Powertrain Study 2020

Staying profitable in the new powertrain age

Why electric mobility puts automotive profitability under pressure

For the next decade, electric powertrain technology will maintain its pace of development. At the moment, boosted by legislation in China and Europe electric vehicle sales are growing. However, cost increases caused by a powertrain technology shift threaten margins and profitability in the next decade. In our new Powertrain Study, we have looked at electric vehicle sales in Europe, China and the US and have analyzed how powertrain technology and costs evolve. In order to stay profitable in the new powertrain age, OEMs need to focus on cost-optimized powertrain platforms and a customer-oriented powertrain portfolio now.

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Top findings

  1. The electrification trend is accelerating and unstoppable, driven by legislation and popular sentiment. To achieve European CO2 fleet targets, an electrified vehicle (“xEV”) share 35% to 45% will be required in 2030
  2. As OEMs struggle with on-costs for xEVs, profitability and contributions margins are under threat. This is due to the new roll-out of xEVs to the volume segment, and the economic downturn caused by COVID-19
  3. Batteries are the largest cost driver of electric powertrains - costs will fall further, yet this fundamental point will still apply
  4. The often discussed turning point when BEVs become more economic than ICEs is not a discrete point in time. It depends largely on vehicle segment, power, and range (battery size). BEVs will become economic for several segments, but extended ranges (600 km+) will not be viable with BEVs
  5. Based on the customer value proposition for powertrains, variants should be reduced to enabled focused development capacities, while core competencies need to be revised
  6. Given that profitability is precarious (due to COVID-19) but xEV sales are growing, OEMs need to focus on cost-optimized powertrain platforms and a customer-oriented powertrain portfolio to improve margins and profitability

Electrified vehicle profitability

Market Outlook 2030

Electric vehicle sales boosted by legislation in China and EU

USA

  • Around 8 percent of new car registrations electric by 2030 
  • Penetration of electric lower than other regions due to relatively low cost of existing ICE alternatives
  • Municipal and state-level privileges support local market dynamics
  • Domestic charging infrastructure widespread only after 2030

Europe

  • Around 34 percent of new car registrations electric by 2030
  • Sufficient domestic/commercial/ public charging infrastructure from 2025 onwards
  • Strong legislative push from 2020 onwards 
  • Cost-of-operating tipping points will vary by segment and pattern of use
  • Ongoing cost reductions and improved customer acceptance of BEVs expected to boost demand further after 2025

 

China

  • Around 33 percent of new car registrations electric by 2030
  • Sufficient public charging infrastructure from 2022 in priority cities and main travel routes
  • Consumer demand for electric vehicles growing from sub-car segments to all segments

Contact us

Jörg Assmann

Jörg Assmann

Partner, PwC Strategy& (Germany) GmbH

Dr. Jörn Neuhausen

Dr. Jörn Neuhausen

Director, PwC Strategy& (Germany) GmbH

Christoph Stürmer

Christoph Stürmer

Senior Manager, PwC Strategy& (Germany) GmbH

Felix Andre

Felix Andre

Manager, PwC Strategy& (Germany) GmbH

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