a multifaceted strategy – the Zoe seems to be designed to slot within their range of conventional vehicles, the Twizy stands out as something quite different with its funky design, whereas their Kangoo ZE is an electric variant of their Kangoo van.
Clearly the range of strategies from the tier one manufacturers is quite varied. Of course their strategies are constrained because they have established brands and the vast majority of sales are for non-electric vehicles. Therefore, their EV strategy is just a part of their overall brand and vehicle range strategy and this will continue to be a bit of a headache for them. The only certainty is that all of the major manufacturers have some sort of EV strategy currently being played out.
Let’s look at the new entrants
Now we can look at the opportunities for new entrants in the electric vehicle market. Fortunately, there is no need for them to add an internal combustion engine into their vehicles as a hybrid solution since this makes the vehicles more complex, expensive, constrains the design, diminishes their green credentials and tax breaks, and would force them compete in an existing market dominated with established brands. So who are these new entrants?
Well it was initially the USA, or actually California, that seemed to lead the charge probably driven by the opportunities created by emissions legislation. Obviously there is Telsa who appear to be doing well despite much initial scepticism. There was Fisker who went bust but may rise again as New Fisker and there was also the less well known Coda Automotive that also went bust.
In the Far East BYD are currently the dominant manufacturer (buses and cars) with Warren Buffet being a large investor. Foxconn have stated they are developing their own electric cars with a target price of less than $15,000 and have committed close to $1b to the plan. There are a number of rumours about Eastern technology companies and battery companies with aspirations in the EV manufacturing space.
In Europe there are already a small number of emerging niche EV companies. Rimac (Croatia) have their Concept One super car on the road, the Lightning GT (UK) prototypes exist, the Silex Chreos (Malta) is due in 2015. Then there is the Gevco i-Mav (UK) project developing an EV platform to enable many vehicle variants.
The list is not exhaustive but gives a flavour of what is happening around the world and again we do see a variety of approaches and different vehicle types from city cars to super cars. Many seem to be developing high performance car platforms which gives them the option of scaling these down for lower cost (higher volume) vehicles in the future but others such as BYD and Gevco are looking at volume cars from the outset.
Picking the winners
So who will get it right – can the new electric car manufacturers get their manufacturing costs down and rival the incumbent volume manufacturers, or will the big names find the winning formula first. Probably the answer is that they will both get it a bit wrong (are currently getting it wrong) but will iterate in a Darwinian manner towards products that consumers, beyond the early adopters, want. Personally I think that there will be winners and losers in both camps.
Within the tier ones I like the BMW approach simply because they recognise that electric cars are not just a change of power train, they are a radical shift in technology and they ought to be designed differently. I don’t think Ford or VW have been bold enough and I bet BMW will see greater growth in sales through their i-brand strategy.
For the new entrants, many will stumble, but they will learn and adapt quickly while spending a fraction of the tier one budgets developing sellable cars. The good news is that building an EV (certainly in small volumes) is really now a technology business rather than a heavy engineering (traditional automotive) industry. It is no real surprise that consumer technology product manufacturers such as Foxconn are gearing up for EV production. So consumer product designers ought also to be giving car designers a run for their money in this new order. With modern materials and less metal bashing it should be possible for a niche car manufacturer to take their designs to a contract manufacturer and achieve volume production at reasonable unit costs. New entrants bring rapid design cycles and innovative designs that will shake the automotive market incumbents.
Some new entrants will definitely make it as niche EV manufactures, some won’t, others will develop innovative vehicles and will be acquired by tier one car manufacturers or even by brands wishing to add cars to their portfolio – I can imaging being able to by a Virgin car (think about it Richard!). Already there is one example of a new entrant heading for tier one status and that is Tesla. There could, of course, be more especially once heavy investment and M&A activity hots up in the EV space.
It is definitely getting very exciting and electric car sales are now accelerating rapidly. My winners are BMW for tier one and for the new entrants my head says it will be from the Far East and rolling off the Foxconn production line but my heart says Silex Chreos!