Automotive the way we see it

Electric Vehicles:
A Force for the Future
Collaboration – Inside and Outside the Automotive
Industry – Will Be Key to Electric Vehicle Development
 ‘‘ The electrification of the automobile is inevitable.
— Bob Lutz, Vice Chairman, General Motors1
The growth of electric- Bob Lutz is not the only one who sees
a bright future for electric cars. Most
powered vehicles will of the major automotive manufacturers
lead to a fundamental – as well as new players like BYD and
Tesla – are investing heavily in electric
shift in the existing vehicle design and manufacturing.
landscape in areas such Governments and other public sector
bodies from the U.S., France, the UK
as design and and other countries are making
significant investments in the
manufacturing, development of electric vehicles and
distribution and introducing various tax credits, incentives
and subsidies. In France, for example,
aftersales service, and the ministry of sustainable development
energy supply and recently launched a national plan for
the development of electric vehicles
infrastructure. and rechargeable hybrids.
Energy companies and other
industries have also set their sights on
electric vehicles. ExxonMobil, for
example, is sponsoring an all-electric
car-sharing and rental program, called
AltCar, at the Maryland Science
Center in Baltimore.2 French utility
company EDF is working with car
maker Renault on a recharge system
enabling communication between
recharge terminals and electric
vehicles.3 In Germany, Renault and
RWE, a leading European gas and
electric company, have partnered to
create a common transport and
recharge system for electric vehicles.
The U.S. Postal Service is studying the
feasibility of moving its fleet of
146,000 delivery vehicles to electric
vehicles.4 And consortia combining
different groups are working together
in countries like Israel and Portugal to
test various integrated models.
1 “Bob Lutz: The Man Who Revived the Electric Car,” http://www.newsweek.com/id/81580
2 “Exxon and Electrovaya Launch Car Program in Baltimore,” http://www.businesswire.com/portal/site/home/email/alert/?ndmViewId=news_view&newsLang=en&newsId=20090623005671
3 http://press.edf.com/the-edf-group/press/press-releases/noeud-communiques-et-dossier-de-presse/renault-and-edf-strengthen-collaboration-on-zero-emission-electric-vehicle-602317.html
4 “U.S. Postal Service: Electrification of Delivery Vehicles,” http://www.uspsoig.gov/FOIA_files/DA-WP-09-001.pdf
5 Cars Online 09/10, Capgemini (study spans the U.S., Western Europe and the BRIC countries of Brazil, Russia, India and China), 2009
1
’’
But most importantly, electric vehicle
development is being strongly fueled
by consumer demand stemming from
economic and environmental factors.
In Capgemini’s Cars Online 09/10
study, 41% of consumers said they
currently own a fuel-efficient and/or
alternative-fuel vehicle, up from 36%
the prior year. And another 30% said
they plan to buy a fuel-efficient and/or
alternative-fuel vehicle.
Hybrids Lead the Way
Electric vehicles, particularly hybrid
gas/electric cars, are the most
commercially mature and viable of the
various kinds of alternative vehicles
and have demonstrated the potential
to reduce fuel consumption and
exhaust emission. Gas/electric hybrids
are the primary type of alternative-fuel
vehicle that consumers currently own
or plan to buy.5
Hybrid electric vehicles still represent
only a small share of overall car sales
– estimated at about 1% in Europe
and 2% in the U.S. Sales of hybrid
cars, like all vehicles, have suffered
recently. Nevertheless, future demand
is expected to grow, particularly in the
U.S. and Japan, as prices of hybrid
and other types of electric vehicles
begin to drop.
By some estimates, global sales of
hybrid electric vehicles may surge at a
compound annual growth rate as high
as 12% over the next few years.
Developing markets like Brazil, India
and China are also expected to
contribute to this growth as they put
more focus on environmental issues
such as CO2 reduction.
 Automotive the way we see it

