As a new and emerging market segment, the European e-vehicles1 sector may offer substantial opportunities for U.S. exporters. President Obama has set a goal to have one million electric vehicles on US roads by 2015. The EU has set an equally ambitious goal of getting 6 million e-vehicles on the road by 2020. Studies from the European Commission (EC) and other sources indicate that by 2020 e-vehicles will represent between 1% and 5% of cars sold annually in the European Market.
This brief provides an overview of the EU market for e-vehicles, highlighting recent policy discussions and the work of standards organizations, researchers and project developers. It addresses the current EU regulatory environment and how it may impact the development of the e-vehicle market, as well as U.S. and EU cooperation on harmonizing requirements necessary for interoperability.
Snapshot of EU Market for E-Vehicles
Reports on e-vehicle market share/expected growth are numerous, including from the European Automobile Manufacturers’ Association (ACEA), which writes that e-vehicles will hold a 3 to 10% market share by 2025 in the European Union. This will depend on the pace at which technological, infrastructural, and socio-economic challenges are addressed.
In 2011, 13.3 million vehicle registrations were issued in the EU.2 At the same time, e-vehicle sales totaled 11,563 in Western Europe in 2011, or about 0.09% market share. If such a trend continues it will be a challenge to meet the EU’s goal of having 6 million e-vehicles on the road by 2020 and a market share of 3 to 10% by 2025. The EU’s struggle to reach its own non-binding CO2 emission targets by 2020, however, may boost production and use of hybrid and e-vehicles.
Current EU Policy-Level Initiatives
Until recently, the European Commission (EC) has mostly instituted “soft” measures to propel the discussion, research, and development of e-vehicles. These have included a push for Public-Private- Partnerships (PPPs) and the engagement of a vast array of government and private sector stakeholders. At the European Union level, a number of different actors have been involved, including multiple Directorates General and European Parliamentary Committees. The following is a summary of the most relevant initiatives.
In October 2010, the EC re-launched its Competitive Automotive Regulatory System for the 21st century (CARS 21) as part of its new industrial policy. CARS 21 is now an official EC advisory group, which “sets out to define policies for a competitive EU automotive industry and sustainable mobility and growth in 2020 and beyond.” While the overall aim of this initiative is a European automotive industry that is sustainable and competitive, providing a framework for the development and market uptake of energy efficient vehicles is one of its main policy pillars. The CARS 21 advisory group is comprised of national government representatives, European Parliament representatives, European Commissioners, auto industry executives, environmental NGOs, and representatives from trade unions and consumer groups. Its policy covers all vehicle technologies, including electric vehicles and alternative fuels.
European Green Cars Initiative
The 2008 European Recovery Plan to boost demand, save jobs and help restore confidence included Research and Development Public-Private-Partnerships (PPPs) for the automotive sector. The European Green Cars Initiative is one such PPP. €5 billion were allocated to the initiative’s portfolio to assist the automotive industry during the economic recession through the development of new sustainable forms of road transport. In the area of electric and plug-in hybrid vehicles, the R&D focus has been on high density batteries, electric engines, and smart electricity grids and vehicle charging systems. To structure the dialogue with industry, Ad-Hoc Industrial Advisory Groups have been set up, involving representatives of stakeholders and Commission officials.
Within the European Green Cars Initiative is the “Green eMotion” project. This program is tasked with enabling “a mass deployment of electromobility in Europe.” Combining over 40 stakeholders – including the energy sector, academia, e-vehicle manufacturers, and municipalities – this initiative aims at developing and demonstrating “a commonly accepted and user-friendly framework consisting of interoperable and scalable technical solutions in connection with a sustainable business platform.” This four year project, which was launched in early 2011, has an operating budget of €42 million, of which €24 million is funded by the Commission.
Member State Incentive Programs for E-Vehicles
While the European Union is the leading actor on measures for sustainable energy use in road transport, member states initiate national actions. Several national governments have announced measures to stimulate the growth of their domestic electric vehicles market and some have indicated their plans to invest in e-vehicles through public orders.
Last updated in March 2011, ACEA published an overview of national incentives. For example, in Germany, owners of e-vehicles are ranked in the lowest emissions taxation category. E-vehicles are also exempted from the annual circulation tax (ACT) for the first five years. Similar measures exist in Portugal and the United Kingdom.
