Impact of ICT R&D on the deployment of electric vehicles

Digital
Agenda for
Europe
Impact of ICT R&D on the Large-scale
Deployment of the Electric Vehicle
Summary Report
FINAL REPORT
A study prepared for the European Commission
DG Communications Networks, Content & Technology

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Impact of ICT R&D on the Large-scale
Deployment of the Electric Vehicle
Summary Report
Report for the European Commission,
Directorate-General for Communications
Networks, Content and Technology (DG
CONNECT)
AEA/R/ED57083
Ref: SMART 2011-0065
Issue Number 2
Date 05/11/2012

Impact of ICT R&D on the Large-scale Deployment of the Electric Vehicle
Ref: AEA/ED57083/Issue Number 2 iv
Customer: AEA Contact:
European Commission, Directorate-
General for Communications Networks,
Content and Technology (DG CONNECT)
Matthew Morris
AEA Technology plc
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th
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th
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th
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Authors:
Matthew Morris, Duncan Kay, Dan Newman,
Lena Ruthner, Gena Gibson, James Norman,
Stephanie Cesbron, Charlotte Brannigan
Approved By:
Nikolas Hill
Date:
05 November 2012
Signed:
AEA reference:
Ref: ED57083- Issue Number 2
Disclaimer:
This study has been produced by outside contractors for the European Commission
Directorate-General for Communications Networks, Content and Technology (DG CONNECT
)and represents the contractors’ views on the matter. These views have not been adopted or
in any way endorsed by the European Commission and should not be relied upon as a
statement of the views of the European Commission. The European Commission does not
guarantee the accuracy of the data included in this study, nor does it accept responsibility for
any use made thereof.

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Table of contents
1 Project Overview ........................................................................................................ 4
1.1 Aims and Objectives .......................................................................................... 4
1.2 Methodology ...................................................................................................... 4
1.3 Scope................................................................................................................. 5
2 Summary..................................................................................................................... 6
3 Objective A: landscape analysis ............................................................................... 9
3.1 The ICT opportunities in the FEV system ........................................................... 9
3.2 The anticipated value chain in ICT for FEVs......................................................10
3.3 European value chain competitiveness .............................................................14
3.4 The European market for FEVs.........................................................................17
3.5 The FEV industry in other world regions............................................................18
4 Objective B: the enabling role of ICT.......................................................................20
4.1 Patenting activity in ICT for FEVs......................................................................20
4.2 R&D investment in the EU and Other Regions..................................................23
4.3 Technical capabilities........................................................................................25
4.4 Cross-industry fertilisation.................................................................................25
4.5 Feasibility of EU manufacture of FEVs and components...................................27
5 Objective C: hurdles and roadmaps ........................................................................30
5.1 Barriers to electric vehicle deployment..............................................................30
5.2 Solutions to overcome hurdles ..........................................................................34
5.3 Solutions offered by ICT....................................................................................35
5.4 Roadmaps for FEV deployment ........................................................................36
6 Objective D: environmental and health impacts .....................................................39
6.1 The vehicle life cycle.........................................................................................39
6.2 Life cycle analysis for present-day vehicles.......................................................42
6.3 Future developments in environmental & health impacts...................................43
6.4 The role of ICT in the environmental & health impacts of FEVs.........................45
6.5 The role of FEVs in decarbonising the European transport sector.....................46
7 Objective E: analysis of socio-economic impacts..................................................48
7.1 Qualitative assessment of the socio-economic contribution of FEVs .................48
7.2 Quantitative assessment of the socio-economic contribution of FEVs...............51
7.3 Socio-economic contribution of potential ICT applications.................................55
8 Objective F: conclusions and recommendations ...................................................56
8.1 Overview of recommendations..........................................................................56
8.2 Recommended objectives.................................................................................58
Appendices
Appendix 1 Expert interviews

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List of figures
Figure 1: Applications of ICT in the FEV...............................................................................10
Figure 2: Shifts in the automotive value chain bought by FEVs ............................................12
Figure 3: Evolution versus revolution: two contrasting views on the future of electric vehicles
.............................................................................................................................................13
Figure 4: Automotive ICT for FEVs value chain ....................................................................14
Figure 5: Key competitive strengths of the European value chain for ICT in FEVs................15
Figure 6: SWOT analysis for European value chain competitiveness in ICT for FEVs ..........16
Figure 7: Comparison of annual sales projections for FEVs in Europe .................................17
Figure 8: Sales projections for electric vehicles across world regions (source: IEA) .............18
Figure 9: Strengths and weaknesses of the FEV industry in other world regions..................19
Figure 10: High-value EV-ICT patent applications by region of origin, 1998-2008...........21
Figure 11: SWOT analysis for European companies and their intellectual property
strategies 23
Figure 12: Sales vs. R&D spend for the top OEMs (data extracted from the 2011 EU
Industrial R&D Investment Scoreboard) ...............................................................................24
Figure 13: Seven success factors for European FEV manufacture .................................29
Figure 14: Resource risks associated with FEVs ............................................................33
Figure 15: Five insights into consumer reaction during field trials ...................................34
Figure 16: The role of ICT in overcoming hurdles to electric vehicle deployment ............36
Figure 17: Comparison of FEV deployment targets from different roadmaps ..................37
Figure 18: Different approaches found in FEV roadmaps................................................38
Figure 19: Overview of a vehicle lifecycle .......................................................................40
Figure 20: Overview of energy chain efficiency in BEVs (top) compared to diesel ICEVs
(bottom). [Source: adapted from Swiss Federal Office of Energy] .......................................41
Figure 21: External cost for whole life cycle, split by stage in 2015 (€ per 1,000v-km) ....42
Figure 22: External cost for whole life cycle, split by emission type in 2015 (€ per 1,000v-
km) 43
Figure 23: Key factors affecting the environmental and health impacts of FEVs .............44
Figure 24: The role of ICT in improving environmental and health benefits of FEVs .......45
Figure 25: Abatement potential of FEVs under three scenarios (compared with business-
as-usual) 47
Figure 26: European flagship policies considered in this study .......................................49
Figure 27: Qualitative assessment of the socio-economic contribution of FEVs through
development of a strong European FEV market ...................................................................50

