Electric Vehicle Batteries: Regulatory Trends

GlobalData’s estimates expect worldwide fitment of advanced batteries to electric vehicles to jump from 9.7 million units in 2020 to nearly 68 million by 2035.

Listed below are the key regulatory trends impacting the solid-state battery industry, as identified by GlobalData.

CO₂ and fuel economy

The auto industry has long been led by regulation as much as it has responded to consumer demand. European original equipment manufacturers (OEMs) will be forced to electrify their fleets with more speed than planned due to the rise of the sport utility vehicle (SUV) and the collapse in diesel demand. They are pressured by the rise in European fleet CO₂ emissions in 2018, which was exacerbated by new Worldwide Harmonized Light Vehicle Test Procedure (WLTP) rules, resulting in many hybrid and electric vehicles being withdrawn from sale in the second half of 2018.

There is a suspicion that OEMs have been gaming their hybrid and EV sales for a big push in 2020. For example, VW has stopped offering plug-in hybrid electric vehicles (PHEVs) across Europe, while Hyundai’s Kona EV has been pulled from sale in the UK. The stakes are high for the OEMs as they face stringent EU fines if they overshoot their fleet CO₂ emission targets.

In the US, the proposed CAFE standards for 2025 vehicles, passed into law by the Obama administration, remain in a state of flux after the Trump White House proposed rolling back the standards. The fate of the 2025 target is not yet resolved, nor likely to be in the near-term. The prior target is now made more difficult by low gasoline prices in the US and light trucks taking a ~50% share of the market against the legislation’s assumption of 30%. The US auto industry’s position flies in the face of the international community and threatens its international competitiveness.

In contrast, China’s is leading the world industry in its technological capability in electric vehicles due to the NEV policies initiated by the government.

De-dieselisation

De-dieselisation refers to the rapid market backlash against diesel, particularly in European markets, emanating from the VW emissions scandal and, concurrently, from increased lobbying over air quality in cities. This backlash has not discriminated between diesel engines, so Euro VI engines that meet all the latest emission requirements are seen by the public as being as bad for air quality as a Euro II diesel, which does not. Some cities have introduced legislation to place restrictions on the use of diesel vehicles, while others are planning outright bans for diesel vehicles in the future.

For the European industry, diesel was a primary tool for meeting European Commission rules for CO₂ emissions in 2020/21, as they offer a relatively cost-effective means of improving fuel economy. Now, OEMs are rushing electrified vehicles to market to ensure their fleet CO₂ emissions are low enough to avoid punitive fines from the European Commission.

Vehicle light weighting

Reducing vehicle weight by 100kg is estimated to lower fuel consumption by 0.5 litres over a distance of 100km and cut CO₂ emissions by 1.2kg over the same distance.

Under certain weight-based (as opposed to footprint) CO₂ reduction regimes, vehicle mass reduction can be counterproductive for OEMs and make for tougher targets.

Nevertheless, replacement new vehicles are now in the main lighter than their predecessors. For example, the Ford F150 and L405 Range Rover were 315kg and 420kg lighter, respectively, than their predecessor vehicles.

The replacement of traditional steel body components with aluminum, high tensile steels and/or carbon fibre reinforced polymer (CFRP) is a key trend, but plastics are also playing a significant role in weight reduction.

The premium that OEMs put on weight reductions depend largely on the vehicle segment, brand positioning and the vehicle’s sales take of its fleet. For mass market A-C segment vehicles EUR2-5 per kg is reckoned to be the range.

This is an edited extract from the Electric Vehicle Batteries – Thematic Research report produced by GlobalData Thematic Research.

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