Of course, to achieve this, some of the challenges currently facing the sector will need to be overcome: battery autonomy, which will go hand in hand with greater technological development, improved infrastructure, and government support to achieve increased demand.
The legislation's objectives are clear: to reach a 20% electric vehicle market share by 2020. The sector is optimistic, although opinions differ between those who believe the turning point will arrive in 2018 and those who think the timeframe will need to be extended by another ten years to see the industry's full development in this area. However, everyone agrees that growth, once this technology becomes widespread, will be exponential. Nevertheless, the challenges are still evident. Arturo Pérez de Lucia, Managing Director of AEDIVE, speaks of challenges such as increasing battery range and the fact that we are facing an aging vehicle fleet where it is necessary to implement zero-emission alternative technologies to fulfill that function.
From an industrial perspective, Ricardo Olalla-Guerra, sales director of Mobility Solutions at Bosch Spain, prefers to talk about electrified vehicles: “Our scenario is that by 2020, 10% of the fleet will be electrified vehicles, of which 2-3% will be pure electric. Meanwhile, in Europe, we see roughly 20% electrified, of which one-third could be pure electric, another third plug-in hybrid, and the rest, standard hybrids.” These forecasts are even conservative, as this expert explains, considering the changes in regulations.
Once those barriers are overcome, the wheel will keep turning. However, according to Ramón Gavela, director of the Energy Department at Ciemat, that won't happen "until electric vehicles are autonomous and no longer dependent on subsidies or institutional support. And that will be sometime after 2020.".
But first, there will be changes. Especially in demand, infrastructure, and, above all, in the industrial sector. The gradual development of electric vehicles has significant implications for the automotive industry in Spain. Spain is one of the few countries that manufactures five electric vehicle models, more than 30,000 units per year. These electric vehicles are distributed to more than 40 countries worldwide. “Demand forecasts indicate that more electric vehicles will be needed globally, and since Spain has strong industrial expertise in this area, our country can aspire to manufacture higher volumes and more models of electric vehicles. This will position us globally as a country that, in addition to manufacturing vehicles, also develops new alternative technologies,” explains David Barrientos, communications director of Anfac.
The statistics are clear: “37.4% of Spaniards agree with motorization, compared to 26.7% of Europeans. This is important because we are at a slow stage of development in which Spain can take the lead,” acknowledges Mar García Ramos, partner at S&F Consultants.
DEMAND
A business – disruptive or not, and opinions vary on this – where the key will be changing consumer habits. While some point to the emotional factor, alluding to the fact that pollution kills 12 more people a year, others are more skeptical. “The primary reason for buying a car is its aesthetic appeal, and the second is its price. Environmental pollution isn't even in the top ten,” explains Ricardo de Lombas, business development director at Bosch Spain. But “if, starting in 2020, I'm banned from driving in cities, charged a toll, or forced to pay a tax, the electric vehicle might become the ultimate solution for understanding new forms of mobility.” Just this week, we learned that the island of Formentera aims to be the first island in Europe with only electric cars starting in 2017.
In this sense, cities will be the biggest beneficiaries, and “when they make a firm commitment to it, it will be fundamental to ensuring that people see that this works effectively and energy-efficiently,” explains Juan Luis Plá, Director of Institutional Relations at Nissan Iberia. He also makes it clear that caution is necessary because “if we don't make electric vehicles competitive, we can do whatever we want, but we won't achieve widespread adoption,” and the stigma will remain that combustion engine vehicles are associated with freedom, while electric vehicles are associated with limited range and dependence on infrastructure.
TECHNOLOGY
That's why one of the key factors will be technological development, primarily focused on increasing battery range. Ultimately, "it's the most important component, not only in terms of performance but also in terms of cost," explains Joaquín Chacón, CEO of Albufera Energy Storage. "Keep in mind that the battery represents between 30-50% of the total cost of the vehicle. A battery capable of lasting 600 km is already technologically possible, but ultimately, to achieve that many kilometers, you need more kilowatts of power, and that adds up to a significant cost." This expert acknowledges that in this segment, they are considering "8-10 years as the time needed to develop the more chemical aspects of the battery," making 2040 a feasible key date for the full development of this market.