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Figure 28: Qualitative assessment of the socio-economic contribution of FEVs through
development of a competitive European FEV manufacturing and service industry ...............50
Figure 29: Comparison of projections for growth in FEV registrations showing AEA’s
SULTAN scenarios...............................................................................................................52
Figure 30: Quantitative metrics for the socio-economic contribution of FEVs in Europe..53
Figure 31: Areas for recommended objectives and desired impacts ...............................57

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1 Project Overview
1.1 Aims and Objectives
The European Commission, Directorate-General for Communications Networks, Content and
Technology (DG CONNECT) has commissioned AEA to undertake a service contract entitled
"Impact of ICT R&D in the Large Scale Deployment of the Electric Vehicle”. This project aims
to collate and analyse the growing body of knowledge in European efforts for the application
of ICT and smart systems in fully electric vehicles (FEVs) to support policymaking in this
area. The project started in November 2011 and is approximately one year in duration.
The objectives of this project are to:
A. Analyse the existing landscape of European R&D, manufacturing and deployment in
the domains of ICT and smart systems and architectures for the fully electric vehicle,
and draw comparisons with other world regions;
B. Assess the future potential for these domains within Europe, and the enabling role of
ICT and smart systems in the deployment of the fully electric vehicle;
C. Identify barriers and hurdles to development and deployment of the fully electric
vehicle in Europe, drawing on experience from trial deployments to date, and
evaluate roadmaps towards overcoming these hurdles;
D. Assess the environmental and health impacts of the deployment of electric vehicles
compared with other types of vehicle, assess weaknesses and threats, and evaluate
the role of ICT and smart systems in bringing about potential environmental and
health benefits;
E. Analyse the potential contribution of the fully electric vehicle towards achieving
European socio-economic goals;
F. Collate the above work in order to provide policy advice on European strategies for
R&D in the area of ICT and smart systems for the fully electric vehicle, in particular
for R&D “lighthouse” projects to accelerate the development and deployment of
electric vehicles in Europe.
The project is divided into six work packages, each of which addresses one of the six
objectives.
1.2 Methodology
The study team have the overall task of collecting and collating information from a wide
range of sources, analysing the information and presenting conclusions and
recommendations to decision makers and stakeholders. This is achieved through the
following processes:
 Literature review of recent studies, publications and conference notes published by
academic, commercial and public sector sources in Europe and beyond. All literature
sources are fully referenced in this report.

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 Stakeholder consultation by face-to-face and telephone interviews with key experts,
together with presentation of draft results at workshops/conferences. Further
information on the stakeholder consultation undertaken by the study team is provided
as an appendix to this report.
 Analysis and presentation of the results in written reports such as this one, and in
presentations to stakeholders.
1.3 Scope
Fully Electric Vehicles (FEVs)
An increasing range of vehicle types utilise electricity for motive power and electrical storage
systems within their powertrain. This study focuses on ‘Fully Electric Vehicles’ (FEVs). The
project’s definition for FEVs as set out in DG CONNECT’s (formerly DG INFSO’s) 2011
report ‘ICT for the Fully Electric Vehicle’, as follows:
‘Fully Electric Vehicles (FEVs) means electrically-propelled vehicles that provide
significant driving range on pure battery-based power. It includes vehicles having an
on-board fuel based electrical generator (Range Extender based on Internal
Combustion Engine or fuel cells)’.
Furthermore, this study is restricted to passenger cars only. The study team have not
considered smaller (e.g. e-bikes, quadricycles) or larger (e.g. vans, trucks) vehicles.
Information and Communication Technology (ICT)
The particular technology focus of the study is on the role of ICT and smart systems in
the fully electric vehicle. We define ‘ICT’ / smart systems as any system or subsystem
utilising electrical or electronic components. This can include sensors and actuators,
electronic controllers, embedded systems, power electronics, and wireless
communications. Our study investigates the enormous scope for such systems in the
fully electric vehicle.
‘Vehicle-side’ technology
One particular feature of the fully electric vehicle is the potential for innovation and new value
chains in related areas such as smart infrastructure/grids, intelligent transport systems, and
interaction with an ever-increasing ‘cloud’. Whilst our study inevitably considers these
possibilities, the detailed technology focus is on systems and innovations within the fully
electric vehicle itself.

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2 Summary
This document summarises the research findings of the six work packages undertaken in this
DG CONNECT-funded project. Each work package also has an individual report that
provides more detail on the research and analysis undertaken. These reports are available
separately.
The project aims to provide substantiated advice on strategy for EU funding under the next
Framework Programme, Horizon 2020. Drawing on the analysis carried out under Objectives
A-E of the project, the study team arrived at twenty recommendations. The following diagram
and tables outline our headline recommendations; more detail is provided in the final section
of this report.
Desired
impacts
Recommended
objectives
ICT
for
FEVs
ICT for
FEVs
Developing
technologies
and services
Supporting
a European
value chain
Stimulating
innovation
in Europe
User
acceptance

