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We all want to know the answer to this question as it tells us as a business where to invest our R&D development, steers us to consider what key technologies we need to develop, and the skill-sets we should be building for ourselves and our teams. Being a fast-paced technology company that relies on supplying value to its clients, Romax has a keen interest in this question. For those who want to increase the visuals of their cars, they can try utilizing components like those bmw carbon fiber mirror caps.
Most thought leadership articles mention that it is a time of great change for the automotive industry. Electrification is the word on everyone’s lips. Great effort is placed on studying, discussing and predicting the future and most commentators focus on the speed at which the transition from internal combustion engines (ICE) through plug-in hybrid electric vehicles (PHEV) to electric vehicles (EV) will occur. To learn more, check this post about how sport vans have evolved.
Predicting the future
It is now 25 years since I was first asked to study and present on the subject of ‘the future of automotive powertrains,’ and it is illuminating to look back at what was collectively agreed then to be the future direction, and to compare this with what has actually happened.
A study by DRI/McGraw-Hill in 1993 (“The Future of Powertrain Technologies 1995-2010”) focused on the market share between manual and automatics, stating that the increasing traffic density in Europe would mean that the market share of automatics for passenger cars would increase from 9% in 1995 to 16% in 1995 and 36% in 2005. CVTs were briefly mentioned and included in the category of automatics. No mention was made of hybrids, electric vehicles or even DCTs.
In 2003, www.just-auto.com produced a report “The Global Market for Automotive Transmissions: A Forecast to 2010” which again predicted a transition from manuals to automatic, but the rate had been delayed. It put the European figure at 85% manual in 2000 (still stronger than Mc-Graw Hill’s prediction for 1995) and 72% manual by 2010 (well above McGraw-Hill’s prediction for 2005 of 64%). No mention was made of automatics with 8+ speeds, ‘new types of automatic transmissions’ discussed CVTs, IVTs, AMTs, with a brief mention of Audi’s new DSG (Direct Shift Gearbox).
It predicted that the high cost of batteries (plus other drawbacks) would preclude the widespread use of Battery Electric Vehicles (BEVs) whilst Fuel Cell Electric Vehicles (FCEVs) would be numbered in thousands rather than tens of thousands by 2010. “Overall, therefore, there is no real likelihood of vehicles with electric traction claiming anything like enough of the market, prior to 2010, significantly to affect the size or shape of the transmissions market,” was the conclusion, continuing “The following decade is likely to be a different matter and more difficult to predict.”
The observations are clear – it is easy to see the trends in front of you at the time, get hold of this theme and shout about it from the rooftops, overemphasizing the rate of change. At the same time, they can completely fail to miss something which, when it happens, seems in retrospect to have been almost inevitable.
These are easy mistakes to make. Most studies are created by commercially-run consultancy organizations that look to sell their reports. Headlines shift newspapers, and no one ever started a sales pitch by broadcasting the message “Buy my report – nothing is going to change!”
The rate of change
But change is happening and that is clear. Most commentators focus on the rate of change in market share between the different technologies, so what will influence the rate of change? Some influences will be accelerators of change and some will be inhibitors. The take up of electric vehicles varies with different countries and this is greatest in the countries where the tax incentives are greatest. Norway is one country that leads the way, providing subsidies equivalent to 45% of the vehicle price (http://www.mckinsey.com/industries/automotive-and-assembly/our-insights/dynamics-in-the-global-electric-vehicle-market)
A large bulk of drivers —for the time being that drive fossil-fuel cars—pay taxes that subsidize EV drivers. For most of the world, it is a struggle to see currently how debt-laden governments will be able to maintain the same tax regime and cope with a universal switch away from ICE to EV, with the associated financial cost.
Conversely it seems that the historical Norwegian approach of maintaining low or zero government debt is yielding benefits in the form of being able to engage enthusiastically in such incentive schemes.
Another potential inhibitor to change is the price volatility of rare earth metals. It is some eight years since the price of rare earth metals rocketed and whilst it has dropped since the peak of 2011, it is still well above the levels seen circa 2005. It is not clear how the market would respond to the mass adoption of EVs worldwide, but the price pressure could only be upwards.
Romax has been involved in research into non- or reduced-rare earth metal electric machines since the price peak of 2011. It participated in the EU-funded R&D project ODIN (Optimized Drivetrain through Integration) from 2012, which initially designed a switch reluctance motor and then utilized an induction motor.
