THE GLOBAL SHIFT TO E-MOBILITY AND ITS IMPACT ON E-AXLE MARKET OPPORTUNITY
The car manufacturers around the world have committed upwards of $200 Billion worth investment over next 5 years for developing electric and electrified vehicles. Where most of the investment will go in sourcing reliable battery supplies, developing an all new BEV platform, a substantial investment will also go in for powertrain development (motor, transmission, power electronics etc).
After putting all this investment, and letting go of the all that cutting edge ICE(internal combustion engine) technologies developed over past 100 years, one really wonders, how does it benefit the auto industry. We look at some of the points below.
- Higher profit margins EVs need far lesser time and components on assembly line. Once battery prices come down to <$100/kWh, uncertainty over battery manufacturing and sourcing settles down, the profit margin on them will be at least 20-25% more than a comparable gas-powered vehicle
- Fewer recalls- Inconsistency in precision manufacturing has resulted in massive number of recalls and related deaths around the world resulting in various lawsuits, ultimately reflecting on OEM`s balance sheet and consumer satisfaction. BEVs will have much lesser moving parts, lesser precision- engineered sub-components and hence less chances of failure and recalls.
- No worries about future emission regulations- Over the past 10 years the incremental cost of equipping cars with “clean technologies” has kept the auto industry on its toes. BEVs will be”emission-legislation proof” for lifetime
- Simplified and easily scalable powertrain- A car could have one or multiple electric motors(AWD), catering to various consumer sets. In gas powertrain, it would need more cylinders, better fuel injection, low friction moving parts and equally capable exhaust treatment to keep emission in allowable limits.
The conventional auto power train suppliers who have manufactured pistons, crankshaft, fuel injection assembly, exhaust system for decades will have to look elsewhere for compensating for revenue loss.
Now when we talk of BEV powertrain, electric traction motor (Permanent magnet synchronous) coupled to a single speed transmission is the most obvious choice due to low cost and simplicity.There are a few exceptions like GAC AION and Sono Motors sourcing e-axle/complete e-drive unit from Nidec and Continental respectively, but even together they make up for less than 4% of global BEV production in 2019.
When we look at the global vehicle electrification, there is a big opportunity in the growing SUV market? SUVs(of all shape and size) have been growing every year post 2010 and now account for ~35% of global vehicle sales as compared to 22% in 2013. The growth is yet to slow down and they are the most profitable segment for car manufacturers.
Developing an all new Electric SUV platform will take time, capital and letting go of current platforms which are already quite successful in attracting customers and return decent fuel economy (thanks to light weighting and fuel-efficient powertrains). The easiest way out is offering a PHEV (Plug in-hybrid variant) of the SUVs. Now how to get the AWD feature without altering the platform- add an E-axle with 10-14kWh battery pack. It will not only result in electrified powertrain but also reduce weight, emissions and improved AWD response.
KEY criteria for E-axle adoption by OEMs
The top 5 vehicles with E-axle right now
E-axles are not just a great fit for SUVs, there is also a market for E-axle in electric transit buses and regional haul trucks that run for 150-250kms a day.
In CVs, the axle is one of the most important components in the vehicle architecture, which can increase/decrease the fuel economy depending on its weight and efficiency. The London Electric vehicle taxi in UK, Mercedes E-Actros, Peterbilt Class 4-6 trucks in US, which feature an e-axle from GKN,ZF and Meritor respectively are some of the examples.
Cost-breakup of an E-axle
Now, lets look at some of the competing technologies for E-axle.
E-axle competing technologies
The motors are packaged as a complete wheel hub, with disc or drum brakes, motor, bearings, mounted on suspension.
Pros- It can help automakers offer a lot of room inside the car with a relatively small footprint. Nidec (a prominent e-axle supplier) is already aiming to mass produce a 100kW version to be fitted inside 20-inch wheels by 2023.
Cons–One of the biggest reasons why we do not see production electric cars with in-wheel motors is that wheels take a lot of abuse in everyday driving which can affect the performance and reliability. Additionally, adding motors in all 4-wheels adds cost.
ZF, Jatco, Aisin and Toyota and have developed hybrid transmission(RWD application, better suited for SUVs) which have an electric motor inside transmission casing for all electric drive.
Pros- They are already in production and can be added to the vehicle without making much of architectural changes
Cons– High cost remains a major barrier .Since most of the hybrid transmissions developed By ZF are for RWD application they are better suited for premium segment(German Diesels and >2L gasoline engines).Whereas, the FWD hybrid transmission developed by Aisin and Jatco(FWD) are better suited low torque aplications.
Conclusion- So, where`s the e-axle market opportunity
- Many reports have claimed that BEVs in China are the biggest application for e-axles, which is completely inaccurate. The PHEV segment is the growth driver of E-axle market globally and especially in Europe, where they accounted for 55% of EV sales, compared to 22% in China and 28% in US in 2018
- Europe is the biggest and most matured market for European luxury car OEMs accounting for 35% of their sales by volume but 45% by value, indicating higher average transaction prices than China, which explains higher E-axle fitment there, globally.
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