Opportunities and Challenges
E-vehicles are primarily being marketed for urban mobility needs using a single daily battery charge. Given European driving habits, most mobility needs could be satisfied by electric vehicles because average mileage is below 100 kilometers (62 miles) per day. The development and marketability of electric vehicles for non-urban areas is also important for progress in this field. The main challenges remain educating the consumer, as well as cultivating the necessary mental shift towards this new mode of personal transportation.
Developing the e-vehicle market depends on a charging infrastructure. The Commission intends to promote investment in infrastructure to develop the e-vehicle market with the help of the European Investment Bank (EIB). The Commission explained in its Communication COM (2010)186 that the EIB will find a way to “provide funding to stimulate investment in infrastructure and services build-up for green vehicles.”
An initiative like the Strategic Energy Technology (SET) Plan, under DG Energy, will also play a in the development of the European infrastructure. Its role is two-fold: 1) to increase research to reduce costs, improve performance of existing technologies, and encourage the commercialization of these technologies; and 2) to encourage activities related to the competitiveness of new technologies for renewable energy and energy storage.
An efficient, suitable, and well-planned infrastructure for electric and hybrid vehicles is an integral part of getting the public onboard with the switch to e-vehicles. Such infrastructure will ultimately involve the participation of all national level governments, as well as changes to their transportation policies.
Charging Modes and Charging Cables/Plugs
The infrastructure for charging e-vehicles connects the car with electric charging stations throughout urban areas as well as at private residences. Its technologies are separated by two dominant Modes and two dominant cable Types. Modes refer to the managed charging processes (smart charging), and the various types refer to the connected charging devices used for charging e-vehicles (the charging plugs and charging couplers). Both charging modes and charging cable types need to be covered under international standards.
In Europe, “mode 2” and “mode 3” are heavily endorsed by charging infrastructure developers. Mode 2 refers to the non-managed charging of e-vehicles (simply charging the vehicle, even at “peak” times of electricity demand), whereas mode 3 refers to the managed charging of e-vehicles, taking into account energy and load management to give the user and the electric grid the flexibility on the amount of voltage and time spent charging at home or at public charging installations.
For charging devices, there are two dominant European types that are designed to conform to the auto manufacturers’ inlet design (which is the plug contact point on the side of the vehicle). These types refer specifically to the physical cable and plug adapters between the e-vehicle and the source of electrical charging. Currently these are referred to as “type 2” (predominantly manufactured by German companies) and “type 3” (predominantly manufactured by French companies). While the major developers and manufacturers of this technology in Europe built either “type 2” (German) or “type 3” (French) charging structures, there is currently interoperability between the two, as car manufacturers must provide these adapters. This communication between electricity distributors (and grid developers) and e-vehicle manufacturers enables current and future owners of e-vehicles to switch between different charging modes while traveling internationally. The developments and trends in both charging modes and types are critically important for American auto manufacturers to keep in mind in terms of future market access potential.
There are two forms that a charging infrastructure can take: “slow charging” at home or “fast charging” with high voltage at public charging stations and battery exchange points. To avoid incompatibility among e-vehicle solutions, it is crucial to focus on standardization. To that end, in fall 2011, seven large auto manufacturers on both sides of the Atlantic agreed to develop one “combined charging system as an international standardized approach to charge electric vehicles in Europe and the United States.” Specifically, the automotive industry recommended that the use of the Type 2/Type 2 Combo be the common plug in public infrastructure across Europe. Regarding the physical requirements on the vehicles themselves (inlets), industry has agreed to use the same plug with new vehicle types beginning in 2017.here. 3 This overall common charging approach will ensure that the vehicles developed by Audi, BMW, Daimler, Ford, General Motors, Porsche, and Volkswagen will be able to connect to a charging station using one universally designed charging connector as well as one universal means of facilitating communication between the vehicle and the charging station. Since the agreement Chrysler has also joined this group. The press release from October 12, 2011, announcing the charging infrastructure recommendations and plans by seven US/EU auto manufacturers, can be found
Key battery issues are raw material cost and supply. On the cost side, the lithium-ion technology will have to become more affordable in the long-term. On the supply side, the ability of manufacturing infrastructure and capacity to produce this type of battery at the necessary volume will be a limiting factor for e-vehicle promotion. Nevertheless, it is expected that the lithium-ion battery technology will become the standard for electric vehicles as its production costs will continue to decline. Manufacturers, however, continue to further explore innovative charging/storage technology.