Breakthrough in electric cars not expected for another decade
- High expected demand in the BRIC markets drives positive European outlook
- Small cars segment to lead expected growth
London, 14 September 2011: European automotive executives are confident that the automotive industry will continue to grow in the next 12 months, according to the results of the European Automotive Survey 2011, released today by EY. The survey of over 300 European automotive leaders conducted in July also reveals that on average they believe that the electric vehicles market will reach a critical mass by 2022.
Europe is expected to be where the first mass market in electric vehicles, according to 52% of respondents, closely followed by China (39%) and Japan in third position with 37%. The eleven year horizon is an average result. Responses varied widely with 9% of respondents believing that electric cars will enter the mass market by 2015, while 19% believing it will happen after 2025.
Peter Fuss, EY European automotive partner said: “There is a growing diversity of opinion in the debate on how quickly the mass market for electric vehicles will take off in Europe and Asia in particular. Although the current outlook for the sector is benign the current economic instability will only add to that uncertainty. That said many of the major players are taking the potential move very seriously indeed.”
Challenges for electric vehicles
Some of the most significant challenges highlighted by the executives to explain the delay in adopting electric vehicles are “lack of range” (65%), “lack of charging stations” (57%) and the “excessive price” (55%), as well as “unsuitability for day-to-day use” (30%). The vast majority of respondents (91%) also believed that government grants around the world are needed to help electric vehicles make a breakthrough.
“From the industry’s perspective, the biggest problem is still electric vehicles’ lack of range. Building up the infrastructure needed and the high price of the vehicles are also seen as significant challenges,” says Fuss.
High expected demand in the BRIC markets drives positive European outlook
The auto executives remain reasonably positive in all the major markets although unsurprisingly those based in Italy and Spain were less confident than those in the UK or France. Overall the executives predicted an increase in sales over the year driven by an uptick in demand in the BRIC countries and Eastern Europe.
When asked how sales will develop in the next 12 months, 71% anticipated an increase in the Chinese market (25% said a ‘significant increase’). The forecast for Eastern Europe with 57% expecting an increase in demand, Russia (52%) and India (51%) were also optimistic. By contrast the outlook for the North American market with only 5% expecting a significant increase in sales and 12% a decrease in demand was the most negative.
When asked about prospects for the new passenger vehicle nearly 80% expected growth in the small cars segment of the auto market compared to 64% and 52% for the mid-price and upper price segments of the market. There was no consensus at the other end of the scale with luxury cars. While 19% of the executives expected strong growth in the near to medium term (the highest percentage), 29% forecast stagnation or even declining sales figures.
Fuss concludes, “Despite uncertain economic times in Western Europe and North America there are plenty of reasons for European auto executives to feel positive about exporting vehicles to Eastern Europe and the BRICs, both from the smaller and luxury ends of the market. And despite the probability it will be a decade away there is a definite sense that many auto players are planning now for electric vehicles breaking through into the mass consumer market.”
EY is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 141,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.
EY refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit www.ey.com
This news release has been issued by EYGM Limited, a member of the global EY organization that also does not provide any services to clients.