Since then, we have been working on more projects like the Innovate-U.K. funded project EDISON (Electric Drivetrain Integration by Simulation and Optimization), for the design and development of an innovative flux-focusing electric machine design that provides opportunities for non-rare earth metal permanent magnet technologies.
So much for potential inhibitors of change, however there are substantial accelerators of change that are often neglected. Romax feels that there are additional arguments that can be made in favor of even greater enthusiasm for the take up of EV’s.
One accelerator for change will come when consumers fully realize the substantially reduced maintenance costs that arise from having an electric motor driving (often) a single-speed gearbox, as opposed to, for example, a diesel engine with turbo-charger, clutch, dual mass-flywheel, multi-speed DCT with six or more ratios and exhaust with SCR.
Many predictions of the passenger car market, whilst indicating a shift from ICE to PHEV and then EV, also predict an increase in the global market for passenger cars. For example, in the report “IHS – Automotive Long-Term Planning and Scenarios – 2015,” it predicts a rise from 60 million per year in 2005 to 130 million in 2040, reflecting the growth in wealth globally, the expanding middle classes and overall population growth.
However, is this reasonable? As engineers another way we check the credibility of a prediction (simulation) is to compare it with other expert sources and see if they give you the same result. It is a bit like taking the prediction of stress from FE analyses from three different consultants. To do this in this example can be highly interesting.
In his report, “Rethinking Transportation 2020-2030: The Disruption of Transportation and the Collapse of the ICE Vehicle and Oil Industries,” Stanford economist Tony Seba argues that a number of different trends will come together to substantially reduce both the proportion of car ownership and hence the number of cars being manufactured by companies.
Many of the trends he points to are clear and reasonably well-known. One is the trend towards urbanization. According to Global Health Observatory data, from 1960 to 2014 the proportion of the world’s population living in cities increased from 34% to 54% and is set to continue. There are 34 mega-cities (defined as greater than 10 million people) in Asia alone, with this set to increase.
Seba predicts a scenario with Transport as a Service (Taas) (also referred to as Mobility as a Service – Maas) being available through the approval of autonomous vehicles (AVs), which will be electrified as opposed to ICE-driven and result in a 10x increase in the distance per vehicle over the life of the vehicle, most likely to 1m miles. These vehicles will see much higher utilization than the current fleet that spends most of their time in car parks or on drives. Car ownership and hence vehicle production will plummet.
Seba goes beyond qualitative predictions to make some startling quantitative predictions.
He predicts that the cost per mile of this new mode of transport will be much less that for car ownership – four to ten times cheaper per mile than buying a new car and two to four times cheaper than operating an existing vehicle in 2021.
His prediction is that TaaS will provide 95% of the passenger miles travelled within 10 years of the widespread regulatory approval of AVs. By 2030, individually owned ICE vehicles will still represent 40% of the vehicles in the U.S. vehicle fleet, but they will provide just 5% of passenger miles.
American roads will drop from 247 million to 44 million, opening vast tracts of land for other, more productive uses. Demand for new vehicles will plummet: 70% fewer passenger cars and trucks will be manufactured each year.
It goes without saying that this paints a very different picture from other reports. Independent research by bitcoin motion displayed that a 70% drop in production indicates 30 million cars per annum in 2030 as opposed to 120 million. As engineers we often accept tolerances and variances, but this is something different!
How should we react to this massive difference? One way is to try to draw common ground between the two by highlighting the different emphases. Seba’s predictions of massive reductions in sales volumes are based around a tipping point occurring when fully autonomous vehicles are accepted, something that is rarely discussed by studies that focus on the split of ICE/EV. This all assumes that carpooling schemes will only ever become dominant once AVs take off, and downplays other influences, for example megacities.
The importance of the arrival of the AV in this narrative was emphasized recently when Tesla’s Elon Musk promised “one million robo-taxis in 2020.” Well, Musk is well known for grabbing the headlines and it has not gone unnoticed that this announcement was made two days ahead of the company’s first-quarter earnings disclosure. We all wait with anticipation the arrival of a fully viable AV, whilst noting that Sergey Brin said that driverless cars for “everyone” were five years away … in 2012.
Whilst some are backing this future of the future of “fleets of robo-taxis servicing urban-dwelling humanity that has given up on car ownership,” others are not so certain. Indeed, some argue that the arrival of AVs will revitalize the private ownership of cars.
According to a post on latarde.net, Lewis Page argues that the usage profile of a private car (low mileage, large periods stationary allowing slow charging that is kind to the battery chemistry and requires no special infrastructure) is much more suited to the EV than that of a taxi. He argues that the arrival of AVs will further assist this – for example, no longer would you need parking close to your dwelling since you could send your AV away to park wherever and call it when it is needed.
