By Anuj Monga and Pranav Nair
New automotive ecosystems are emerging globally as a result of connected autonomous shared electricity (CASE) megatrends, transforming the aftermarket in the process. The traditional sources of revenue generated by internal combustion engine (ICE) vehicles are set to be depleted. However, electrification will flood new growth opportunities related to plug-in hybrid (PHEV) and battery-powered electric vehicle (BEV) services. The emergence of new demand pockets will force existing companies and recent entrants into the aftermarket to design appropriate electrification-led business models.
One of the biggest constraints on increasing adoption of electric vehicles in most markets is battery range concerns. This makes this transaction look like a trade-off between traditional drivetrain vehicles and electric vehicles. Therefore, addressing this challenge has become essential, and market participants have begun to explore different business models.
Some of the most popular models include providing efficient mobile or home charging solutions. This creates room for different participants to enter the space and operate with their own value proposition.
As regulations require market participants to ensure safe disposal of dead batteries, some of the other business models for end-of-life battery management have emerged as a need.
4 major demand pockets
The latest research identifies four key demand areas: battery life management, fleet battery replacement, mobile direct current charging, and retailing of Level 2 Electric Vehicle Supply Equipment (EVSE) that offers healthy growth potential. increase.
Battery life management with a focus on reuse and recycling, and Ride Hailing Fleet modular battery replacement, require huge up-front investments to expand operations.
However, app-based on-demand DC fast charging (FC) and direct sales of Level 2 EVSE to consumers to address range anxiety provide easier goals to achieve.
Revenue and growth opportunities
Our estimates are that the scale of revenue opportunities in North America alone is $ 2.1 billion for Level 2 EVSE retail, $ 792 million for battery life management, $ 975 million for mobile DC charging, and $ 3 for batteries. It could be $ 447 million. Replaced by the end of 2030.
In India, opportunities may be relatively small, but concerns surrounding India’s high fuel import bill, worsening air quality levels, and rising fuel costs are still a preference for personal mobility to electric or hybrid options. It represents an opportunity worth taking advantage of as it gradually fine-tunes. Sensing this, OEMs are diversifying their EV portfolio and consumer-available model choices to drive EV adoption.
Based on trends, battery life management and mobile DC charging are expected to be key areas of focus for independent aftermarket (IAM) participants.
In 2020, about 13,302 EVs were sold in India, compared to 375,000 in North America. In North America, a cumulative waste lithium-ion battery capacity of 19.4 GWh is expected by 2030. Participants have taken one of two approaches to managing the life of this capacity. Each of them requires different levels of scale and investment.
The first is battery recycling, which extracts important raw materials from dead batteries and introduces them into the new battery supply chain. The second is battery reuse as part of second-life use in both automotive and non-automotive applications.
In India, with the country’s renewable energy ambition to install capacities close to 450 GW by 2030, the possibility of deploying used EV battery capacity for non-automotive purposes becomes even more important. Deployments of this scale create a demand for costs. -An effective stationary storage solution that EV retirement batteries can provide.
As part of its sustainability initiative, Tata Chemicals is already active in the field of lithium-ion battery recycling and is currently focused primarily on batteries extracted from consumer electronics. The company plans to use the obsolete EV as an operational battery source after EVs have become mainstream and have produced sufficient quantities.
Most of Gravita India Ltd’s current business, a market leader in the field of battery recycling in India, is from lead-acid battery recycling. We are currently looking at EV battery recycling opportunities and expect to be a viable source of revenue by the end of the decade.
All signs show the fact that public direct current fast charging (DCFC) infrastructure cannot keep up with the dramatic growth of PHEV / BEV vehicle parks. This provides B2C mobile DCFC providers with an important and profitable business opportunity of billing as a service, and off-peak billing keeps replenishment costs low.
Almost 70% to 80% of PHEV / BEV charging needs can be addressed by residential charging. Therefore, we believe that the sale of Level 2 EVSE will provide a profitable business opportunity for home consumers to move to faster charging equipment such as Level 2.
Battery replacement for fleet applications will be another area of growth in the future. Shared Mobility Operators are heavy annual vehicle mileage (VMT) generators that average over 30,000 miles per year. Frequent use combined with the negative impact of repeated DCFCs on battery life underscores the appeal of modular battery replacement as a viable fast-charging solution to meet fleet needs.
A 2018 NITI Aayog survey on trends in shared mobility in India predicts that cumulative vehicle mileage will decrease by approximately 27% in high-sharing scenarios (those where shared mobility solutions such as Uber and Ola are often adopted). Normal business scenario by 2034 (scenario where recruitment level remains current).
Meanwhile, players using ride-hailing services such as Ola and Uber are pursuing aggressive fleet electrification plans as environmental, social and corporate governance themes become more widespread. Therefore, as urban mobility becomes more and more shared and electric, battery replacement is expected to be favored among shared EV drivers and provide service providers with economies of scale.
Another area of growing OEM interest is the refurbishment of all vehicle batteries, including the recovery of usable EV batteries from totally damaged vehicles. This provides opportunities for growth and minimizes stress on the now gradually evolving battery waste management ecosystem.
5 growth areas
Aftermarket participants also need to rethink their strategies for replacing EV components. The expertise required to manufacture EV components that integrate with the vehicle control system is the protection of the OE channel, which indicates that the IAM channel pays attention to the remanufacturing of faulty parts that are not covered by the warranty.
Along this line, Frost & Sullivan’s research highlights five key areas of opportunity for aftermarket exchange. they are:-
- Failure of the PHEV / BEV e-compressor creates an opportunity to replace it with a new / recycled part.
- Replacing the PHEV integrated starter generator (ISG).
- Replacing power electronics components such as integrated inverters and DC-DC converters. The heat and wear associated with the high switching frequencies of EVs compromises long-term reliability.
- Battery Replacement — Repeated charging will significantly reduce the energy storage capacity of the EV battery. When the original battery capacity drops by 25% to 30%, it can no longer be used in automotive applications and will be replaced with a larger capacity rechargeable battery.
- Replacement demand for drive motors and reducers.
The adoption of PHEVs and BEVs will create a range of new demand pockets and business opportunities for existing and new entrants in the aftermarket value chain.
The potential for aftermarket prosperity and growth in the new era of electric vehicles is real and enormous. This includes consumer preparation to convert traditional ICE to hybrid / EV variants in do-it-yourself (DIY) mode and do-it-for-me (DIFM) mode, private EV mobile services, EV Includes an upgrade of the dealer infrastructure to ensure readiness. Sales, services and smart solutions focused on EV fleet tire life optimization technology.
Aftermarket stakeholders need to identify these early opportunities and leverage them in targeted, electrification-driven strategies.
(Disclaimer: Anuj Monga, Associate Director of Mobility Practices at Frost & Sullivan, wrote this article with a contribution from Pranav Nair, Senior Research Analyst for Mobility Practices at Frost & Sullivan. The views are personal. )
How hybrids and EVs generate new revenue streams in the aftermarket, Auto News and ET Auto
Source link How hybrids and EVs generate new revenue streams in the aftermarket, Auto News and ET Auto