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How to drive winning battery-electric-vehicle design: Lessons from benchmarking ten Chinese models
Our analysis of the Chinese battery-electric-vehicle market revealed important clues for OEMs that want to thrive in this sector.
By Mauro Erriquez, Philip Schäfer, Dennis Schwedhelm, and Ting Wu – Many automotive OEMs and suppliers in Europe, Japan, and the United States are starting large-scale launches of battery electric vehicles (BEVs) in their core markets. But in China, a rapidly growing BEV market and ecosystem have already emerged.

To help global automotive OEMs and suppliers truly understand the major challenges and opportunities of the Chinese BEV market, we analyzed ten BEVs that are popular in China using McKinsey’s electric-vehicle index. We covered a large portion of the market, looking at vehicles from both incumbent OEMs and new players. The benchmarking consisted of a detailed technical analysis, as well as a cost estimate down to the level of individual components. We summarized our findings in our report, How to drive winning battery-electric-vehicle design: Lessons from benchmarking ten Chinese models (PDF–501KB).

The Chinese automotive market is the world’s largest automotive profit pool, accounting for one-third (about $40 billion) of the global total. The market is now shifting toward e-mobility. From 2014 to 2019, BEV unit sales in China increased by 80 percent a year. With more than 900,000 units in 2019, 57 percent of the BEVs sold throughout the world were sold in China, making it the world’s largest BEV market. A look at OEM market shares reveals that Chinese OEMs dominate the market almost completely. International OEMs had a mere 15 percent of annual BEV sales in 2019.

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The outlook for the market is promising: BEV penetration in China is expected to grow from 3.9 percent in 2019 to 14 to 20 percent in 2025—a sales volume of roughly 3.8 to 5.0 million vehicles. With the COVID-19 crisis affecting global BEV markets, China’s central government decided in March 2020 to extend purchase subsidies by two more years to fuel BEV sales. Therefore, we expect that after stagnation in 2020—compared with the double-digit growth before COVID-19—the BEV market will pick up again, both absolutely and relatively, in 2021.

Several BEVs have the potential to be profitable, as their product cost structures benefit from several unique characteristics of the Chinese market. The reuse of existing internal-combustion-engine (ICE) platforms decreases time to market, and off-the-shelf components and a high level of modularization keep down capital expenditures. These design principles and their effects are supported by an ecosystem of local suppliers with long-established expertise across electronics and batteries. more>

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