Skeptics At Boston Consulting Group Now Support Electric Cars

1 week ago by Steven Loveday 17

Interestingly, amidst the current administration aiming to do away with the EV tax credit, another skeptical firm moves to support electric cars.

Yes, the Boston Consulting Group (BCG) is now on the growing list of supporters of electric cars. It’s a somewhat surprising time to hear of new additions to the EV club, but considering the fact that Tesla is no longer the only automaker banking on EVs, and the fact that several OEMs are in too deep to negotiate a reversal  (most recently Opel this week), it makes sense. In regards to the US House hoping to chop the tax credit for electric cars, that’s surely a huge “maybe”, as we have already seen the new Senate revision strike that part out.

Electric Cars

2018 Nissan LEAF

According to WardsAuto, BCG has been skeptical about electric cars for some time.

However, now the firm has changed its tune to suggest that EVs will see marked growth, with a switch to battery cars taking the advantage by about 2028. This is to say that BCG’s report shows electric vehicles reaching a 6 percent global market share by 2025 (6.3 million EVs), followed by 14 percent in 2030 (15.3 million EVs). BCG is also predicting about 900,000 electric cars delivered globally in 2017. The consultancy states further, via Wards:

“Sales of xEVs, including 48V mild hybrids, full hybrids and plug-in hybrids, as well as BEVs, will account for 24% of global light-vehicle volume in 2025 and 48% in 2030, up from 5% today, BCG predicts. That should be good for 25 million and 52 million vehicles, respectively.”

These numbers may seem small, but we have to keep in mind that percentages like this are actually monumental, considering that we’re at 1ish percent now and people will continue to buy plenty of ICE vehicles in the meantime.

The more telling part, however, is that in 2010 BCG claimed that battery electric vehicles would top out at 1.5 million copies by 2020. Though, lithium-ion battery costs have declined much more than the firm anticipated, and continue to do so. Added to this, battery makers are accelerating their efforts globally. BCG says battery costs will hit ~$70-90 per kilowatt-hour globally in 2030.

Electric Cars

EV battery packs are getting cheaper and more energy dense and battery makers are accelerating their efforts.

According to Wards, one of the main reasons the BCG likely changed its stance is due to BEVs overtaking ICE cars in terms of total cost of ownership, sooner rather than later. In fact, BCG expects this transition to occur by its target year of 2028.

While BCG isn’t suggesting complete price parity between electric cars and ICE vehicles, the view is that, with all things considered, it will be notably cheaper to own an EV.  Other recent forecasts show that upfront price parity may be achieved around a similar timeline, which projects itself as much more obvious to most consumers.

Wards recaps other important information per BCG’s recent report:

-48V hybrids will account for 8% of the global market in 2024 and 15% in 2030.Plug-in hybrids make the least sense economically, with the longest payback period among electrified models. Still, the sector will triple its global market penetration from 2% in 2024 to 6% in 2030.

-Full-hybrid market share will nearly double over the 2024-2030 timeframe to 13% worldwide.

-China will be the biggest market for EVs, as its 17% BEV market share projected for 2030 equates to nearly 6 million units annually. But BEV penetrations rates will be higher in the U.S. (20%) and Europe (22%) due to the mobility-fleet sector. Penetration will reach only 12% in Japan, where BCG says the fewer miles traveled annually make full hybrids a more rational purchase for consumers.

-Government incentives and emissions regulations will need to remain in place to continue driving the BEV market through 2025 (a U.S. House bill on tax reform threatens to end the $7,500 credit on EV purchases). “If you do away with the incentives (before then), the market goes away,” Mosquet says. After 2025, costs will decline and consumers will begin to drive demand

-While battery cost will come down, range doesn’t need to go beyond the 200-plus mile (322-km) distance of the Chevrolet Bolt for the 2030 volume targets to be hit, Mosquet says, noting that’s enough daily range to meet the requirements of a metropolitan taxi and most commuters.

Source: WardsAuto

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17 responses to "Skeptics At Boston Consulting Group Now Support Electric Cars"

  1. ffbj says:

    So I guess they were wrong, and now the’re what, less wrong?

    1. Pushmi-Pullyu says:

      BINGO!

      They say BEVs won’t achieve total cost of ownership parity with gasmobiles until 2028? Seriously?

      I’ve seen some analyses indicating we’ve already passed that milestone, at least for some models.

  2. pjwood1 says:

    Still seems crazy we’re headed to 8% 48V Mild Hybrids, in a ~$100/KWh world. It’s another place where a manufacturer will save itself nickels, rather than let consumers save dimes or do better for the environment. Why not “step up” to hybrid?

  3. Kdawg says:

    Is it really a “prediction” when you keep changing it as reality unfolds?

    1. SJC says:

      More of a projection based on advanced information.

      1. MikeM says:

        There must be another word for:

        Ideologically blinkered dimwits having reality shoved in their faces.