Global Hybrid Electric Vehicle Sales

somewhat, but it is still early in the
cost-reduction curve. Government-
sponsored programs in the form of
Sales (Global)
both consumer credits/rebates and
Number Sales
battery development incentives
4,000,000
provide some cost relief. However, the
3,750,000 price gap between gas-powered and
3,500,000
electric vehicles will need to shrink if the
mass market is to accept electric cars.
3,000,000
Our Cars Online research found that
2,500,000 consumers show some willingness to
2,100,000
pay for improved fuel efficiency.
2,000,000 However, most are unwilling to pay a
1,600,000 premium of more than 10%.
1,500,000

1,090,000 The existence of other alternatives:

1,000,000
Electric cars are not the only
700,000
alternative-fuel vehicles on the
500,000 390,000
195,000 230,000
market. Other options like ethanol
55,000 110,000
5,000 20,000 30,000 and gasoline/ethanol flex-fuel vehicles
0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009F 2010F 2020
have grown in popularity in some
Forecast countries. For example, in Brazil, 22%
• Sales expected to surge at a CAGR of 12% during 2008-2015 of consumers said they currently own
• Hybrid car sales in the U.S. market are likely to cross 1 million by 2012
• Hybrid vehicle production in Japan is projected to hit a CAGR of 6.6% from 2008 to 2011 or plan to buy an ethanol or flex-fuel
car, the highest among the countries
Sources: Capgemini analysis; “Global Hybrid Car Market Forecast to 2010,” RNCOS surveyed in Cars Online.

Ecological value: While the general

perception is that electric vehicles are
more environmentally friendly than
Addressing the Challenges development of a recharging those powered by combustion
Although there is considerable infrastructure. The current low engines, the actual ecological value is
interest in electric vehicles, a number distance capability and frequent questioned by some. For instance,
of challenges must be addressed if recharging necessitates a significant environmental concerns may be raised
widespread acceptance is to be number of charging points, which will if a vehicle consumes electricity from
achieved. require considerable planning and a coal-fired plant. Other factors such
investment. as the recycling of used batteries may
Performance of batteries: The also impact the ecological equation.
industry must solve issues such as Market acceptance: Current electric
low distance capability, recharging vehicles do not yet meet consumer Technological maturity: Electric
duration, battery weight, short expectations regarding speed, power, vehicles are a late entry into the
lifecycle and the high cost of batteries. performance, recharging capability, automotive market and, as such, the
distance and, especially, price. standardization of components,
Infrastructure investment: The technology and test methods is not yet
development of the electric vehicle Price: Prices of new electric hybrid mature.
is dependent on the parallel vehicles have begun to drop

Electric Vehicles: A Force for the Future 2

 What Do We Mean by ‘Electric Vehicle’? Despite these challenges, there is no
lack of investment in electric vehicles.
The continued volatility in oil prices,
In a general sense, electric vehicles are powered by electricity to some degree or another. growing focus on ecological issues
However, there are a number of different types of electric vehicles, including but not and the ongoing improvement of
limited to: technologies should lead to an
■ Gasoline/electric hybrid vehicle: has both a gas and an electric motor, and is based increasingly favorable environment
on two energy carriers: liquid and battery. A gasoline/electric hybrid vehicle typically has for electric vehicle sales.
a limited electric range. The electric propulsion can be mobilized for short urban trips,
but the true utility of the electrical energy is to serve as a boost for the gas engine. The Development Scenarios Will
electricity is produced in the vehicle (recovery through regenerative braking); these Depend on a Range of Factors
vehicles do not need to be recharged. The development scenarios for electric
■ Rechargeable hybrid vehicle: also called a plug-in vehicle. This is a primarily electric vehicles will depend on technical,
vehicle that also has a small combustion engine. Typically it can be used at 100% political and energy considerations.
electric power in the city with a distance capability per charge of approximately 50 km. Capgemini expects two scenarios to
Electricity must be provided by the electric network grid. This type of vehicle does not rise to the forefront over the next few
require complicated recharging terminals; existing electrical outlets in most public and
years:
private parking areas may be sufficient.
■ Fully electric vehicle: 100% electric vehicle without any type of heat engine. A pure Market specific: In this scenario,
electric vehicle requires prior creation of an infrastructure for recharging batteries.
electric vehicles will hold a
Currently the distance capability per charge of a pure electric vehicle is still low (about
measurable market share in certain
200 km) and the cost is high.
regions and for specific uses (like
urban mobility, sport vehicles or
private company fleets). The technical
maturity will be present, however the
lack of consultation and cooperation

