Electric Cars of the East, Part 3: Let's Get Technical
A Deeper Look at the Segmentation within the EV market in the East
In Part 1 of this series, we traipsed around the automotive history of China and India: two nations steeped in more history and culture than the entirety of Western Civilization together. In Part 2, we looked at underlying factors behind their “stories”. In this Part, we’ll merrily take apart the notion of the “EV” and start to answer what it stands for when it comes to these two rival powerhouses.
In the previous entry (i.e. Part 2), I mentioned the value in keeping in mind the idea of the “median income” when it comes to the subject matter. I also mentioned that two the difference in interest rates also has a likely effect on the “growth story” of the automotive sector. I also mentioned that, going by the Top List of models sold in 2019, “cost is king” when it comes to India.
However, to contextualize the subject matter further, let’s first consider the “unassailable fact” that that China is the world’s leader in EV sales. Many a mainstream publication, be they digital or *shudder* paper, repeat this fact loud and clear, over and over. However, what many an esteemed contributor or columnist fail to notice is that China refers to this segment of the automotive market not as “EVs” but as “NEVs” (New Energy Vehicles). Furthermore, NEVs are broadly split into “Battery Electric Vehicles” (BEV) and “Plug-in Hybrid Vehicles” (PHEV) categories.
A Quick Primer on NEV Categories
To understand the category, lets start with the basics:
A “Hybrid Electric Vehicle” (HEV) uses the combined efforts of both the fossil fuel-burning Internal Combustion Engine (ICE) and a battery-powered electric motor to drive the vehicle. They don’t need to be plugged in to a power source. Instead, the battery onboard is charged through regenerative braking and by the internal combustion engine.
“Regenerative braking” is an energy recovery mechanism that slows down a moving vehicle or object by converting its kinetic energy into a form that can be either used immediately or stored until needed. It is, by no standard, a new idea: the first true application of this idea was in General Electric's experimental 1936 steam turbine locomotives.
In automobiles, it was used for the the first time in the Amitron subcompact electric concept car, unveiled in 1967 by American Motors. This tiny car was powered by a combination of nickel-cadmium and lithium-nickel-fluoride batteries, the former for quick power delivery on acceleration, the latter for maximum energy storage for sustained cruising. It used regenerative braking to recapture energy and recharge its battery on deceleration. The result: a sustained range of 150 miles (a little over 240 km) at a speed of 50 mph (a little over 80 kmph). However, the Amitron was not put into production and the company quietly vanished into the night.
Regenerative braking was then implemented - and quickly discarded shortly afterwards - under the technical descriptor “Kinetic Energy Recovery System” (KERS) in the 2009 Formula One Season. Four teams used it at some point or the other during this season: Ferrari, Renault, BMW, and McLaren. The reason for it being discarded was attributed to the shifting of the center of gravity in F1 cars, thus reducing their speed (and F1’s raison d’etre).
However, in 2010, Jaguar Land Rover (JLR) - as part of a consortium including Ford and a few engineering companies - continued to work on the adapting this technology to road cars. In 2012, it appeared in the VW Golf Mk7. In 2013, it was made an integral part of the limited-edition million-dollar supercars Ferrari LaFerrari, Porsche 918 Spyder and McLaren P1. It soon became standard practice to include this technology in all supercars and, subsequently, electric cars.
How It Works, Specifically: In a HEV, the electric motor drives the wheels, in conjunction with the ICE. As you drive forward, the motor runs in that direction, supplying electric power to the wheels. But when you take your foot off the throttle, the electric motor stops supplying power to slow the vehicle down. When the motor stops, it immediately disengages, and then starts running backwards. However, it doesn’t reverse the wheels; instead, it acts like a generator. It captures the kinetic energy from the wheels as they slow down, and converts it into electricity. It’s then stored in the battery and the cycle repeats.
A “Battery Electric Vehicle” (BEV) typically doesn’t have an ICE, fuel tank, et al and relies only on electricity for propulsion. Unless, of course, a gasoline-powered generator is included as seen in the likes of the BMW i3 to give the driver a little breathing space to get to the charging station.
A “Plug-in Hybrid Electric Vehicle” (PHEV) is a peculiar beast that lies somewhere between a HEV and a BEV. It works like a HEV but comes with a bigger (higher capacity) battery that cannot be charged solely via the on-board generator; it needs to be plugged into an outlet/charging station. A PHEV can run anywhere from 25 to 80 kilometers solely on stored battery power. Once that’s used up, it goes back to being a HEV until the battery is charged fully again.
