EVs take over the Shanghai Show
Last week the Shanghai Auto Show opened its doors, with the only evidence of the changed world we now live in being a requirement for a negative Covid test to gain entry. Change was however evident in another way, and this was one which will have a longer-lasting impact on the industry and society than Covid. There was a huge emphasis on electrification, and specifically 100% battery electric vehicles (BEVs). If you look at the various press reports you need to dig deep to find a new car launch that was not for a BEV, whether from global OEMs or the multitude of Chinese brands.
The Chinese central government and various city governments have put in place a range of incentives to support the development and sale of BEVs. This partially reflects the need to improve air quality, but also a broader industrial policy that recognises that if the Chinese car industry had continued to focus on combustion-engined cars, they would always be playing catch-up with their more-experienced global competitors. The Chinese government is reported to have invested around US$50 billion to date, alongside investments from players like Ali Baba and TenCent, resulting in over 400 EV manufacturers being registered. Data from Bernstein Research shows that China accounted for 40% of the BEVs sold in February, a similar level to Europe, with the balance mainly in the USA (and those mainly Teslas, and largely in California). Many of the Chinese products are micro-cars with limited relevance outside China, and some of the manufacturers have yet to produce an actual car, but there are also many serious players with very capable products.
Amongst the global OEMs, Mercedes used the Shanghai Show to debut their EQS (stunning) and the more accessible EQB crossover, whilst Audi showed their A6 e-tron concept (also stunning) that previews a family of cars to be launched in the next year or so based on the same architecture. Honda – whose history is rooted in internal combustion engines for a range of applications – showed a BEV replacement for the HR-V, and Toyota – until now the pioneer and global leader in hybrids – showed a pure BEV replacement for the RAV4, one of seven models from a new ‘bz’ (Beyond Zero) sub-brand to come by 2025. Volkswagen continued their electric onslaught with the China-only, seven-seat ID6 built on their MEB platform.
Chinese brands with products that impressed included the Evergrande Hengchi 1 – their debut model, pitched into the luxury segment with a claimed 760km range and the Geely Zeekr 001, presumably with some links to the sister Lynk & Co and Volvo products, but with an emphasis on user technology including facial recognition and regular over-the-air updates. BAIC – partner of Hyundai and Mercedes in China – launched the Arcfox which includes technology from Huawei, the giant telecoms manufacturer, to offer LIDAR-based autonomous driving features.
There were many other serious products on show, but the striking thing is how quickly things have changed in only 5 years. In 2015, only seven serious BEV models were available for sale in Europe, led by the Nissan Leaf and Renault Zoe, and including variants of conventional models like the VW e-Up! and e-Golf, and the Kia Soul EV. Tesla only offered the Model S, producing just 50,000 cars that year, compared to half a million last year. Now we have moved to a situation where manufacturers such as Ford of Europe, Jaguar and Volvo are declaring that they will only offer BEVs by 2030, and consumers can already find at least one BEV model in almost every manufacturer product range.
To me, it feels like a repeat of the transition from basic mobile phones to smartphones. The Nokia 1011 brought the GSM phone to the masses in 1992, which was followed by a series of innovations through to the launch of the iPhone fifteen years later in 2007. Within a few years of that, we managed our lives through our phones – multiple forms of communication, appointments, banking, shopping, finding information, navigation, photography and all the other functions we now take for granted. In the process, many established businesses came under pressure, from taxi companies to diary publishers, but few of us noticed unless we were directly involved in those sectors.
In automotive distribution, we need to anticipate how quickly the change is now going to run through our industry. ICDP modelling shows that the existing parc will protect the aftersales sector from the worst effect for a number of years, but car sales will be affected very quickly. As an industry, are we ready to explain to buyers how the new BEV they are considering will fit into their lives, and how it differs from the BEVs of only a few years ago? How many dealer sales executives actually run a BEV themselves and can speak from experience? Are we keeping track of how battery degradation affects vehicle performance, and therefore the attractiveness and value of a used BEV? There are actions here for manufacturers, franchised dealers and used car specialists – and they need to be taken now, not when the customers turn up.
Image: Bloomberg