The ecosystem centered on combustion engines must adapt to support the rise of electric vehicles
Truly sustainable mobility is only possible within a sustainable EV framework, writes Richard Billyeald, CTO at Thatcham Research
With around 370 different electric vehicle (EV) models available globally in 2020, the options for electric vehicle buyers have improved dramatically over the past decade, and product offerings now range from consumer vehicles to low cost to high performance and luxury electric vehicles. This level of choice, combined with varying degrees of carrot and stick policies by governments around the world, has seen the global electric vehicle fleet grow to 7 million units.
In 2020, EU registrations of plug-in or plug-in vehicles increased by 170%, reaching 1.046 million units in 2020. It was a different story in the United States, where plug-in light electric vehicles only totaled 296,000 units, but Chinese consumers bought nearly 1.3 million new plug-in vehicles, for a market share of 6.3%. In the United Kingdom, plug-in hybrid vehicles and battery vehicles took 10.7% of the market, or the equivalent of more than one in ten registrations; in 2019, it was one in 30.
The IEA predicts that the world’s roads will accommodate 100 million electric cars by 2030. With the accelerated growth of electric vehicles being one of the goals of COP26, we can reasonably expect sales of electric vehicles in the next few years exceed the forecasts for 2030.
The Achilles heel of the electric vehicle industry right now is the lack of repairability of the battery
However, this growth is taking place within an ecosystem shaped by the Internal Combustion Engine (ICE) and designed entirely to support the ICE. The auto industry, from manufacture to sale, and insurance to repair, has had over a century to get to where it is now: literally, a well-oiled machine. Today’s burgeoning electric vehicle market urgently needs all of the supporting infrastructure that ECIs have, but it doesn’t have the luxury of time to get it right.
Goodbye and not goodbye
This is why what happens after an electric vehicle leaves must be integrated into a business model developed in collaboration and mutually beneficial.
Customer retention and engagement has become a growing concern in recent years for car manufacturers and dealers. With fewer moving parts, electric vehicles require less service and maintenance than internal combustion engines, and without an oil change or brake service, dealerships risk losing established revenue streams. It’s up to automakers and dealers to make sure that when their customer walks away, they say goodbye, not goodbye.
Indeed, electric vehicles offer manufacturers and dealers a unique opportunity to make the ownership experience a central part of their sales strategy.
Certainly, the fruit at hand here loads. Getting out of the dealership is the start of the EV experience, and the charging infrastructure is a critical part. But what is needed is more than a branded charging network and a charging station at home or in the workplace. Because truly covering the entire experience of owning an EV involves taking insurance and repair into account.
Seen by most consumers as a frustrating legal requirement – until of course they need it – the insurance process needs to be competitive and attractive, giving EV owners the peace of mind that the grid repair can work for them if called upon. Get it right, and it can create a new level of customer loyalty and engagement that all parties can benefit from.
Batteries: repair, reuse, recycle, but don’t just replace
Electric vehicles may have fewer moving parts, but they introduce new complexity into vehicle architecture. Firstly, the battery itself, but secondly the way in which the high voltage system is integrated throughout the vehicle. The design of ICE vehicles has evolved over the decades and technicians have good access to repair information. To achieve an equivalent level in EV, the vehicle design process must take repairability into account. This is complicated by national variations; in some markets, like Germany, the repair networks are led by the manufacturers, while in others, like the United Kingdom, the independent network plays a more important role.
Regardless of the market, however, automakers rely on the additional capacity provided by an independent repair network, and these independents thrive when they have access to repair information and technology, and their jobs are made easier if they have access to repair information and technology. the repair was incorporated into the design of the vehicle from the start. Ensuring that electric vehicle repairs are done correctly is critical, but the insistence on using proprietary diagnostic equipment and in-house technicians, for example, can slow the process down. This keeps the car in the shop and harms the customer experience.
The Achilles heel of the electric vehicle industry right now is the lack of repairability of the battery. With zero emissions at the point of use, electric vehicles are essential for improving urban air quality, but they can only be at the heart of a sustainable mobility strategy if they are themselves fully sustainable. Right now, however, if the battery needs repairing, there is only one option: replacement. It is expensive and the inefficiencies do not need further explanation. Plus, insurers are naturally balk at the idea of putting a brand new battery in an older car. Any semblance of durability is lost if a damaged battery can only be replaced.
This growth is taking place within an ecosystem shaped by the Internal Combustion Engine (ICE) and designed entirely to support the ICE.
Putting repairability at the heart of the design is Thatcham’s long-standing call to action, but EV batteries give it new meaning. Since the battery represents up to 40% of the price of a vehicle, repairability should be an option; if the cost of the repair exceeds the value of the vehicle, the insurer is likely to depreciate the vehicle. As battery performance improves, consumer interest in electric vehicles also increases, but performance cannot be delivered at the expense of repairability. The end does not justify the means: sustainable mobility is totally incompatible with disposable or uninsurable cars.
Then there are questions about what happens to the battery that has been replaced. Recycling any item requires minimum volumes for efficiency, and with electric vehicles still in their infancy, there is a lack of critical mass in end-of-life batteries for that efficiency to be achieved. Battery recycling is an issue that will arise very clearly in the future, as electric vehicles begin to reach the end of their lifespan, but preparations for high volume recycling must begin now.
As for repair, so with insurance. Despite the country-specific variations, the fundamentals of insurance remain the same, namely risk and claims based on algorithms and experience. Yet the nascent electric vehicle market has yet to generate enough data to lower insurers’ risk assessments; and this is compounded by insufficient advice and a lack of clarity from automakers regarding vehicle repairability, as well as the cost and availability of spare parts.
Collaboration is what you need
There is only one way for stakeholders to put the EV ecosystem on a par with the long-established ICE experience: through positive collaboration. And this must include, among many others, car manufacturers, suppliers, dealers, repairers, recovery and recycling companies, and of course insurers. And since such collaboration would directly help achieve national net zero goals, there is a strong case for government to play a role here as well.
The automotive industry has spent decades developing highly effective support networks for ICE vehicles. If EV sales appear high, this is nothing compared to the speed at which a supporting EV ecosystem must mature. To support this growth, automakers must always be there for their customers, not just to get them out of the dealership. And for customers to see electric vehicles as normal, automakers need to view them differently.
About the Author: Richard Billyeald is CTO at Thatcham Research