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Study: The key role of battery costs in Automotive
How new players are disrupting the automotive industry
The success of today's automotive industry is closely linked to how well players master the development and production of batteries to power their electric vehicles. New pure electric OEMs are entering the market, vying for market share and disrupting the course of the traditional industry. In our Deloitte study, we highlight critical issues and provide insights on how companies can take action and strategically position themselves along the battery value chain.
The electric revolution, driven by the urgent need to reduce our carbon footprint, has ushered in a new era of battery-powered electric vehicles (EVs) in the automotive world. The industry is undergoing a disruptive shift from traditional internal combustion engines (ICEs) to EVs. This is being driven by regulation and a strong customer desire for greater sustainability. Our new study discusses the key role of EV batteries and their associated costs as the driving force behind this transformation.
Challenges for automakers
Batteries are not just a component, they are redefining the way how automobiles are produced, representing around 40% of the total cost of a vehicle. Mastering the challenges of EV battery technology has become critical for all players withing the industry. In particular, legacy automakers must adapt to this new landscape, where the challenges go beyond manufacturing to include new and rare materials and complex processes that were previously irrelevant to the branch.
As part of this transformation, new manufacturers are emerging around the world, leveraging their battery expertise and disrupting the market. European players, as the traditional powerhouses of automotive innovation, need to accelerate their investment in the technology and seek to position themselves in a value chain that is already dominated by Asian players. Our study provides valuable insights into the dynamics and challenges ahead.
Methodology and content of our study
Our approach included primary data collection through expert interviews and exhaustive secondary research by multiple teams worldwide, supported by our proprietary EV forecasting model. This asset is centered on a total cost of ownership (TCO) logic, that predicts the distribution of passenger vehicle sales based on different drivetrain types and the impact of battery cost. Furthermore, our findings were enriched with insights from Deloitte's network of professionals, incorporating the perspectives of colleagues working in the automotive, raw materials, and the regulatory sectors. As a result, we were able to answer some of the key questions that the industry is facing today:
• What are the main cost drivers for the batteries of today and tomorrow?
• How have non-European players developed their advantage?
• How can European players close the gap?
Based on the insights generated by our data-driven approach, the study provides the following key takeaways:
For more detailed information, please contact our experts. In addition, our Deloitte network has extensive expertise in other key automotive issues. Our global automotive practice combines the strengths of multiple Deloitte businesses to help companies in the automotive ecosystem to solve complex challenges and capitalize on transformational opportunities.
Download our Deloitte study “The key role of battery costs in Automotive” here and find out all the results in detail.
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