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Developing technologies and services
ICT in the fully electric vehicle
1
European OEMs to be amongst the leaders in the development of third
generation ‘ground-up’ designed FEVs with a revised ICT architecture
2
Maintain leadership in the research, development and manufacture of
automotive semi-conductors and power electronics for FEVs
3
Build on an existing strong communications infrastructure to become a world
leader in after-sales software and services, extracting the maximum value
from connected vehicle systems for FEVs
4
Establish a European value chain for the research, development and
manufacture of batteries, their management systems and their integration
into FEVs
5 Develop expertise in energy harvesting technologies
6 Become a leader in the application of vehicle health management for FEVs
Related technologies where ICT can play an important role
7
Become the acknowledged world leader in integrating range extender
technologies into fully electric vehicles, with advanced powertrain control
systems
8
Achieve the successful full integration of FEVs with the electricity grid
through the use of bi-directional smart charging
9
Ensure the environmental impacts of the production and disposal elements
of an FEV’s life cycle are minimised
Supporting a European value chain
1
Assist European OEMs to adapt to the electric vehicle value chain, keeping
inter-company collaboration within Europe to supply ICT in FEVs

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2 Encourage and support innovative SMEs in the field of ICT for FEVs
3
Create regional centres of excellence for key FEV technology areas,
combining research, development and commercialisation activities
4
Address skills shortages in electrical, electronic and mechatronic
engineering disciplines
Stimulating innovation in Europe
1
Create a uniform single market for FEVs, components and services across
Europe by adopting common standards and harmonising incentives
2 Support later stages in the innovation cycle
3
Co-ordinate and streamline public R&D funding at a European and Member
State level
4
Investigate the role of patenting in FEV technology, with a view to
incentivising patenting if necessary
User acceptance
1
Ensure a continued strong development of a European FEV market as a
route to securing a European value chain
2
Develop business models and technologies that reduce the upfront cost
and/or total cost of ownership for FEVs
3 Educate the mass vehicle owner market on the realities of FEV ownership

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3 Objective A: landscape analysis
The aim of Objective A: Landscape Analysis is to provide a picture of the current European
situation regarding ICT and smart systems in electric vehicles, in the context of what is
happening globally in this sector.
Three specific aims were identified within this analysis:
 To examine the opportunities that exist in ICT for fully electric vehicles (FEVs), and to
review European commercial activities in this area;
 To understand Europe’s current capability and global competitiveness in ICT for the
fully electric vehicle;
 To identify where the strengths, weaknesses, opportunities and threats lie for Europe
when compared to other world regions.
3.1 The ICT opportunities in the FEV system
Fully electric vehicles (FEVs) offer multiple opportunities for the application of ICT. In the
drive train alone, sophisticated systems will be needed for battery management, control of
electric motors and their associated power electronics, and management of range extenders
and energy harvesting. This can be achieved using a combination of separate control units,
embedded systems or new centralised architectures. A ‘ground-up’ redesign of the electric
vehicle, particularly the ICT component, could improve functionality and efficiency, reduce
cost and lead to entirely new vehicle concepts.
Electronics has been described as the enabler and driver behind 60% of all current
vehicle innovations1
and other sources suggest that for premium vehicles the figure is
80%.2
Electric vehicles are coming to market at the same time as technologies in other sectors,
which also make extensive use of ICT. The near future will be shaped by what has been
named ‘the internet of things’. Smartphones, tablets, laptops, buildings, personal vehicles
and other mobility solutions will all be connected and will be able to share location, status
and activity information to enable smarter and more efficient use of energy.
1
Oliver Wyman, 'A comprehensive study on innovation in the automotive industry', 2007. Available online at:
http://www.oliverwyman.com/pdf_files/CarInnovation2015_engl.pdf
2
Federal Ministry of Economics and Technology, 'The Software Car: ICT as an Engine for the Electromobility of the Future', 2011. Available
online at: http://www.esg.de/fileadmin/downloads/eCar-IKT-2030_Summary_en.pdf

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Figure 1: Applications of ICT in the FEV
Notes: V2G = vehicle to grid; V2V = vehicle to vehicle; V2I = vehicle to infrastructure
Photo courtesy of GM
3.2 The anticipated value chain in ICT for FEVs
The most significant change in the automotive value chain over the last two decades has
been the impact of the introduction of ICT technologies.3
Customer expectations for high
technology, combined with the need to address concerns regarding range and recharging
availability mean FEVs are likely to have the highest ICT content and connectivity of any
vehicles on the market. ICT for FEVs is therefore likely to see strong growth in value in the
future.
ICT could account for up to 40% of value in a FEV
ICT currently accounts for perhaps 15-20% of the total vehicle value in an FEV. However this
figure could be substantially higher if battery costs reduce (ICT in the battery management
system makes up only a small proportion of total battery cost). Existing batteries add around
€6,000 to €16,000 to the cost of a vehicle, but in the longer-term this could decrease to
around €3,000 to €4,000.4
If this were to happen, it is expected that ICT could account for as
much as 30-40% of total vehicle value in the future.5
3
EC JRC, 'Is Europe in the Driver's Seat? The Competitiveness of the European Automotive Embedded Systems Industry', 2010. Available online
at: http://iri.jrc.ec.europa.eu/papers/2010_JRC60284_WP7.pdf
4
ETC, ‘Environmental impacts and impact on the electricity market of a large scale introduction of electric cars in Europe’, 2009. Available online
at: http://www.europarl.europa.eu/document/activities/cont/201106/20110629ATT22885/20110629ATT22885EN.pdf
5
Figures based on stakeholder interviews
Battery management
• Thermal management
• Electrical management – cell
balancing, monitoring, switching
• Failure and crisis management
• Diagnostics – state of charge,
battery ageing
• Super/Ultra capacitor control
and integration
Range extender integration
• Range extender engine control
systems
• Optimising integration into
vehicle powertrain system
Optimising charging
• Optimising charging strategy
• Ensuring charging safety
• Enabling contactless charging
• Billing and payment systems
Powertrain efficiency
• Improved inverters /
converters
• System efficiency &integration
• Motor control optimisation
Vehicle diagnostics
• Condition-based maintenance
• Servicing software
Active load management
• Coordination and optimisation
Energy harvesting systems
• Optimised energy capture from
regenerative braking systems
• Optimisation and control of
energy recovery from
suspension, tyres, solar photo-
voltaics and waste heat.
Grid integration (V2G)
•Bi-directional charging
•Grid communication
Drive by wire / safety
• Intelligent cruise control
• Autonomous braking systems
• Collision avoidance systems
• Advanced driver assistance
• Dynamic light assist
• Pedestrian and cyclist
protection systems
• Fully autonomous operation
Transport system integration (V2V & V2I)
•Cooperative driving
•Integration into intelligent transport system
Driver interface
• Intelligent routing / navigation
• Range management
information
• Pre-booking recharging
infrastructure
• Infotainment systems / WiFi /
3G
• User definable seating /
control feel

