Daily Archives: September 9, 2017

JPMorgan thinks the electric vehicle revolution will create a lot of losers

Electric Cars, News, Reviews and Comment
  • Adoption of electric vehicles will accelerate and that’s going to hurt some internal combustion legacy businesses, JPMorgan Cazenove said in a note on Monday
  • Losers were likely to include dealer networks, maintenance businesses, lenders and oil companies, the note said

Adoption of electric vehicles is set to accelerate, and that’s going to run over a lot of losers, including within the auto industry itself, JPMorgan Cazenove said in a note on Monday.

The shift toward electric vehicles is set to be a multi-year process, but once there’s a tipping point, likely on a shift in costs, the transition could take off, JPMorgan analysts said.

They noted the price difference between traditional internal combustion vehicles (ICVs) and electric vehicles (EVs) was already narrowing as battery prices fall, but prices might not need to fall much for consumers to make the leap.

“Concerns about scrap values of ICVs may drive consumers towards EVs even before the price differential between the two classes of vehicles closes,”
JPMorgan said.

It estimated electric cars would take 35 percent of the global market by 2025 and 48 percent by 2030.

That’s going to create some clear losers in an industry that’s been spreading its tendrils for more than a century.

For one, adoption of electric vehicles means much lower maintenance costs for consumers, the analysts said.

“EVs have 20 moving parts compared to as many as 2,000 in an ICV, dramatically reducing service costs and increasing the longevity of the vehicle,” the analysts said, adding that it estimated running costs for an electric vehicle can be around 10 percent of an internal combustion one.

“We see this as a meaningful risk for car dealers who rely on after-sales service for a large chunk of their profitability,” the note said. “This should over time reduce the number of vehicles sold as well, in addition to other potential trends, such as automated driving and greater car utilization rates.”

Read more: CNBC

Chery to launch its electric model offensive in Europe with compact SUV

Chery, Electric Cars, News, Reviews and Comment

Chinese giant Chery is to launch its next major attempt to break into the European market in September with the unveiling of a compact SUV at the IAA (International Motor Show) in Frankfurt in September.

It is to come with an ‘all-new nameplate’ that will spearhead the launch of a large upcoming model family across several segments on a new modular platform, all featuring some degree of electrification – from mild hybrid, plug-in hybrid to full electric powertrains, mirroring the much-lauded plans of rival Geely’s Volvo from 2019.

Chery is the largest all-Chinese car producer, selling more than 700,000 vehicles in 2016, including 100,000 in overseas markets, which made up 30% of China’s total car exports last year. Chery last attempted to break into the European market in 2007 via a 50-50 venture called Qoros with an Israeli company. Sales have greatly underperformed and the brand never made it to Europe.

The compact SUV to be revealed in September, spearheading Chery’s new brand for Europe and America, uses typical SUV lines, as revealed from design previews, which also show an interior with a large high-mounted infotainment screen as well as climate control switchgear.

Although Chery has not revealed the model’s target market, it is likely to be competing against mass-market SUVs including the Ford Kuga and Vauxhall Grandland X, as well as being in direct competition with Geely’s upcoming Lynk & Co brand, acquired alongside Volvo from Ford in 2010, which is launching in Europe in 2019.

This will be a major international re-launch for Chery, with the company announcing it will be opening dedicated European design and engineering facilities specifically for the model. It has not yet revealed which countries will see the vehicle first, nor has it been named. It will not use the Chery badge.

Similar to Lynk, Chery will be targeting young, trend-oriented customers in growing urban centres, focussing on high quality low-emission drive technologies, and instilling its models with emotion to improve margins.

Chery has sufficient existing production capacity to build the European model at its current production sites, which include four plants in China and ten international production sites. It is looking for local distribution partners to facilitate its European and American expansion.

Read more: Autovista Group