“ I think we will start seeing an awful lot more cars

available in electric form. And greater pressure will be put
on drivers to be more green aware.
among market players in areas such as
infrastructure and standards will
adversely affect development on a

UK consumer, Cars Online 09/10

” broader scale. In this scenario, the
development and dissemination of the
electric vehicle will occur through
specific segments such as commercial
fleets. In addition, a higher-income
socio-professional category of
consumers will help drive the
development of electric vehicles.

New model expansion: In this

scenario, electric vehicles will hold a
more substantial market share. The
social consensus and the organized
convergence of infrastructure and
standards will result in a strong and
lasting market for electric vehicles.
This scenario will be dominated by
new business models and a new
vision of vehicles and mobility.

3
 Automotive the way we see it

Development Scenarios for Electric Vehicles

Scenarios A. Limbo B. Market Specific C. Classic Expansion D. New Model

2020 Expansion

New vehicle, % market

share (e.g., France) • 1% = 20,000 • 5% = 100,000 • 15% = 300,000 • 15% = 300,000
Electric vehicles % of
global market • <0.3% = 100,000 • 1.7% = 500,000 • 5% = 1,500,000 • 5% = 1,500,000
Dynamic in 2020    
• The dynamic is • The technical • The electric vehicle • The social
not built maturity is present has made such consensus, the
but the lack of progress that it organized
Political consultation and replaces the convergence of
cooperation has gasoline vehicle infrastructure,
adversely affected without great standards, regulated
the development change or modes of and deregulated
mobility vehicles or operators trigger a
business model lasting market
• Progress of electric • Progress of electric • Progress of electric • Progress of electric
Technical vehicles  vehicles  vehicles  vehicles 
• Progress of gas 

Energy • Price of energy  • Price of energy  • Price of energy  • Price of energy 
• Carbon tax • Carbon tax

Segments • Some fleets and • Fleets, Autolib, • Open • New business

Autolib* (e.g.) cargo and urban models, new vision
mobility, CSP**, of vehicle, new
sport mobilities
• Owner • Owner • Owner • Owner
Charge • Some urban public • Online standard • Online standard
Discharge terminal terminal network terminal network
• Vehicle to grid • Vehicle to grid

Source: Capgemini
* Autolib (Automobile Liberté) is an electric car-sharing plan in Paris
** CSP = Socio-professional category of consumers with higher incomes
Dynamic in 2020: Arrows refer to “unchanged,” “changed” and “changed considerably”
Technical Scenarios 2020: Arrows refer to the degree of progress, with a greater number of arrows indicating greater progress
Energy Scenarios 2020: Arrows refer to the anticipated increase in energy prices, with a greater number of arrows indicating higher price increases

Capgemini anticipates that electric vehicle

We anticipate that the market-specific
scenario will be the most realistic path
for electric vehicles as it is more
evolutionary in nature. The new
model expansion scenario is more
revolutionary and would require the
convergence of all players around a
number of key dimensions, including
technology, infrastructure for recharging,
tax and regulation, evolution of users,
and the development of the
industrial/manufacturing capability.
if there is significant government development scenarios B and D are the
intervention in terms of subsidies and most likely future models, with B being
investment, brought about by growing the most realistic path.
concerns for the environment and for
long-term oil supplies.
Changing the Landscape
As these development scenarios play
out, the growth of electric vehicles
will raise a number of critical
questions:
■ Will traditional players (vehicle

