Deterrents for ICE usage

Issue #96, Jul 14th, 2021

Governments and automotive original equipment manufacturers have been announcing incentives to promote electric vehicle sale. But price continues to be a road block. EVs will take a few more years to reach price parity with traditional engine driven vehicles - when they can be made at the same profit margin, irrespective of any government subsidies. Another way is to introduce deterrents like stricter emission norms for consumers to stop purchasing ICE vehicles, like what EU is planning. Tesla has taken the competition to the electronic architecture by coming up with a radical design specific to EVs, contrary to what traditional auto makers have done. Without a major car maker of its own, Spain is diverting a significant portion of its COVID relief funds from the EU for EV manufacturing. Petrochemical player LG Chemical has announced its ESG investments for battery manufacture. Auto OEMs like Volkswagen expect the revenue from software and services to be more than that from EV sales in future. Below are some recent updates.

Strict emission norms to deter ICEs

EU emissions rules coming into effect as soon as 2025 are likely to make petrol cars less profitable than electric models, which according to one of Volkswagen’s most senior drivers is a key point in the car industry. Thomas Ulbrich, head of Volkswagen brand development, said new engine standards, called Euro 7, would be a “huge challenge” for petrol vehicles, as they require more expensive technology to ensure they are compliant. The regulations, which come into force around 2025, require more “technical needs” like expensive equipment to reduce emissions in cars with internal combustion engines, he added. - Financial Times

Tesla's EV focused architecture?

There’s a new development today that’s changing the game for EVs. The maturation of computing technologies is powering a new type of EV – one that is more connected and smarter. An EV, in other words, is less of an electrical device and more like a supercomputer on wheels. Electronic components will soon make up half the cost to produce a car.?

Tesla has radically redesigned the electronic architecture under the hood, in order to reduce complexity. It splits the overall architecture into four controlled domains: autopilot, the central information display, the instrument cluster, and last, drivetrain and energy storage. It’s a product architecture that’s geared for data collection, algorithm testing, and interaction with driving infrastructure and with other vehicles. This approach is in contrast to traditional automakers where the architecture reflects their past experience. - Channel News Asia

Ride sharing going the e-way

The pandemic slowed Uber’s and Lyft’s ride-hailing businesses to nearly a complete stop. The companies were forced to regroup. They realized they needed not only to rethink how they viewed transportation but to reconsider their sustainability efforts. The two companies doubled down on their multimodal transportation strategies: The pandemic had fueled people’s dependence on bikes, scooters, and public transit—all areas in which they were already investing. But they also announced lofty electric vehicle adoption goals. In June of last year, Lyft announced plans to be fully dependent on electric vehicles by 2030. Uber rolled out a similar announcement in September. - Fortune

LG's ESG investments for batteries

The private sector in South Korea has been rushing to announce massive investment plans to reduce their carbon footprint and foster sustainable growth. LG Chem Ltd. will spend 10 trillion won ($8.7 billion) through 2025 to accelerate a “sustainable growth” in its battery materials operations and other business lines, joining other South Korean industrial giants in a shift toward greener practices. “This is by far the most innovative change the company is making since its establishment, which will further lift value and sustainability,” CEO Shin Hak Cheol said. “We will transform our business portfolio based on ESG-related operations and we will prove that we can make a sustainable growth,” Shin said in his briefing. “It’s the time for a major overhaul.” - Bloomberg

Spain's investments in EVs

Spain will invest 4.3 billion euros ($5.1 billion) to kick-start the production of electric vehicles and batteries as part of a major national spending programme financed mostly by European Union recovery funds, the government said on Monday. After Germany, Spain is Europe's second-largest auto producer and the world's eighth biggest. As the industry confronts a tectonic shift towards electric vehicles and greater technological integration, Spain is racing against Germany and France to overhaul supply chains and retool its manufacturing bases. Less wealthy, without a major carmaker of its own and with electric car sales lagging the EU's average, Spain is fighting back by deploying to EV projects some of the 140 billion euros of EU COVID-19 relief funds it is entitled to.- Reuters

VW's plans for software-enabled revenues

Volkswagen expects EVs to gradually replace traditional ones—so far so uncontroversial. But it is also preparing for explosive growth in “software-enabled revenues.” Its presentation implied that this business might be almost as big as that of selling EVs by 2030. The parallel is with smartphones: Apple gets much of its growth from selling services through its iPhones rather than the devices themselves. As cars become connected to the internet and updatable, in-vehicle services seem likely to proliferate. If cars ever become autonomous, freeing drivers to be passengers and even undermining the current dominant model of car ownership, demand for services could skyrocket. VW isn’t the only one preparing to sell services. Ford ’s strategy day in May made much of the opportunities an “always-on” relationship with its customers might bring. - WSJ