In summary, while modern-day usage typically lumps all three types into the the catchall term “electric vehicle”, when it comes to being an actual electric vehicle, you aren’t “cooking with gas” unless it’s a BEV (well… HEV and PHEVs do, in fact, literally “cook” with gas but they don’t fit the intentions behind that expression…. uh, I give up. Ignore this summary).
A Quicker Primer on NEDC
Almost all carmakers - outside of the U.S.* - use the New European Driving Cycle (NEDC), last updated in 1997, to gather points to assess the emission levels of car engines and fuel economy in PVs. Electric vehicles use the NEDC to calculate the driving range as well. Offering a stylized driving speed pattern with low accelerations, constant speed cruises, and many idling events, criticism towards NEDC started mounting the very next year for being far too unrealistic and for its results being manipulable by, say, performing the test with the AC and heated windows switched off, removing the roof rails and rear view mirrors to reduce drag, over-inflating the tyres, adusting brakes to reduce friction, running 2 kmph below the required speed, etc.
It is also criticized for not being repeatable to get the same results, not including sustained driving, and not having an actual body of observers to verify carmakers’ stated values and methods used for deriving said values.
While China currently uses the NEDC to report ranges, the government has been testing the China Light-Duty Vehicle Test Cycle (CLTC) as an alternative to accurately represent actual driving conditions in the country. From 2021 to 2025, the Worldwide Harmonized Light Vehicles Test (WLTP) procedure is set to be adopted for PVs and light vans. Under the WLTP procedure, the fuel consumption is estimated to be at least 20-26% higher than that reported in NEDC, significantly reducing the all-electric range (AER) of Chinese PHEVs.
While India also currently uses the NEDC, the government has mandated modifications to account for local conditions. In addition to limiting the maximum cycle speed to 90 kmph, some other procedural changes to the test protocol have also been made. While the government had originally decided to mandate WLTP as the standard for testing PVs and light vans by 2020, this due date has now been pushed back to 2023.
*The U.S. Environment Protection Agency (EPA) administers a different test in closed conditions in the U.S. with different test protocols that I won’t go into solely for your benefit, dear reader.
Now, with the lingo down pat, let’s examine some sales figures, shall we? (“Yes, lets!”, you, dear reader, shouted enthusiastically)
Contextualizing EV Sales
First off, knowing what we know now, lets amend the aforementioned unassailable fact, parroted by commentators and journalists: China is the world’s leader in New Energy Vehicle sales. In fact, as per Moneyshake, 4 of the top 10 EV manufacturers in the world are Chinese:
There are simply hundreds of models of PVs in both BEV and PHEV categories. Going through each and every model of NEV would likely take all month. I’m sure neither you, dear reader nor I, have the wherewithal for that1; so let’s apply some rudimentary statistics on aggregated data per EV category for insight.
Using “Price” and “Range” values supplied by Wattev2Buy on a total of 432 models, we can surmise the following simple summary statistics2 about BEVs:
In the lowest pool of driving range values, i.e. the 85-170 km range, a large number of models are closer to the minimum price than the maximum. Considering the facts that this represents about 7% of all BEV models and have a relative lower driving range, this can be considered the “budget” set of models. The higher end of prices in this pool are by “premium” carmakers who can likely command a substantially high price based on brand equity or features unrelated to just driving range.
The other two pools of driving range values, representing the other 93% of all BEV models, have a fairly well-distributed range of prices. Interestingly, while the ratio of maximum-to-minimum price is in the 180-380 km range (almost 17X), the subsequent higher pool, i.e. the 400-706 km range has a tighter ratio (around 13X).
A quick look at the list of BEVs reveals that the third pool is where the best-reviewed top dogs of the BEV category are: predominantly long-range/all-wheel/performance models of Tesla Models 3 and X, Arcfox α-T, BYD Han, GAC Trumpchi, XPeng P7 and, of course, NIO EC6, EC8 and ES8.