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Almost all FEVs will be ‘connected’ vehicles’
Plug-in electric vehicles are expected to lead the way in terms of use of telematics in the
automotive sector. Purchasers of FEVs in the next 5-10 years are likely to be more affluent
and technologically aware. 80% of FEVs are expected to offer connected vehicle telematics
with services such as live traffic information, weather, streaming of information from the
internet and cloud computing.6
Whilst connectivity of all vehicle types is expected to increase,
some connectivity opportunities are unique to FEVs – for example, communications for range
management and the location, reservation and use of charging infrastructure, and managing
the vehicle’s relationship with the electricity grid.
FEVs change the automotive value chain: from mechanics to electronics
FEVs introduce substantial changes in the value chain. The added value associated with the
conventional internal combustion engine and transmission – a key area of strength for
Europe’s OEMs – is significantly reduced or removed. At the same time, FEVs introduce a
new high-value electric powertrain that utilises many technologies outside OEMs’ traditional
core competences.
In an FEV, the battery is key for customer satisfaction
At present, the biggest single cost of a battery electric vehicle (BEV) is the battery itself.
Customer satisfaction will be strongly influenced by the performance of the battery. It is
fundamental to vehicle performance, range, reliability, degradation over time and resale
value. This is unlike the situation with conventional vehicles, in which petrol and diesel fuels
conform to universal quality standards, and owners can expect vehicle performance to be
largely independent of the fuel they use and its storage system (the fuel tank). As a result,
electric vehicle batteries could represent a severe reputational risk for OEMs.
OEMs must decide which key FEV components to bring in-house
The powertrain of a vehicle has traditionally been a key brand differentiator and source of
value for OEMs. Some have argued that for FEVs, this value may shift to battery
manufacturers and other suppliers of electric powertrain components, with global mega-
suppliers selling standardised products to multiple OEMs.7
It is important that OEMs build up
a detailed understanding of electric powertrains in order to ascertain which areas they wish
to develop in-house and which they can safely outsource without risk to their brand.
It is not clear which elements of FEVs will be standardised and which will be bespoke
FEVs could present a change in the balance of using large-scale standardised components
and subsystems and engineering bespoke elements using in-house know-how. It is not clear
which elements of FEVs will be used to differentiate the vehicle, or whether suppliers or
OEMs will provide these differentiating features, but the outcome will help to define the new
value chain.
New participants will enter the automotive sector value chain through FEVs
New participants will be attracted into the automotive sector by the growth in FEVs. This may
be particularly true in three areas:
6
Pike Research, ‘Electric Vehicle Telematics’, 2011. Available online at: http://www.pikeresearch.com/research/electric-vehicle-telematics
7
Deloitte, ‘Charging Ahead: Battery electric vehicles and the transformation of an industry’, 2010. Available online at:
http://www.deloitte.com/assets/Dcom-UnitedStates/Local%20Assets/Documents/Deloitte%20Review/Deloitte%20Review%20-
%20Summer%202010/us_DeloitteReview_ChargingAheadBatteryElectricVehicles_0710.pdf

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 Power electronics equipment and high voltage equipment – companies with
experience in this area will see opportunities given the existing automotive sector’s
inexperience.
 Control units and modules – as these become more standardised consumer
electronics companies may be attracted to start supplying the automotive sector.
Low-cost manufacturing countries such as India and China may take an increasing
share of this market.
 Vehicle OEMs – designing and developing a BEV requires little of the engineering
know-how necessary for the internal combustion engine powertrain. This reduces the
barriers to entry to this market, although existing OEM know-how in other areas
(design for safety, long-term reliability and understanding the consumer needs)
remains important.
 Software and service suppliers – the move towards software- rather than
hardware-based ICT will allow more interaction between different applications within a
vehicle, and combined with enhanced connectivity, facilitate a variety of mobility-
based services. If hardware and software platforms are standardised, new, innovative
players could enter the market.
Figure 2: Shifts in the automotive value chain brought by FEVs
Large
increase
Large
decrease
Energy storage systems – up to 60% of the vehicle value for a BEV
and a key vehicle differentiator (range, charge time etc)
Power electronics and electric motors – with a high ICT content
Connected vehicle hardware and services – possible new after-
market value chains utilising connectivity, with software and services
adding value
Energy harvesting and energy management – enabled by a fully
electric powertrain and high ICT content
Internal combustion engines – still used as range extenders but
increasingly not key brand differentiator. A key strength for European
OEMs
Aftermarket components – FEVs have fewer moving parts and less
mechanical wear. Currently a significant source of income for OEMs
ICEV powertrain – gearbox, transmission etc – does not normally
feature in FEVs
The OEM landscape: Evolution or revolution?
The literature review and stakeholder interviews highlighted differences of opinion regarding
the likely nature of future uptake for FEVs. These can be broadly grouped into two
alternatives scenarios: evolution or disruption. These scenarios are described in Figure 3.