This second scenario will only happen manufacturers, suppliers, energy

Electric Vehicles: A Force for the Future 4


companies) be able to maintain their
dominant positions?
■ Will new players be able to design
viable products and strategies to gain
market share?
■ Will new aftersales players design
and implement new business
models?
■ Can business – and potentially
government – define and develop
the standards and infrastructure
necessary to provide the power
supply for electric vehicles?
■ Can companies and governments
optimize the management of
electrical energy needs?
The answers to these questions will
underlie a fundamental shift in the
existing landscape in areas such as
design and manufacturing,
distribution and aftersales service, and
energy supply and infrastructure.
Traditional and new players will need
to consider the potential impact of
this emerging market on their
business.
Traditional manufacturers will need to
define their strategy for positioning
the different “clean” vehicle
technologies and rethink their design
and manufacturing capabilities as well
as their supply chain. Automotive
suppliers will need to adapt existing
products and develop new products to
suit electric vehicles, while new
suppliers with purpose-built products
will enter the market.
Traditional car dealers, service
providers and spare parts vendors will
need to adapt and transform their
activities to serve the electric vehicle
market. Gasoline and tanker
companies will need to manage the
5
“ I will purchase an alternative-fuel car as I am very
concerned about the environment. But I hope that prices
will come down as it will encourage others to purchase
this type of vehicle as well.
U.S. consumer, Cars Online 09/10
”
transition to a new power source that well as broad and proven experience
will reduce the traditional heart of in automotive strategy, process,
their business. And large utilities will infrastructure and retail. We use
need to take into account the potential proprietary approaches such as our
impact on the grid, new rate Accelerated Solutions Environment
structures and new types of services. (ASE) to harness high-performance
group creativity and collaboration to
At the same time, new players, achieve buy-in and build solutions in
including vehicle and battery record time, particularly relating to
manufacturers, will need to master the emerging technologies and business
technology development and models. According to one vehicle
scalability needed to serve the mass manufacturer, the ASE approach
market. Mobility service providers and helped the company “…achieve in
car rental companies will also need to three days what would have taken four
adapt their business models for this years of NetMeetings and thousands of
new market. PowerPoint slides to accomplish.”
The development of a significant
market for electric vehicles will likely
give rise to the need for a new
network of charging points that could
include traditional gas/petrol stations
as well as other players with a large
number of physical locations. This
could include big fast-food operators
such as McDonald’s or retail chains
like Walmart.
Conclusion: Collaboration Is
Key to Electric Vehicle
Development
Electric vehicles have the potential to
be a market-changing force. However,
the continued development of this
business will require collaboration
both inside and, more importantly,
beyond the automotive industry.
Parties including vehicle
manufacturers, suppliers, dealers,
other retailers, consumers,
electric/utility companies and
governments must all be aligned.
Capgemini has the supporting tools
and methodologies to help bring
together these key stakeholders in the
emerging electric vehicle business, as
 Automotive the way we see it

About Capgemini and the

Collaborative Business Experience

Capgemini, one of the called Rightshore®, which aims to get the

world’s foremost providers
of consulting, technology and outsourcing
services, enables its clients to transform
and perform through technologies.
Capgemini provides its clients with
insights and capabilities that boost their
freedom to achieve superior results
through a unique way of working, the
Collaborative Business ExperienceTM. The
Group relies on its global delivery model
right balance of the best talent from
multiple locations, working as one team
to create and deliver the optimum
solution for clients. Present in more than
30 countries, Capgemini reported 2008
global revenues of EUR 8.7 billion and
employs 90,000 people worldwide.
More information is available at
www.capgemini.com

For more information, please contact:

Gord Reynolds
Energy & Utilities Practice
Smart Energy Services
Global Operational Services Lead

+1-416-732-2200
gord.reynolds@capgemini.com

© 2009 Capgemini. All Rights Reserved. No part of this document may be modified, deleted
or expanded by any process or means without prior written permission from Capgemini.
Rightshore® is a trademark belonging to Capgemini.