Increasingly Electrified Automotive Market To Propell Wire & Cable Industry
21 Jan 2020
According to the German Association of the Automotive Industry (VDA), electric vehicles are suitable for the market. A “young, still small market with high dynamics” has developed around e-cars - even though vehicles with combustion engine technology currently still dominate the global automotive market. Suppliers of the wire and cable industry are already picking up speed and see e-mobility as an opportunity.
“The market potential is enormous,” Wafios emphasises. “Accordingly, the forecasts are positive.” For this reason, e-mobility became the focus of the company's attention already some years ago. “Technical triggers were enquiries from the automotive sector, both on the OEM side, supplier level and in the equipment sector about three years ago,” explains the supplier of machines for bending wire and tubes. E-mobility picked up speed.
However, the industry is still “clear and concentrated on a few market participants”, explains Wafios. According to AlixPartners Global Automotive Outlook 2019, the global market share of electric drive units in terms of vehicles sold amounted to 2.7 per cent in 2018. A share that is clearly expandable, which is shown by the growth rate of the e-drive of more than 65 per cent. Thus, according to Outlook 2019, the market is speeding ahead “in the irreversible market run-up”.
Faster than expected
According to the VDA, electric mobility is coming faster than many expect. One reason is, for example, the tightening of regulations and the improved incentive systems for electric mobility in order to reduce CO₂ emissions. For example, there will be no new registrations for conventional drives in Norway from 2025 - the sale of electric cars will be promoted with massive tax incentives. The Netherlands, Ireland and Israel want to use only emissions-free vehicles from 2030. A sales ban on combustion engines is planned from 2040 in Great Britain and France. In the USA some states, such as California, plan to permit only emissions-free cars from 2040. In order to get their act together, suppliers have to target these figures.
Globally, a drastic increase in hybrids and electric vehicles can be expected between 2020 and 2025. The VDA predicts that “by 2030 a production share of electrified vehicles of 60 per cent or more worldwide is likely”. China will be a pioneer here - every third vehicle could be fully electric by 2030. In Western Europe, the share could rise to 25 per cent due to stricter regulations and driving bans. According to the association, a breakthrough in Africa and South America is not to be expected so soon. For Japan, Korea and North America, a share of hybrid vehicles of around 80 per cent would be conceivable. The car world is electrified - a realistic view.
Car manufacturers and automotive suppliers must therefore make massive investments: The AlixPartners Global Automotive Outlook 2010 reports that at least 202 billion euros will have to be spent globally over the next five years to master the technological change to the electric drive and the development, production and marketing of up to 300 planned new e-vehicles. “The level of investment is still out of all proportion to demand,” says Dr Elmar Kades, Global Co-Lead Automotive and Managing Director at AlixPartners. At the same time, the current and expected weak sales development for the next few years will increase the short-term pressure on the margins and cash flows of the suppliers, Kades continued. Weak sales and massive investments therefore coincide.
Even though the situation is challenging, the wire and cable industry remains optimistic. “Electrically powered vehicles promise higher sales for our company because more or higher quality cables are needed,” explains Leoni. Hybrid vehicles, in particular, which contain both an electric and a combustion engine, require a higher product share from the company.
High-quality cables are required in various areas of the electric car: In the charging cable from the charging station to the vehicle system and from the charging connection to the battery. Lines finally transport the electricity via the inverter to the electric motor. The internal wiring supplies other high-voltage components, such as air-conditioning compressors or electrical heating, with energy. Electrifying outlook...