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The future is likely to contain elements of both these scenarios, and it will be important for
Europe to ensure that it adopts policies which will allow it to remain competitive regardless of
how the market develops.
Figure 3: Evolution versus revolution: two contrasting views on the future of electric
vehicles
Evolution Revolution
 Traditional OEMs continue to dominate,
leveraging their brand power and
gradually moving into the FEV market
 OEMs use brand power, experience and
consumer understanding to repel
challenges from new entrants and strong
suppliers to maintain control over the
value chain
 OEMs initially produce FEVs that are
adapted from existing vehicles and share
production lines to minimise risk and
maintain flexibility
 As demand increases, there is a gradual
transition to fully redesigned FEVs with
their own production lines
 Models evolve from hybrids to plug-in
hybrids and finally to battery electric
vehicles, as technology performance and
cost improve
 New innovative vehicle concepts using
electric powertrains emerge, first in the
small city car segment
 New market entrants are quick to
innovate with new business models and
novel vehicle concepts enabled by
electromobility
 Innovation creates entirely new services
and value chains with a rapid pace of
development
 Major OEMs struggle to keep up,
hindered by their size and large
investment in ICE technologies
 Major OEMs lose significant market share
as the value chain rapidly changes
structure
A graphical presentation of the overall value chain for the ICT in FEVs sector is presented in
Figure 4 below.

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Figure 4: Automotive ICT for FEVs value chain
3.3 European value chain competitiveness
A review of the European value chain in ICT for the fully electric vehicle yielded the following
key findings:
 Europe has companies operating in all sections of the FEV value chain, many of
which are market leaders or have unique added value offerings.
 There are two broad categories of company in today’s value chain: major automotive
players who are moving into the sector (by technology cross-over, acquisition etc.),
and smaller companies who are currently niche players overall but who have a focus
on ICT for FEVs.
 The majority of European companies involved in this sector are large enterprises
(over 1000 employees), but for most of these, FEV/ICT is only a small part of their
overall business.
 There are several examples of small or medium-sized European companies that
specialise in FEV and ICT technologies and have world leading solutions.
 In terms of company headquarter locations, three European countries dominate:
Germany, the UK and France. However, the majority of companies identified operate
multi-nationally if not globally.
Our research highlighted key competitive strengths that give European companies an
advantage over their international competitors in ICT for electric vehicles. However, the value
chain also has weaknesses and threats to its competitiveness. These are outlined below in
Figure 5 and Figure 6.
Tier 1 suppliers
• Provide vehicle sub-
systems
• Integrate functions,
systems and
components
• Work with OEMs to
introduce innovations
• Drive out cost
Tier 2 suppliers
• Provide components
for sub-systems
• Cross-fertilise
innovation from other
sectors
• Can sometimes act
as both tier 1 or tier 2
Telecoms suppliers
Provide data transmission networks
Location based service suppliers
Provide location-specific data to support telematics, V2I,
V2V and ADAS services
Connected vehicle service suppliers
Supply services across vehicle lifetime via mobile
networks or cloud computing solutions
Semiconductor suppliers
Supply semi-conductors to tier 1, 2 and 3 suppliers
OEMs
• Understand
customer needs
• Specify vehicle
characteristics
• Integrate vehicle
systems
• Manage brand image
Tier 3 suppliers
• Provide specialist
components and
knowledge in niche
areas
• Highly innovative
• Smaller, regional
operators
Consumer
• Purchase vehicles &
mobility services
• Feedback
satisfaction to industry
• Ownership
experience shared
with social networks
Software suppliers
Supply software products to tier 1 to 3 suppliers, OEMs and connected vehicle service suppliers
Energy suppliers
Provide energy services (via charging
providers) and smart charging markets

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Figure 5: Key competitive strengths of the European value chain for ICT in FEVs
Europe
 Large OEMs with powerful brands: Volkswagen Group is the
world’s second largest vehicle manufacturer
 Very strong presence in the (ICT-rich) premium vehicle
segment: BMW, Mercedes-Benz and Audi are major players
 Brands willing to commit to FEVs: Renault-Nissan has
shown the greatest commitment to BEVs of any major OEM
 World-class Tier 1 suppliers: Bosch is the world’s largest,
Continental and Magneti Marelli are in the top five
 Leading automotive semiconductor suppliers: ST Micro,
Infineon and NXP are three of the largest in the world
 Five of the top 10 automotive sensor suppliers are
European
 Four of the top 10 mobile phone network operators are
European

AEA 16
Figure 6: SWOT analysis for European value chain competitiveness in ICT for FEVs
Europe
Strengths Weaknesses
• Strong FEV market growth projections due to
long-term policy direction and incentives
• Strongest Tier 1 suppliers of any world region,
with higher electronics capability than OEMs
• World-leading in premium OEMs with a strong hi-
tech product offering and buoyant exports
• World-leading in automotive semiconductors and
automotive sensors
• Electricity Utility companies that understand the
potential of FEVs
• Very strong on combustion engine technology
(for range extenders) – especially diesel
• Flexible value chain with close OEM - Tier 1
relationships
• Widespread ownership of smartphones
• Automotive industry invests more on R&D than
any other world region
• Very strong academic centres leading to high
quality research and strong tech skills base
• World-leading standard in safety, quality and
reliability
• European auto market saturated so net growth
must come from other world regions
• Lagging behind in both the development and
manufacturing of battery technology
• Having to catch up or partner on hybrid
technology, particularly for intellectual property
• Most connected vehicle services are provided by
non-European companies
• OEMs are relatively weak at co-ordinating R&D
activities throughout global centres
• Extreme weakening of the small supplier network
plus the threat of further consolidation
• Weak consumer electronics industry
• Slow decision making processes (including public
strategy, regulation and technical standards)
• Low co-ordination of Member State export policies
• Non-integrated EU market; regional competition
versus complimentary networks
• Complicated and dispersed R&D funding
processes, historically not commercially focussed
Opportunities Threats
• Build on success of AUTOSAR to develop leading
position in automotive software development
• Trade/ IP and skills in ICEVs / form alliances to
rapidly gain battery capabilities
• Potential to demonstrate EVs in combination with
renewable electricity generation and smart grids
• Build on academic battery R&D to establish future
battery industry
• Supply of sensors to foreign OEMs
• Utilise EU telecoms / ICT expertise to focus on
high-value ‘connected vehicle services’ sector
• Encourage greater industry cooperation / reduce
concerns about anti-competition laws
• A healthy mix of existing experienced OEMs and
dynamic new players specialising in FEVs
• Development of new services and business
models to generate growth
• Other regions adapt, develop standards, and
support nascent industry players more quickly
• Asian consumer electronics companies acquire
significant part of EV-ICT value chain
• Locked out of key battery and hybrid technologies
due to Japanese / Korean / US patents
• Continuing reliance on importing batteries and
rare earth elements
• Chinese government encouraging foreign OEMs
to make FEVs in China (in partnership with
Chinese OEMs) leading to gradual offshoring
• Foreign OEMs targeting European market
• Foreign investment funds acquiring European
companies to gain expertise and access to the
market
• European OEMs manufacture in growth markets
and export back to the EU