        1. Pushmi-Pullyu says:

          “Willfully ignorant”

  4. CDAVIS says:

    Boston Consultng Group Said: “Sales of xEVs, including 48V mild hybrids, full hybrids and plug-in hybrids, as well as BEVs, will account for 24% of global light-vehicle volume in 2025 …”
    ——————-

    EVs (all types) market share increasing at a rate of 30%/year compounded through 2025 = ~14% market share.

    So Boston Group’s 25% 2025 EV market share prediction forcasts a significantly greater than 30% year over year market share increase for EVs.

    1. stan1 says:

      Yes CDAVIS, and the BCG growth rate is ridiculously conservative. The growth rate over the last 10 years has only been so slow because the incumbents have been dragging their feet. The increasing numbers of markets making ICE sunset announcements have made the foot dragging completely untenable any longer. China’s recent news was the final nail. We are on the precipice an absolute explosion in scale growth. It is going to continue over the next decade.

      EVs achieved price parity at the top of the market first since their range has to be purchased and greater range helped address the only EV downside of refill speed. As battery prices continue to decline, EVs are becoming fully competitive in larger and larger segments of the industry.

      It will be extremely hard to sell new ICE products even by 2025. By 2030, ICE products will likely only sell in the cheapest market segments where the cost of EV range is least competitive.

      Plugging in (inductive or whatever) will get easier by the day as more and more infrastructure is built, and charging times continue to decline. The exact opposite will occur for petroleum infrastructure. Fewer and fewer products will be utilizing pumps at declining rates causing significant infrastructure contractions. Filling up will become increasingly difficult and possibly even more expensive over time.

      Vehicle automation will make the transition even faster.

  5. stan1 says:

    “According to Wards, one of the main reasons the BCG likely changed its stance is due to BEVs overtaking ICE cars in terms of total cost of ownership, sooner rather than later. In fact, BCG expects this transition to occur by its target year of 2028.”

    Utter nonsense. A small start up has been selling segment competitive products at segment competitive prices with industry level per unit profits for nearly 10 years now.

    1. Some Guy says:

      Which start-up would that be?
      Tesla comes to mind, but their per unit profits are beyond the wildest dreams of established manufacturers. Gross margin 25-30% is what Tesla achieves, Porsche (leader of the mass production ICE pack) is at ~15%, and real mass producers like VW are at about 2-5% gross margin.

      BTW: BCC gets paid by the ICE cartel, so they consult what those guys want to hear, to give them something that can be cited to the paid politicians to make legislation more ICE friendly. Like the EU just did. Old CO2 threshold for fleet consumption was 95g/km for 2021 (to be achieved with the cheating NEDC test, so like 135 g/km real world). Now they say 30% less CO2 until 2030, but this does not equal 66.5 g/km, but ~95 g/km real world, as the cheating ICE cartel crime lords pleaded that the new test method which generates real world data would be unfair and they will never be able to make it because of their cheating that they are now used to. Jobs at risk!! Bribes and donations at risk! So Europeans are going to inhale toxic fumes for decades in the future. In Germany, the government ignored health issues regarding NOx and particulate dust. They got fined a whopping 4000 Euro by a court for this, which they pay with the money collected from the same taxpayers whose health is endangered.

  6. ClarksonCote says:

    I believe “OEMs are in deep enough to negotiate a reversal” should be “OEMs are in too deep to negotiate a reversal”

    1. Jay Cole says:

      Indeed, thanks

  7. Victor says:

    If any electric car is competitive the do not need tax credits. They are not competitive. It is just politicians trying to get votes. It is like high speed trains, almost 100% of lines are not economically viable without tax money.

    1. stan1 says:

      Sure, most EVs sold today aren’t competitive even with subsidies however that is completely by design. The idea that EVs aren’t competitive without subsidies however is pure blather. Highway capable EVs are fully competitive in the upper end segments with no subsidy despite the massive subsidies enjoyed by their petroleum competition.

      They are noncompetitive at the bottom of the market which is why the incumbents have only been targeting that end. Even then they’ve gimped the products to constrain demand. The Volt has back seats only usable by the legless. The i3 is a clown car. These firms have wanted to pretend parity has/had not yet occurred. But, that is an easily disproven, bald faced lie.

      A small start up has been selling segment competitive products at segment competitive prices with industry level per unit profits for nearly 10 years. It has been successfully marketing those products in markets with no subsidies. EV price parity was a rear view mirror event the moment that firm successfully marketed its products in unsubsidized markets with sustainable per unit margins.

      Mitsubishi has always been supply constrained for its Outlander. The new Leaf is significantly less gimped. The design is no longer so “polarizing”. The range is no longer so low. It is going to sell at significantly higher rates even in unsubsidized markets. The Model 3 is completely competitive in the high end mass market. It will sell whether subsidized or not.

    2. Dan Hue says:

      The objective of the subsidy is not to permanently compensate for a lack of competitiveness, but rather to bridge the gap and help accelerate technological developments until parity (and beyond) is reached. This is worthwhile if you think (like I do) that electrifying transportation is a required for civilization to advance.

  8. stan1 says:

    “These firms have wanted to pretend parity has/had not yet occurred.” They also wanted to pretend there was no demand.

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