The summary statistics for PHEV models are hilariously different and very, very interesting:
Firstly, all three pools show a fairly well-distributed range of prices. However, the first pool with the lowest driving range values has 68% of all PHEV models and the highest ratio of maximum-to-minimum prices (around 15X). A quick look at the list reveals that this is where the “premium” brands’ PHEVs reside: BMW i8 Coupe, Audi Q7 e-tron, Lincoln Aviator, Volvo S60L Twin Engine, Mercedes E300, Han Teng, BYD Tang, etc.
The second pool has a tighter ratio of maximum-to-minimum prices (around 4X) and is comprised of the likes of specific models of BYD Tang, Songsang Dolphin, Jeep Commander, Denza X, etc.
The third pool - comprising only 6% of all PHEV models - has the tightest ratio of prices (around 2X) and is comprised predominantly of China-specific BMW and Buick models.
What’s also interesting is the prices themselves: when considering the BEVs - barring the first pool - the minimum price is at least 2X or 3X the median income in China. Among PHEVs, this goes up to 5X (first pool) to 9X (third pool). A quick look at the Federal Reserve Bank of St. Louis’ research into China’s incomes reveal that the provinces where disposable income is closer to or above the median income are: Shandong, Liaoning, Fujian, Guangdong, Jiangsu, Tianjin, Zhejiang, Beijing and Shanghai. This is also very likely where the bulk of EV sales are made in China.
As mentioned in Part 1, 2020 is likely the “Grand Spoiler of Trend Estimations”. The percentage of PV sales that fall into BEV and PEV categories over the four years prior to 2020 are as follows:
BEVs dominate sales across all four years over PHEVs. Interestingly, on a global level, the BEV:PHEV ratio was estimated at 69:31 in 2018 and 74:26 in 2019.
The skew in this ratio tells us a very interesting story. Consider the following: since both China and India operate in the 220-240 V level, one hour of charging provides upwards of 40-50 km of driving range. Charging overnight for 8 hours delivers upwards of 300 km (if that’s the vehicle’s driving range). Level 3 charging (also known DC Fast Charging or DCFC) provides up to 200 km of driving range in 30 minutes.
As of 2019, there were about 519,000 public DCFC charging stations - about 5 times more than the number of gas stations - in China. However, filling up a petrol tank takes considerably less time (say a couple of minutes on average). Also, as we had discovered in Part 2, production and sales numbers are quite close to each other. This implies that, while the explosion of the EV scene in China is certainly impressive, it isn’t unplanned.
The conclusion we can formulate from this is that while most BEV models are certainly more attractive than most PHEV models on account of the price advantage, it’s also very likely that a significant portion of those living well above the “median income” level prefer PHEVs. Also, the significantly large number of BEVs sold indicate that most buyers use it for intra-city commutes or short trips; PHEVs, for the most part, have a distinct advantage when it comes to long trips on account of its ICE (particularly if there aren’t too many DCFC stations nearby).
This indicates that, barring high-quality offerings by “premium” BEV carmakers, the bulk of the purchasing power (in monetary terms) likely rests among those living well above the “median income” level.
Thus, we can apply the final touch to rectify the “unassailable fact” parroted by commentators and journalists thus: China is the leading manufacturer of passenger vehicles in the world with EV sales SET around 5-6% of the total, making it the world’s leader in New Energy Vehicle sales.
When it comes to India, the numbers are significantly…. more quaint. The predominant type of EV sold are actually “2-wheelers”; i.e. scooter, mopeds and motorcycles. Among “4-wheelers”, they’re limited to passenger cars and vans and have about two manufacturers: Tata Motors and Mahindra (the Hyundai Kona and MG ZS are imported as “kits” and assembled in the country). Relative to the total production of “2-wheelers” and “4-wheelers” across the same 4 years used to showcase China’s production, the picture is significantly…. more quaint:
There is one distinctive factor here: None of the models sold as EVs are HEVs or PHEV; all vehicles counted as “EV”s are BEVs.
Now, a little tangent to help us onwards: the fact that regenerative braking went from F1 to supercars to road cars is by no means a fluke: “downstream” technology transfers have been the norm in the automotive industry for a very long time. Generally, having a powerful position in the “standard” car market enables a carmaker to work their way into the “luxury”/”high-end” segment after years of costly R&D and promotion. Having a viable “luxury”/”high-end” segment then helps said carmaker whilst entering the EV space: it’s a little easier to expend capital in R&D to deliver a winning lineup without queuing up at investors’ tables.
