OEM tie up with power industry puts heat on Tesla

January 13, 2017

BMW, Daimler, Ford and Volkswagen have agreed a collaboration with major power generation companies to provide scale and drive forward rapid electric vehicle charging networks.  

The OEM joint venture founded last November is joining forces with power and engineering companies including Germany’s E.ON, Innogy and Siemens and Portugal’s Efacec to build an extensive ultra-fast charging network for electric vehicles (EVs) across Europe.  It follows Renault, Nissan, BMW and Volkswagen Group Italia working with utilities in Italy and Austria on the EVA+ project.

The OEMs are pushing demand for electric cars as a means to meet increasingly tough emissions targets but also seek to reduce Tesla's recharging advantage in the market. The consortium will begin by building 400 rapid charging stations across Europe.  

Breeding overconfidence, Tesla chief operating officer Elon Musk hinted that it would fight back, deriding 350kW chargers as a ‘children’s toy’.  

As the market for electric vehicles grows, traditional carmakers are going to find it easier to compete with Tesla. So far, Tesla’s independence has given it more flexibility to invest in electric vehicles without having to provide substantial returns for investors. However, when the market begins to become mainstream – dependent on a charging network to support it – the larger carmakers will be in a better position to capitalise on the opportunity thanks to more extensive resources.  

The fastest chargers in widespread use in Europe so far are the more than 1,800 installed by Tesla. However, at 120kW, they require 30 minutes to give a car enough charge to drive 270km – still inconvenient for many and making charging impossible during a quick stop-off. They are also incompatible with existing EVs made by rivals.  

While Europe has nearly 72,000 EV charging stations, only about 5,800 of these are considered ‘fast’, according to the International Energy Agency, meaning many are avoided because they are simply too slow to practically provide a meaningful charge.  

European carmakers believe they are approaching the tipping point for a surge in demand for EVs, as joined-up emissions policy pressures and charging network growth push forward electric as a third mainstream option alongside petrol and diesel. Daimler CEO Dieter Zetsche expects electric vehicles to make up 15-25% of Mercedes sales by 2025.  

However, the problem with carmakers is that in the race to improve the range of electric cars, the batteries become ever higher capacity, putting pressure on charging times. Therefore, there is no guarantee that charging times will decrease. Samsung SDI, for example, has just revealed its new battery technology, which will be available in 2021, will be able to reach 80% charge and provide a 600km-range in 20 minutes. That means a 100% charge, while giving a longer range, is unlikely to be achieved in much less time than with Tesla’s current ‘rapid’ 120kW technology. Therefore, as possible range improves, some electric cars may choose to compromise on maximum possible range in order to allow for faster charging.  

The news comes as a new study predicts that by 2025, more than 68 million light-duty electrified vehicles will be in use globally, with over half (37 million) being plug-in electrified vehicles, as demand for hybrids continues to soften in favour of plug-ins. The study suggests light-duty plug-in vehicles may become cost competitive enough to surpass conventional vehicles in sales, even without needing incentives.

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