AEA 17
3.4 The European market for FEVs
In 2010, FEVs plus hybrids accounted for less than one per cent of European
passenger car sales
The current market for FEVs as a percentage of total passenger car sales is very small.
Including hybrid vehicles (which dominate the figures), total 2010 sales in Europe were just
0.7%. The markets with the largest shares are Japan (11%) and USA (2.5%). China’s market
lags considerably at less than 0.1% of 2010 sales.
As with any disruptive technology that has yet to hit the market fully, predictions of future
sales are difficult as they depend on future policy support; infrastructure deployment; speed
of technology innovation and cost reduction; and economic drivers such as oil prices. Despite
these uncertainties, experts generally agree that electric vehicles will represent one of the
key options for individual mobility in the future. Where disagreements arise is in the timing of
this development.
Estimates for European sales of FEVs in 2020 vary between 0.5 and 3 million
Figure 7 compares predictions of annual FEV sales in Europe. By 2020, at the bottom end of
the scale, ACEA’s lower estimate assumes that 500,000 units will be sold. In comparison,
Roland Berger’s ‘The future drives electric’ scenario estimates annual sales could reach 3
million. This scenario foresees higher oil prices, accelerated battery cost reductions, stronger
government support and a broader product range in the next five to ten years, making
electric vehicles a very attractive alternative by 2020.
Figure 7: Comparison of annual sales projections for FEVs in Europe
Europe may account for 25% of global FEV sales in 2020
Europe’s share of the total global car sales market is expected to decline in the future due to
growth in car sales in developing regions. Its position for FEVs may be different, as electric
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2015 2017 2020
FEVannualsales,millions
Roland Berger *
Roland Berger **
ACEA Communication San
Sebastian
ERTRAC
Sum of Member State targets
(IEA 2009)
Frost & Sullivan
Strategy Analytics (pessimistic
scenario)
Strategy Analytics (optimistic
scenario)
*Potential EV customers based on car buyers who have access to infrastructure and a compatible mobility profile
** "The future drives electric" scenario - higher oil prices, accelerated battery cost reduction, stronger government support and a broader FEV product range in the next five
to ten years
8
8
8
6
6
4
4
4
4
7
7
7
5
5
3
3
1
1
2
2

AEA 18
vehicle sales in the short and medium-term are more likely to be concentrated in wealthier
countries. This is in part because of their cost premium compared to internal combustion
engine vehicles, and in part because of demand-side policies driven by regulatory pressure
to address carbon reduction and air quality issues.
Figure 8: Sales projections for electric vehicles across world regions (source: IEA)8
These projections suggest that Europe will experience amongst the strongest growth in sales
for FEVs of any world region to 2020, despite stagnating growth in overall car sales. A strong
domestic market would likely benefit European OEMs and stimulate a European FEV
manufacturing capability. However the strong growth of emerging markets, particularly
China, may counterbalance this.
A conservative estimate of the global market value for ICT in FEVs is around €15
billion by 2020.
Combining the various projections of FEV sales with predictions of the expected value of ICT
content in all types of future vehicles, it is possible to derive an approximate estimate for the
market value of ICT in FEVs of around €15 billion by 2020. However, this could be
conservative. FEVs are likely to be the most connected vehicles on the road and expert
estimates of the total ICT value within a next-generation FEV range from 15% to 40% of the
total vehicle value. At the upper end of this estimate or with higher deployments of FEVs, the
total value of the sector could be several times this.
3.5 The FEV industry in other world regions
Our analysis suggests that four world regions stand to compete most strongly with Europe in
the emerging FEV market. This section gives brief summaries of strengths and weaknesses
of the FEV industry in these regions.
8
IEA, 'Technology Roadmap: Electric and plug-in hybrid electric vehicles', 2011. Available online at:
http://www.iea.org/papers/2011/EV_PHEV_Roadmap.pdf

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Figure 9: Strengths and weaknesses of the FEV industry in other world regions
Japan
+ Third largest producer of motor vehicles in the world, one of the most
successful exporters
+ Leads the world in hybrid vehicle systems with dominant IP,
manufacturing and brand position – particularly Toyota
+ Strong internal market for efficient vehicles and new technology
+ World leader in battery technology design and manufacture
- Strength of the yen makes inward investment unattractive
USA
+ Substantial government funding has stimulated FEV industry
+ Strong track record in high tech R&D with silicon valley hub
+ Startup OEMs and component (esp. battery) suppliers targeting FEVs
- Support at the state level is inconsistent
- Consumers still favour larger gasoline vehicles with long range
China
+ The largest global growth market for passenger cars
+ Attractive conditions for manufacturing vehicles and components
+ Strong government intent to support the FEV industry
+ Industrial policy that favours domestic producers
- Low FEV demand today with a cost-constrained consumer base
- Lower vehicle quality standards currently leads to weak exports
S. Korea
+ Strong in Li-ion battery R&D and manufacturing industry
+ Second only to Japan in Li-ion intellectual property
+ Strong government support for industrialisation of FEVs
+ Free trade agreement with the EU since 2011
- Low FEV demand today with a cost-constrained consumer base