However, Damián Martín, Director of Electric Mobility at Cooltra Motos, mentions the two-wheeled version, which already boasts "between 100 and 250 kilometers of range for the scooters and motorcycles, respectively. In this sense, we are at the potential takeoff point in this sector; the only drawback is the price.".
What if I want to travel beyond 600 km? Rent one. That's the recommendation of Ricardo de Lombas, Director of Business Development and Electric Vehicles at PSA-Peugeot Citroën, in a scenario where "we are going to be mobility providers because the customer will demand a response adapted to their needs at any given moment." In this regard, Alberto Peña, director of the automotive area at Tecnalia Research & Innovation, suggests that car-sharing vehicles "are going to become something similar to a household appliance, which could pose a threat to hybrid vehicle manufacturers and an opportunity for the largest ones.".
INFRASTRUCTURES
And here are two key questions: Will there be enough lithium for everyone? Do we have enough electricity generation capacity to supply a developing sector and ever-increasing demand? To the first question, a resounding yes. In fact, experts are no longer talking about lithium but are instead considering what comes next. In the second part, Elena Bernárdez, head of electric mobility marketing at Endesa, admits that energy “won't be a problem. In fact, if 10% of the vehicle fleet were electric, electricity demand would only increase by 2%, so it's not a generation problem.” However, the grid needs to be considered, as the power grid will not be located where the service stations are, “but it will be overwhelmed, and habits will have to change.”.
However, this expert cites range, price, and lack of infrastructure as three of the factors currently preventing consumers from switching to electric vehicles. Once sufficient range is achieved, price will cease to be a determining factor, but people "want to see charging points before they can buy the car. They might not use them later—because we have the experience—but they want them because they feel secure." The path forward lies in enabling people to charge at home and establishing a charging infrastructure with a socially subsidized cost.
But what economic effects will this technological shift bring? Joan Pallisé, director of institutional relations at Circutor, acknowledges that 1,000 vehicles traveling 10,000 km per year would mean shifting 10,000 barrels of oil from the balance of payments, as Spain would no longer need to purchase them. “In Spain, we have a large number of combined cycle power plants that are currently idle. To power one electric car for a year, we would need to operate one of these plants for three hours. If we switch to renewable energy, we would need 30 hours of operation, which would provide enough energy to power the cars for a year.”.
Recently, Tesla CEO Elon Musk confirmed that Apple was developing its own electric car. This is something the industry views with considerable skepticism, as while they make very cool phones, a car is not a phone. Ultimately, "those of us who work in the automotive industry are very used to competition and it doesn't scare us at all," explains Ricardo de Lombas. He refers to Tesla as a very special case "because it has enormous financial resources and has started building cars, but does it want to be like Aston Martin or Nissan/Peugeot/Volkswagen, with large production levels? Having exclusivity for the iPhone is easy; the challenge is achieving it on a mainstream scale.".
From an investment perspective, Tesla is one of the companies closely monitored by Cygnus experts. Luis Amusátegui, Partner and Head of Analysis at the asset manager, explains that the company is held in their portfolio not as an automotive company "but as a battery manufacturer. Although we also look at companies in the sector in Europe and China, we are "looking for good entry points into these stocks, but without being fully invested all the time.".
The change, rather than being disruptive and meaning we'll go from selling 2,500 to 300,000 cars, "will be gradual and will have a significant impact on the market, especially the regulatory aspect," acknowledges the communications director of Anfac. Better taxation, tax exemptions, independence from small local governments, and government investment in charging infrastructure are some of the developments that need to come from the government. Promises need to be translated into action, and there needs to be greater safety.
