[Infinite Power] Growth Drivers of the Battery Market for Electric Vehicles

[Asia Economy Reporter Park So-yeon] With the help of a battery expert from Samsung SDI, let's explore the growth drivers of the electric vehicle battery market.

The electric vehicle market began to grow around 2010, when electric cars started entering our daily lives, driven by government support policies.

Governments around the world started promoting adoption by providing economic benefits such as subsidies and tax incentives. Of course, even now, countries maintain policies to secure a leading position in the electric vehicle market.

The year 2020 marks the beginning of the second phase. If the first phase was a carrot policy, the second phase is a form of applying the stick. This refers to regulations on carbon dioxide emissions and fuel efficiency.

These regulations impose penalties if vehicles emit more than a certain amount of carbon dioxide or fail to meet fuel efficiency standards. At the same time, the first phase’s electric vehicle adoption created an experiential purchasing effect where owners realized "this is why electric cars are good."

The final third phase is expected to be driven by factors that can increase electric vehicle demand, such as shared services and autonomous vehicles, leading the growth of the electric vehicle market.

Phase 1: Subsidies and Tax Benefits

The early electric vehicle market grew through subsidies and incentives provided by major countries to promote electric vehicle adoption. Even in 2017, subsidies ranged from as low as 15% to as high as nearly 49% of the electric vehicle price.

As of this year, major countries continue to lead the electric vehicle market by offering not only vehicle subsidies but also support funds to encourage replacing old vehicles with electric ones, as well as various tax benefits such as import taxes, acquisition taxes, and ownership taxes.

Phase 2: Carbon Dioxide Emission and Fuel Efficiency Regulations and Electric Vehicle Competitiveness

From 2020, regulations on carbon dioxide emissions and fuel efficiency have become more stringent.

Europe operates the most stringent policies limiting carbon dioxide emissions.

Standards have tightened from 130g/km in 2015 → 95g/km (95% compliance) in 2020 → 95g/km (100% compliance) in 2021, with a penalty of 95 euros per gram exceeding the limit per vehicle.

China not only enforces fuel efficiency regulations but also mandates that automakers produce a certain percentage of NEVs (New Energy Vehicles) relative to total production each year. Failure to meet these quotas results in suspension of certification applications and announcements. The United States has also finalized and applied fuel efficiency regulations this year, although these may fluctuate depending on presidential election outcomes.

If automakers continue producing and selling vehicles in Europe as they did in 2018, the total penalties for exceeding carbon dioxide emission limits are projected to reach $83 billion (approximately 85 trillion KRW) by 2025. This is why automakers have no choice but to announce electrification strategies.

Volkswagen has announced an electrification strategy targeting 30% by 2025 and 100% by 2040, BMW plans 25% by 2025, and Renault aims for 30% electric vehicle production by 2022.

The significant improvement in electric vehicle performance is now also considered a key growth driver. Electric vehicle prices are expected to reach parity with internal combustion engine vehicles within the next five years without government support, and profitability is projected to exceed 10%.

The biggest consumer complaint about electric vehicles has been charging time. Previously, even fast charging took about 40 minutes to an hour. Recently, charging for 20 to 30 minutes can enable driving 300 to 400 km. In the future, charging within 15 minutes?comparable to the time it takes to enjoy a cup of coffee?is expected to be possible.

Phase 3: Expansion of Shared-Based e-Mobility Demand

After 2025, the electric vehicle market is expected to grow complementarily in connection with services based on sharing driving data, service networks, and pricing.

Have you heard of Mobility as a Service (MaaS)? MaaS literally means "mobility as a service." The vehicle-sharing services that emerged a few years ago are now familiar to us.

MaaS goes a step further by encompassing all transportation modes, including personal vehicles, trains, buses, and taxis. For example, when traveling domestically, even without a personal vehicle, MaaS creates the optimal combination of various transportation modes to reach the destination.

If autonomous driving functions are perfected, labor costs and operational efficiency will increase, maximizing service convenience.

If these services and autonomous driving functions are realized with electric vehicles, it would be ideal. Combining electric vehicles, which have electricity costs about 20-30% cheaper than fuel and lower maintenance costs, with MaaS will further accelerate its spread.

This content was produced with the assistance of AI translation services.