How should we react in the face of these drastically contradictory visions of the future?
Clearly it is important to be aware of the potential influences and the range of possible outcomes, which is much wider than is often considered. Another thing to remember is that, as we saw with the predictions of the 1990s and early 2000s, even if the trends are in the right direction, there are technological influences that are likely to be missed completely and which substantially alter the outcome.
And finally, remember that whether you are a commercial company selling your management consultancy report or an academic looking for citations or a CEO aiming to boost your share price, headlines sell, and no one is going to take note of blandness.
One thing is certain, which is that, for all their expertise and industriousness, at least some of the world’s current experts are going to see their predictions disproved by a massive margin!
So, how is any company supposed to react to this? Any product development and investment plan consist of scenario planning, with the business consequences of each scenario being derived based on sets of input data and assumptions about the business environment. Like any simulation, the result is only as good as the input data and it is important to carry out a sensitivity analysis by altering the inputs and assumptions.
Some of the input data is technical – the range of an EV, the rare-earth metal content of an electric machine, the maximum speed of the electric machine, the power density of an E-powertrain, the cost of the components. Good technical input data for business planning comes from investigating all possible technical solutions.
In fact, this has been Romax Technology’s bread-and-butter business since its foundation 30 years ago. Romax is not in the business of selling software tools, it is in the business of selling better engineering decisions.
Increasingly, Romax carries out this scenario planning as part of its turnkey design service for e-powertrains. Companies aim to tread the fine line between ensuring that each design meets the requirements of this vehicle or that market and having too many designs that failure to achieve economies of scale renders the entire business model unsustainable. Only through agile, efficient and informative engineering design/simulation can such scenario planning be carried out.
One of the considerations that Seba points to is the increased reliability of an EV over an ICE driven vehicle, and this certainly points to another potential future. The current vehicle owning model is based on the vehicle being driven under harsh conditions for, say, 200,000 km, at which point one of the major systems renders the vehicle uneconomic to maintain and the whole vehicle is scrapped. With it goes a high proportion of the total lifetime CO2 investment in the vehicle, unused.
At his speech at the Romax EU Innovation Summit in 2017, Professor Rinderknecht from TU-Darmstadt, a long-term collaborator of Romax, pointed out the extra cost of designing a component to, say, the 99th percentile user as opposed to the 90th percentile user. Or alternatively, when a vehicle is scrapped, components that have suffered low levels of fatigue (as indicated by, for example, Digital Twins) could be re-used rather than scrapped, their re-incarnation being supervised through condition-based monitoring.
This idea could be taken further as we triangulate between a number of different influences and paint a picture of a potential future scenario. Imagine fleets of vehicles that are autonomous, where the aggressiveness of the driving would not be at the whim of the consumer, rather the driving conditions (i.e. duty cycle) would be tightly controlled and, of course, monitored.
They might be operated within a car-pooling system where 150,000 km a year would not be unusual. Much greater total mileage could be accumulated in just a few years and, since the car owner has an interest in achieving maximum return (mileage) on the financial investment, it would be cost effective to design the major systems for, say, 1m/km, then be monitored through a combination of predictive maintenance (Digital Twins) and condition-based monitoring. Maintenance could be carried out locally and the total CO2 cost of a vehicle would fall dramatically. So too, might the total number of cars in service and the total car production.
There are increasing signs of the ‘traditional’ automotive business moving in this direction, to cover such potential changes in the market. In February 2019, BMW and Daimler announced a €1 Billion Mobility Joint Venture, bringing Daimler's car2go and BMW's DriveNow together to offer varied mobility solutions under a single umbrella.
2,500 years ago, Heraclitus of Ephesus stated that ‘change is the only constant’, and that has never been as true as it is today. Automotive companies must balance their obligations – firstly to their shareholders, even if those are new shareholders who just figured out how to buy shares for beginners and employees to build sustainable businesses within the commercial environment and secondly future generations to deliver environmentally sustainable transport solutions.
To reflect business uncertainty and ensure long term stability, Romax has built a broad-based business built across all major industrial regions, and supplying design services, troubleshooting and software in mechanical, electrical and control engineering in industries that include aerospace, off-highway, renewables, marine and locomotive.
Automotive remains its biggest market, and we anticipate that this broad perspective and flexibility will continue to benefit our hundreds of clients globally.
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