This might lead you, dear reader, to ask: where are India’s supercars/luxury cars? Well, it bears noting that when Jaguar Land Rover (JLR) began its research into adapting “KERS”/regenerative braking for road cars - which is now an integral and necessary part for all EVs - it was in its second year of ownership by top Indian carmaker Tata Motors. Strong sales in “standard” cars, in general, created the corpus needed to expend capital into researching new frontiers.
Luxury Marques of the East
A “standard” automobile manufacturer differentiating its “high-end” range of vehicles via a marque that is separate from its “standard” product name is a fairly common practice: VW owns Bugatti, Bentley, Audi and Porsche (among others); Ford owns Lincoln; BMW owns Rolls-Royce; Toyota owns Lexus; Mercedes (under its corporate title “Daimler AG”) owns Maybach, Honda owns Acura; Nissan owns Infiniti, etc., etc. Also, there are the likes of standalone “luxury” marques such as Aston Martin and Morgan, i.e. there are no “standard” models in their lineup.
India and China have their own (and surprising to some) share of luxury marques in both varieties:
From this list, China’s Karma, HiPhi and Apollo/De Tomaso marques are still working on raising capital and/or showcasing concept models predominantly in auto shows. Geely’s Lynk & Co marque is a direct-to-customer marque that has had some success in China. Its Lotus marque has in its genesis a storied British racing team with a handful of compact sports car of some repute. Polestar, a performance vehicle marque originally owned by Volvo (which is now owned by Geely) has a handful of high-end vehicles produced in Geely plants in China.
FAW-owned Hongqi (“Red Flag”) is the classical example of a luxury-brand marque owned by a “standard” carmaker. Prior to the nineties, Hongqi models were only meant for a specific class of Chinese government officials. Later generations of Hongqi models, however, have not done very well: government officials switched to Audis and a range of models derived on mid-range models from foreign carmakers found little traction among the public.
Li Auto is a relatively new marque but was a highly anticipated entrant at Nasdaq in 2020. NIO, as discussed already, has a solid lineup of high performance EVs.
in India, renowned custom car designer Dilip Chhabria’s eponymous DC Design has been offering the DC Avanti - a 250-bhp sports coupe built around a Renault MeganeSport engine, which is “tuneable” to 310 bhp - since 2015. Fewer than 100 vehicles have been sold till date.
However, Tata Motors’ range of luxury marques is quite extensive: JLR has a large stable of popular high-end models (notably the Jaguar I-PACE, a BEV, and the Range Rover Evoque, available as a PHEV). Tata Motors’ range of “standard” cars are mostly in the India-specific SUV/crossover variants and attract those whose incomes are some levels above any estimates of the country’s median income. In addition to its two existing EV compact sedan models, also has 4 mid- to high-end EVs set for launch in the second half of 2021.
Mahindra, too, has a range of India-specific SUV/crossover in addition to the offering two of the most visible EVs on the streets today: the e2o as well as the eVerito.
Mahindra also, coincidentally, has 4 mid- to high-end EVs set for launch in the second half of 2021.
Mahindra’s Munich-based marque Automobili Pininfarina has an unusual distinction among Indian carmakers: it is the first to offer an all-electric “hypercar” - the “Battista” which has a power output of 1,400 kW, a top speed in excess of 349 kmph, can accelerate from 0–100 kmph in less than 2 seconds and 0–300 kmph in less than 12 seconds and has a range of 500 km on a single charge with a recharge from 20-80% state-of-charge in less than 25 minutes. Limited to a production of 150 units and priced at a whopping $2.5 million, 40% of the production was already reserved prior to the car’s public introduction.
It is no coincidence that Tata and Mahindra have a relatively large range of EVs lined up for 2021. It’s also not a stretch to say that both of these carmakers have a significant homeground advantage in more ways than one. It’s best that the likes of Tesla or upstart Chinese EV makers should be wary as they make their way to India.
This cliffhanger brings us to the end of Part 3. In Part 4 of the series, I discuss the EV landscape in India, reveal why it has no hybrid models, draw parallels to China’s own EV growth story and get a little more technical. Stay tuned and hit “Subscribe” here if you haven’t already!
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If you see a few extra commas in these numbers, dear reader, that would be because my toaster - born in China and raised in the Decadent West - had spontaneously adopted Indian values a short while ago. With the zeal of a convert, it is now immune to all entreaties to express anything beyond the bare minimum in Western values.