AEA 20
4 Objective B: the enabling role of
ICT
The aim of Objective B: The Enabling Role of ICT is to build on the work in Objective A by
examining the future potential for a fully electric vehicle (FEV) industry in Europe, and the
enabling role for ICT. The specific aims were:
 To understand how ICT and smart systems might feature in the future FEV industry in
Europe, both in their enabling role in vehicles and as a contribution to Europe’s
industrial economy;
 To analyse the R&D spend, and emerging results, in Europe compared with other
world regions;
 To investigate Europe’s potential in the future in terms of infrastructure, skills, and the
potential for cross-industrial fertilisation.
4.1 Patenting activity in ICT for FEVs
Patenting activity (both applications and granted patents) in the cross-over area between
electric/hybrid vehicles and ICT (EV-ICT) was analysed. Key conclusions are presented
below.
4.1.1 Patent applications
Patent applications can take anything from three to eight years to reach grant stage. Analysis
of recent applications can be used as a measure of productive research activity. National
patent applications are influenced by many factors, including differences in culture, local
industry, government incentives, economic climate and intellectual property laws. Due to
these issues, our analysis focused primarily on high-value patent applications. These are
defined as applications that are either:
1. Made through the Patent Cooperation Treaty (PCT); or
2. Triad applications (made at the European, US and Japanese patent offices).
Figure 10 below shows the change in volume of high-value patents in EV-ICT by the region
where the patents originated, over the decade to 2008 (the latest year for which data are
available in this detail).

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Figure 10: High-value EV-ICT patent applications by region of origin, 1998-2008
Note: The apparent drop in applications from Japan in 2008 is likely an artefact due to translation delays.
Japan accounts for 45% of high-value patent applications in EV-ICT (1998-2008)
A major portion of this activity is from Toyota, which files over a third of Japanese
applications. The other two major Japanese OEMs are some distance behind. Honda files
11% of Japanese applications and Nissan 9%.
The majority of EV-ICT applications from European companies originate in Germany
From 1998 to 2008, around 17% of high-value patent applications originated from Germany,
with Tier 1 suppliers Bosch and ZF Group registering the most applications in EV-ICT.
Despite growth in German applications, the number is on average only half that of Japanese
applications. France takes a distant second place at 5%, led by Renault, Peugeot and Valeo.
The US accounts for around 16% of applications, China for only 2%
Although US activity has shown a gradual increase, the rise has not been as steep as in
other countries. Chinese applications are mostly limited to the domestic market, and
therefore do not feature strongly in the analysis. Overall, applications from China account for
only 2% of the total high-value applications, and mostly originate from R&D facilities owned
by non-Chinese OEMs (Toyota and Mitsubishi are the top two companies). Other regions
including Korea, India and Brazil each account for less than 1% of applications.
Toyota is pursuing an aggressive patenting strategy in EV-ICT
Toyota dominates the number of patents in this area. All other applicants lag behind by a
significant margin. Honda and Bosch, in second place and third place respectively, each
have only one third of the number of applications. Toyota’s patenting strategy could create
barriers to other firms that wish to enter the EV-ICT value chain.
China has joined Europe, the US and Japan as a key market for patent applications
Between 2000 and 2004 the proportion of patent applications seeking protection in China
grew very strongly. Since 2004, China has joined Europe as the third most popular region in
0
100
200
300
400
500
600
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
High-valuepatentapplications
Other
EU-27
2005-08 (drop likely due
to delay in
translation)

AEA 22
which to register EV-ICT patents, after the US and Japan. This reflects China’s growing
market importance.
4.1.2 Granted patents
Granted patents will have been originally filed around three to eight years ago, so do not
include the latest innovations. However, they can provide an indication of market advantage.
Triad patents (covering US, Europe and Japan) were analysed as these are typically of
higher value.
Japanese companies hold the largest EV-ICT triad patent portfolios
Toyota has accumulated a significant patent portfolio over the past two decades, which
makes it more difficult for competitors to patent similar technologies. It holds 1,500 high-
value patent family applications in EV-ICT areas. Honda is in second place, with 420 and in
third, the highest-ranking European company was Bosch, with around 380 patents. Japanese
companies hold around three-quarters of total ‘triad’ grants over the past two decades. Even
in patents covering Europe only, Japanese companies are more active than European firms,
accounting for just below 40% of total patent grants.
Germany and France have the most triad patents of European countries
German companies hold 11% of total triad grants and France holds 3%. The European
companies with the biggest portfolios are: Bosch (a supplier); Daimler (an OEM); Renault (an
OEM) and Siemens (a supplier). US companies hold around 8% of triad grants.
Number of patents held does not directly translate into market power
Large patent portfolios can be an indicator of strength in the market, but the advantages of
patenting must be considered in light of the significant costs incurred during patent filing and
prosecution, investments in research and litigation costs against infringers. It appears that
Toyota’s extensive patent portfolio has slowed or excluded other manufacturers from the
hybrid market, enabling Toyota to gain a majority market share of hybrid vehicle sales.9
It has
also enabled Toyota to license and cross-license hybrid technology. Experts we interviewed
acknowledged that Japanese firms have the strongest EV-ICT patent portfolios, but many
thought that the ability to trade IP and the fast pace of technological development would
mean that European firms would not necessarily be disadvantaged as a result.
4.1.3 Position of Europe compared to other world regions
Europe remains behind Japan in terms of patent generation, but there are other
opportunities to ensure access to intellectual property
In the automotive sector, it is very common to cross-license (trade patent rights) and litigation
over patent infringement is relatively rare (compared to, for instance, the recent spate of
high-profile mobile technology patent cases).Given the speed of technological change and
the faster rate at which competitors can bring imitations to market, it may be that firms are
choosing other strategies. Alternatives may include keeping trade secrets or public research
disclosures.
9
Griffith Hack (2009) Who holds the power?

