The automotive sector has been a dominant industry for the major economies worldwide as it is the largest source of employment and offers enormous opportunities to the other inter-connected sectors as well. As Jennifer Granholm rightly quoted “If you don’t have an auto industry, you will not be secure as a nation because you won’t have a backbone like manufacturing to be able to put people to work in producing the means to keep you secure.” The fact that this industry is continuously evolving by introduction of state-of-the-art features and specifications with regards to the consumers’ interests is what is helping the automakers to retain their dominance over the years.
However, the hazardous gas emissions with the large consumption of fuels has always been the bottleneck in the production of automobiles. That’s where powertrain electrification came into the picture. In this mechanism, engines in the powertrains are replaced by the electric motors that utilizes fuel cells, electric generator, or batteries. The technological breakthrough in the fields of battery composition and power electronics has paved the way for this concept in the modernized automobiles. Governments worldwide are also showing deep interest in the deployment of electric batteries that will proactively support their clean air initiatives. For instance, European Commission launched European Battery Alliance (EBA) in October 2017 with an am to ensure that the region aids from sustainable technologies and cleaner vehicles. As of 2020, China has emerged as the largest hub for the deployment of electric vehicles followed by Europe and U.S.
Stricter Emission Regulations
consumption attributes that is a matter of concern for automakers worldwide. Owing to the rising environmental concerns, the countries worldwide have imposed stricter regulations limiting the CO2 emissions. Regulatory frameworks subjected to the consumption and emissions by the top automotive manufacturing countries (based in North America, Europe, China, and Japan) have mandated laws, hinting towards environmentally sustainable and more energy-efficient economies.
For instance, the U.S. Environmental Protection Agency (EPA) along with National Highway Traffic Safety Administration (NHTSA) issued a Safer Affordable Fuel Efficient (SAFE) in March 2020, stating the automobile manufacturers to increase the fuel efficiency of their offerings annually by 1.5% from 2021 to 2026. The Center for Climate and Energy Solutions (C2ES) published the following economy standards that would append with the SAFE law-
|Vehicle||CO2 Emission Standards (g/mi)|
|Combined Cars & Light Trucks||224||214||211||207||204||202||199|
Source: U.S. Environmental Protection Agency (EPA) and DataHorizzon Research
The violations of these regulations are quite grave and the automakers have faced crucial penalties for the desecration of such laws. For instance, Volkswagen AG was fined USD 14.7 billion for installing a defeat device equipped with an engine control software in their Jetta TDI model. While the programming was focused on reducing the emission levels, it was found that it increased the pollution levels by 40-fold during the testing phase by the concerned U.S. authorities.
Increasing Government Investments
Total cost of ownership of the electrified transport is higher than that of conventional vehicles. Thus, the consumers are reluctant to make purchasing decisions in the favour of the electrified cars. However, the governments worldwide are offering subsidies and are also reducing the vehicle taxes to promote electrification. Such rising investments in mobilization sector to roll-out low-carbon technologies and renewable energy generation is anticipated to play a vital role in electrifying the vehicles. Such anticipatory government support has encouraged the OEMs to come up with electrified vehicles over the recent years.
International Energy Agency (IEA) reported government spending was approximately USD 15 billion in 2018 which was about 18% of the overall spending on the EV infrastructure. It has also released a comparison of global spending on EV purchases by consumers and governments from 2011 to 2018 as illustrated below-
The government spending continually rose over the last few years with an aim to contemplate the general public of opting for electrified cars over conventional vehicles However, policy changes are already being made in certain countries to mandate cost shifting from public sector to consumers.
Increasing Popularity of Hybridization
The plethora of electric vehicle models such as Basic Electric Vehicles (BEVs), Plug-In Hybrid Electric Vehicles (PHEVs), Plug-In Electric Vehicles (PEVs), and Fuel Cell Electric Vehicle (FCEVs) is observed to uphold the electrification phenomenon in the automotive industry over the years to come. The paradigm shift towards powertrain electrification either by total substitution with pure battery architecture or hybridization is expected to gain traction. Both architectures require high voltage battery systems that not only improves energy efficiency but also enables reduction in the overall weight of the vehicle.
However, automakers are considering hybridization, a combination of both conventional fuel engine and electrified motors in their new models. Both standard and plug-in hybrid vehicles induce lesser amount of pollution, has better pulling power, and have multiple drive modes (both on engines and electric motors.) The multi-attributes of the hybrid vehicles are expected to propel the market growth.
The electrically charged vehicles are perhaps the most efficient solutions in the modernized environment, but the charging infrastructure complicates the consumption. This certainly leads to the hindrance in the purchasing decisions regarding the EV fuelled vehicles. There are various factors related to the charging infrastructure dispelling the electrification growth as listed below-
- The electrified cars have a maximum limit of up to 100 miles on a single charge. Since these are powered by electricity, there is a need to recharge the batteries placed in the cars at regular intervals to prevent them from discharging especially in the case of BEVs that only run on electricity. Thus there is a soaring need to strategically place the charging stations for the consumers when travelling for longer distances.
- The process of recharging requires an external charging equipment or are recharged at commercial stations. Moreover, the charging of electrically fuelled cars is quite time consuming and usually takes up to 3 hours. However, consumers are now preferring residential charging wherein they can charge their batteries overnight when the vehicles are parked. In addition, home charging is lesser expensive especially at off-peak hours.
The electric powertrain phenomenon is anticipated to outperform in the years to come. We are transitioning into an era where the environmental concerns are at its peak and the global population are making humongous efforts to nullify these ecological disruptions. During these concerning times, the deployment of powertrain electrification is the ultimate solution for the automakers to glorify their product offerings and attain a competitive edge over their counterparts. However, the unprecedented change in the global automotive industry with respect to the total substitution of conventional engines has become a matter of concern owing to the high cost of the charging infrastructure. This has led to the popularity of hybridization which is now being considered as the subsequent mainstream powertrain alternative.
Since, the hybrid vehicles tend to offer ‘best of both world’s technologies,’ it is anticipated to have performed satisfactory over the recent years and is likely to foresee enormous opportunities in the forthcoming period as well. The major automakers are now considering hybridization in the product development phase of new products and are educating their consumers with the incessant merits of adopting hybrid vehicles. If the similar approach is adopted by automakers worldwide, the powertrain electrification is likely to attain traction over the years to come.