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The Powertrain Transition | Scenarios for vehicle electrification in 2040

By 2040, almost 45 percent of vehicles worldwide will be purely electric or powered by fuel cells // Europe can continue to be a leading production location for mobility // Mechanical and plant engineering can maintain the level of jobs // Public funding for research and development at the beginning of the value chain makes sense and is necessary // Technology neutrality of central importance

Mobility is undergoing a profound transformation process. Driven in particular by emissions legislation, planned bans on vehicles with combustion engines in some countries and the push for electrification.

The current study published by VDMA and FEV Consulting GmbH shows that by 2040, almost 45 percent of a total of 128 million passenger cars sold worldwide will be purely battery-electric or powered by fuel cells. The number of vehicles sold with combustion engines will fall by 16 percent worldwide by then compared to 2019. This will have a massive impact on value creation and investment, particularly in Europe, the USA and China, the core markets for automotive mobility.

"The transformation in the mobility sector is in full swing. In particular, the change in drive technologies will be clearly seen in the coming years, with high shares for battery electric vehicles and fuel cell vehicles. Mechanical and plant engineering is at the heart of this development as a technology supplier," says VDMA President Karl Haeusgen.

Massive change, especially in Europe
The study predicts a significant turnaround for Europe in particular. Considering the tightening of emissions legislation in the wake of the EU's Green Deal, it can be assumed that no new cars with combustion engines will be allowed to be sold in Europe in 2040. In addition to battery electric vehicles, the importance of fuel cell vehicles will increase significantly, which according to the scenario study will achieve a market share of around
22 percent in the EU.

Need for transformation to electric components
In conjunction with this, the study authors see a positive development in the business potential for mechanical and plant engineering. An increase of around 75 percent to 403 billion euros is expected for electric powertrain components by 2040.

There will be a strong shift from technologies and components for the conventional and mature combustion engine to components for the electric powertrain. In Europe, a decline of up to 80 percent is expected for conventional combustion engine technologies. Only China has an increase of 13 percent here over the period under consideration due to its large market growth. "Germany's most important industrial groups, mechanical engineering and the automotive industry, are therefore dependent on access to global markets and functioning free trade," emphasizes VDMA President Haeusgen.

"In particular, electrical systems and components such as the battery, the electric motor and power electronics, but also fuel cell components will be the growth drivers in the future. At the same time, value creation is shifting significantly from manufacturing-intensive activities to higher material intensity. The value added by manufacturing is being reduced and shifted to the upstream value chain," says Prof. Dr. Stefan Pischinger, Chairman of the Management Board and Managing Partner of the FEV Group. Overall, it is expected that approximately 160,000 jobs will be lost in the manufacturing of vehicle powertrains in Europe by 2040. If it takes advantage of the opportunities for change, the mechanical engineering sector can maintain its level of 55,000 jobs in the car powertrain sector.

Investment requirements in powertrain technology and infrastructure
In order to produce the drive systems of the future, an annual inflation-adjusted investment volume of around 11.5 billion euros per year is expected in Europe. This means that the investment value for 2040 is roughly equivalent to that of 2019. Additional opportunities for mechanical and plant engineering companies arise in the upstream processes of the supply chain, for example in the processing of raw materials for battery cells and subsequent recycling. The expansion of the necessary infrastructure, including charging stations and hydrogen supply chains, also offer business potential.

„The transformation process presents companies with enormous tasks. Public funds must be invested at the beginning of the value chain,“ says VDMA Deputy Managing Director Hartmut Rauen.

Policymakers must give the space to adapt
"Successfully achieving the goals of the drive in transformation is truly not a foregone conclusion," says Hartmut Rauen, Deputy Managing Director of the VDMA. "The transformation process presents companies with daunting tasks. Public funds must be invested at the beginning of the value chain - in research and teaching, in professional qualification and thus also in intelligent production technologies and products," demands Rauen.

The change must not be based rigidly on one technology. Rather, it is important to develop the best alternative for the respective application in a technology-neutral manner and to think beyond the automotive application. Germany and Europe have all the prerequisites to remain a leading location for innovation and production. The high qualifications of its employees, a mindset characterized by sustainability, and a leading position in intelligently networked production justify the confidence that the mobility of the future will be produced here.

How to obtain the study:
Members of the FVV Prime Movers innovation network can download the full study from THEMIS. An executive summary is available here.


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