“The time when electric vehicles were a premium product that was only bought by a small target group is slowly coming to an end.”
The shift towards e-mobility is in full swing and car manufacturers are recording a strong increase in sales figures for electric vehicles. In the first part of this two-part interview, our consultant Tobias Grün tells us what influence this has on the sales sector and where customers will be found in the future.
Sales of e-vehicles have risen sharply and there is a great deal of attention surrounding the topic of electromobility - both within the automotive industry and in society. What influence does e-mobility have in your work as a consultant? What questions arise in particular?
There is no doubt that this is a highly topical issue for manufacturers and no longer a topic of the future. Electromobility is increasingly being incorporated in manufacturers’ portfolios or is being expanded, and volume planning with significant unit numbers has been decided for the coming years. For manufacturers, we can of course now look at this from two perspectives: What does this mean from a sales perspective and what does it mean from a service perspective?
Okay, let’s start with the sales perspective. What are the challenges here?
From a sales perspective, as a trending topic, it is above all a marketing topic. The vehicles have to be marketed but de facto they come onto the market as a replacement for established vehicles. They don’t come as a niche product or as an addition to the portfolio, but as a replacement for other vehicles. This means that the impact on sales in some sectors is not that great. This will also level out over the coming years, with the result that the sales potential will essentially be found in the same places where it can already be found today.
Can you elaborate on that?
Well, the time when electric vehicles were a premium product that was only bought by a small target group is slowly coming to an end. In the early days, there were only a few manufacturers that had electric vehicles in their portfolio at all. Production capacities were smaller, unit numbers lower and development costs high. Therefore, it wasn’t possible to serve a price-sensitive market at first. In other words, the vehicles were developed for a niche of well-off people and sold where people already lived with premium combustion engine vehicles. However, this niche has long since been abandoned, on the one hand because these manufacturers offer electric motors for several - even smaller and cheaper - models, and on the other hand because more manufacturers in general have jumped on this bandwagon. The fact is that numerous manufacturers have now entered the mass market.
This can be seen from the fact that electrification is broadly based: combustion engine vehicles are being supplemented bit by bit by electric vehicles in all brands, segment by segment, and replaced in the long term. The time has also passed when an electric motor is simply installed in an existing model. Instead, new model platforms specifically for e-vehicles have emerged in recent years. Today, other segments of the population, such as families or people with lower incomes, are therefore also being targeted to buy new cars, partly supported by all kinds of premiums. And acceptance will continue to grow the more vehicles there are. Therefore, in the future we will have a mass market in which customers are essentially to be found in the same places. The question will then be less “Do I want an e-vehicle or a combustion engine?”, but rather classic questions such as “Do I want a small car or a mid-range car? Should it be in the premium range or not?”
Electromobility as a mass phenomenon is also reflected in the legislation of some countries which aim to limit their CO2 emissions. This in turn creates a certain pressure. How do you assess that in this context?
Yes, of course manufacturers are driven by this to a certain extent. It is similar with the fleet balance on CO2 emissions within the EU, which encourages manufacturers to bring certain technologies to market or pay penalties. I also believe that the effect of this is a much greater lever because in actual fact it already costs money today. Besides Europe, the USA is also an example of fleet balances and trading with CO2 certificates or credits. Especially in such larger markets, this naturally plays a role for manufacturers and generates a certain pressure. Ultimately, however, this will no longer play a major role in the next few years with regard to the sales sector - I have already mentioned the reasons for this. It will only have a stronger influence on the manufacturer’s drive technology portfolio, which will then contain more replacements for combustion engines in the future. In this context, however, it is still exciting to see statements by some manufacturers who are already going public with specific dates, for example that they no longer want to produce combustion engine vehicles from 2035 onwards. Announcing such specific detail has been shied away from for a long time, which is why I found this very interesting. And I think others will follow suit and come under pressure.
And do you think this transition to one hundred percent electric vehicles is realistic in that timeframe?
I believe it is completely realistic. I wouldn’t risk trying to assess how realistic this is for the entire industry from an overall global economic perspective, for example with regard to the availability of raw materials and electricity infrastructure. But from the perspective of an individual manufacturer, I think it is certainly feasible. It is absolutely realistic to remove the old technologies, powertrains, etc. from the portfolio over a period of more than 10 years and to no longer invest heavily in development budgets for combustion engines, so that the whole thing can be gradually phased out, yet in a cost-effective way. And even if more manufacturers were to do this, there would still be plenty of combustion engines available on the used car market. It’s just that there would be no more new combustion engine vehicles from some brands. I am also quite convinced that many established manufacturers will have massive volume plans for electric sales in the coming years. So I can imagine that electric vehicles will already make up a significant share of the vehicle fleet in workshops in a few years’ time. After all, you always have to consider which vehicles go to the authorised workshop. These tend to be younger vehicles, and the older the vehicles get, the smaller the number. So if the sales volume of electric fleets increases, which brings us back to the CO2 emission benchmarks that apply pressure, then everyone will make an effort to ensure that their own electric technology accounts for a significant share of the sales figures.
Data source: Germany, Kraftfahrt-Bundesamt, Registrations, 15.03.2021, Data license by-2-0; Management Services Helwig Schmitt GmbH
Tobias’ outlook on the service perspective and his recommendations for dealing with e-mobility for sales, service and network planning can be found in the second part of the interview.
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