The European Automotive Industry Moves to a BetterPlace

What a difference two years makes!, it wasn’t too long ago that the European automotive industry was just about to enter the abyss, but government incentives during the economic downturn managed to save many car manufacturers and suppliers from going out of business. Car sales in the European markets provide a good indication of how quickly countries are recovering and how consumers are once again looking to spend their hard earned money. In addition to increased car sales there is an increasing interest in electric vehicles from both consumers and the EU commission who have just signed an initial project with BetterPlace to look at how a European wide charging infrastructure could be deployed.  With buy in from the EU commission I think we can safely say that electric vehicles will start to become more common place on streets across Europe.  Let me first provide a recap on car sales for May and why this is of significance to the future of the automotive industry in Europe.

In May, new car sales across Western European countries rose by 6.9 percent to 1.18million vehicles after very strong growth in Germany offset declines in other countries. German car sales increased by 22 percent to 304,543 vehicles last month, compared with the year before giving a 3.3million unit annualized selling rate for May, according to J.D Power Automotive Forecasting’s U.K office. This result reflects an economy that is helping lead the economic recovery in Europe and strong business and consumer confidence.

At the other end of the scale Spain saw their vehicle sales fall by 23.3 percent in May to 78,870 units, the eleventh straight month of declining sales since the Spanish government removed subsidies in July 2010. In the UK, new car registrations fell by 1.7 percent to 150,431 units and this represented the smallest decline since last July and mainly helped by improvements in business and fleet sales.

So in short J.D Power forecasts western European sales of just over 13 million vehicles for 2011, up a very small 0.6 percent on 2010 figures. Now this growth may appear very small but it is starting to allow the car manufacturers to re-invest their profits into their manufacturing plants, introduce new models and prepare for the future.  For example the UK automotive industry was buoyed by the fact that BMW announced a £500M investment in their UK Mini manufacturing plants and Nissan announced the investment of £100M in their UK Sunderland plant.

Now many automotive companies are being forced to prepare for the future by their local governments and in many cases they are being asked to invest in greener more fuel efficient vehicle technologies.  There were three very contrasting news items that I noticed in the past week.  Firstly today, TH!NK, the electric vehicle company went out of business.  In my mind this is a real shame as they were one of the first companies to bring out  a truly electric vehicle. Unfortunately they were way ahead of their time and the company was originally a division within Ford.  Ford at the time didn’t believe that the electric vehicle market would be very big and had limited sales success and so divested the operation in 2002.  With nearly every car manufacturer, including Ford, now investing in electric vehicle programs, TH!NK will have a very hard time trying to compete in the market.  Other companies such as Tesla have been able to steal a lot of the market interest in electric vehicles away from TH!NK.  It does make you wonder where Ford would have been today if they had retained and invested in the TH!NK Brand.

The second notable news item that appeared in the past few days was the Renault Nissan alliance announcing a $5.6 billion investment in their electric vehicle car program. Renault Nissan has had slightly more success than other electric vehicle manufacturers, namely with their LEAF vehicle, but they have only been able to achieve this through economies of scale and producing a vehicle that can actually be used in the real world. Some recent research highlighted that one of the key barriers to electric vehicle adoption has been range anxiety, for example drivers constantly watching their charging dial to see how many more miles they can drive. Nissan responded to this in Japan by launching a recovery truck that provided fast charging at the roadside! This investment by Renault Nissan in their future electric vehicle line up is great testament to their CEO Carlos Ghosn who believes that the electric vehicle market will one day be very lucrative.

The third significant news item to appear in the last week relates to a company called BetterPlace, a company I have discussed in previous blog entries and I have been watching them closely over the last couple of years as they provide the other key component to the future electric vehicle market, namely a charging infrastructure. GE was recently announced as a key partner to BetterPlace.

On 16th June the EU Commission announced a new project as part of their ‘De-Carbonisation’ infrastructure project, basically a project to setup a European wide electric vehicle charging infrastructure. BetterPlace has been chosen to head the €5M project which includes eight other partners. The project is designed to help de-carbonise the grid, a key policy initiative for the European Union. Six EU member countries will be involved with the first phase of the project, Denmark, The Netherlands, Austria, Spain, Belgium and Luxembourg.  The project has four key initiatives:

1.  The deployment of the first battery switch stations in Europe, one in Copenhagen and the other in Amsterdam

2.  Planning for a network of battery switch stations across Western Europe

3.  An inter-modal pilot for mobility services across electric cars and trains in Denmark

4.  A policy analysis and report on the conditions needed to accelerate the deployment of an open access electric car infrastructure of charging and switching stations across Europe.

Now this project is very good news, not just for BetterPlace and their charging/battery swap technology but also for Renault Nissan who have been working very closely with BetterPlace to perfect the battery swap technology.  Once again Renault Nissan’s vision for the electric vehicle market has helped to position them for future growth.

From a GXS perspective we are just starting to receive requests from companies who are looking to enter the electric vehicle market and who need help to co-ordinate the various and in some cases different B2B transactions that flow across the automotive and high tech supply chains.  These two industry sectors are certainly converging and GXS Trading Grid is very well positioned to help these industries follow through with their electric vehicle dreams.  I will take a closer look at the specific electric vehicle/charging infrastructure requirements and opportunities that we are seeing in a future blog entry.

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