AEA 23
Figure 11: SWOT analysis for European companies and their intellectual property
strategies
4.2 R&D investment in the EU and Other Regions
Europe has the highest automotive industry R&D spend of any world region
The European automobiles and parts sector spent almost €30 billion on R&D in 2011. Japan
is close behind with €23.6 billion and the USA is third with €11.6 billion. Figure 12 shows a
clear correlation between sales and R&D spend, but it is not clear whether there is a causal
link between the two.
OEMs spend more on R&D than suppliers; Toyota spends the most, followed by VW
OEMs spend more on R&D than automotive suppliers. Eight of the top ten automotive
company R&D expenditures globally are OEMs, Bosch and Denso being the only suppliers.
Toyota spends the most on R&D at €6.7 billion in 2011, with the Volkswagen Group close
behind with €6.3 billion. However Toyota’s R&D spend as a percentage of sales revenue is
3.8% - less than VW, which spends 4.9% of its sales revenue on R&D (see Figure 12).
It is not possible to identify private sector R&D spending on ICT for FEVs
Companies do not divulge specific information on R&D strategies or how their R&D budget is
split between different priorities. As a result of the development cost and diversity of new
technologies, OEMs are increasingly forming joint ventures.
TO
WS
IP generation
Strengths Weaknesses
• European companies appear to be focussing
on their home markets, where they hold
around a third of grants.
• Germany, in particular, shows strong activity
being the country with the second highest
number of ‘high value’ patent applications in
‘EV-ICT technology’.
• European companies hold a relatively small
patent portfolio compared to Japan, both
domestically and globally.
• Recent research trends indicate that despite
increased effort, European companies
remain well behind Japanese companies in
filing patent applications.
Opportunities Threats
• Forming alliances. The Renault-Nissan
alliance is an example of past success.
• Opportunities to license or buy technology;
the market is highly dispersed, with many
small start-ups who could be open to
collaboration.
• The fast-moving technology areas of ICT
may lend themselves more to strategies
other than patenting, which may undermine
the apparent lead of Japanese companies.
• Expensive new technologies such as these
are normally first introduced in premium
brands where Europe has a strong position.
• Toyota’s extensive patent portfolio could
present a challenge for European
companies. In the past, it has slowed or
excluded other manufacturers from the hybrid
market, helping Toyota to gain a majority
market share of hybrid vehicle sales.
European companies must be mindful of
infringement risks.
• Current and past activity appears to focus
more on hybrid technology as opposed to
fully electric vehicles, which could be
problematic if the market moves towards
electric vehicles

AEA 24
Figure 12: Sales vs. R&D spend for the top OEMs (data extracted from the 2011 EU
Industrial R&D Investment Scoreboard10
)
The US provides €1,658 billion public funding for automotive R&D, closely followed by
Europe at €1,611 billion
Public sector automotive R&D funding was investigated by the FP7 project, EAGAR
(European Assessment of Global Publicly Funded Automotive Research). The US spends
the most globally, followed by the Europe. Japan, China, Korea and India are far behind.
Automotive companies are locating new R&D centres in growth regions such as China
and India. Silicon Valley is becoming a focus for telematics R&D
Many automotive companies are opening R&D centres in China and India. This is primarily to
ensure they understand customer requirements in these growing markets, and not to
outsource R&D for European markets. Silicon Valley in the US is a growing location for
telematics R&D due to the existing ICT expertise located there.
Industry experts voiced a number of suggestions for improving R&D investments
The experts we interviewed believed that European R&D is world class, but is under threat
from emerging economies, which are quickly developing their capabilities. They suggested
several options for improving the quality of R&D:
 Further use of public-private partnerships (PPPs) to manage public R&D funding;
 The creation of regional centres of excellence for key technology areas;
 ‘Foundation manufacturing’ facilities for use by SMEs to reduce development costs;
 Specialist research centres with close academic and industrial ties;
10
EC JRC, The 2011 EU Industrial R&D Investment Scoreboard, 2011, Available online at:
http://iri.jrc.ec.europa.eu/research/scoreboard_2011.htm
0
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2,000
3,000
4,000
5,000
6,000
7,000
8,000
0 50,000 100,000 150,000 200,000
R&DSpend(€m)
Sales (€m)

AEA 25
 Facilitate funding projects closer to market by facilitating partnerships that represent
likely supply chains rather than pre-competitive research partnerships.
4.3 Technical capabilities
Europe’s automotive industry has some of the best technical skills in the world
European automotive technical and engineering skill levels are comparable with the
developed automotive nations of Japan and Korea. Experts believe that on average, Chinese
engineers do not currently exhibit the same skill levels, but they are improving.
Some key automotive nations in Europe currently have a skills shortage in electrical,
electronic and mechatronic engineering which is expected to increase
The shift to electric vehicles will require a different skill base in the automotive industry: from
mechanical engineering to electrical, electronic and mechatronic engineering. The UK and
Germany currently have a shortage of skills in these areas; this shortage is expected to
increase as the industry develops in this direction. There are expected to be an additional
193,000 engineers employed globally in the electronics element of the automotive industry
by 2030. Some 50,000 of these are likely to be in Europe.11
Europe needs to attract young talent into automotive engineering
Europe is suffering from an ageing engineering workforce. One suggestion to combat this
trend is to adjust immigration policy to remove the barriers to allow skilled foreign engineers
to gain employment. To attract emerging talent, the automotive industry needs to become an
appealing career option for a young, diverse new breed of ‘Generation Y’ engineers.
Along with a skilled workforce, Europe possesses ‘FEV friendly’ infrastructure
Many European countries (particularly in North-western Europe) rank highly in assessments
of their ‘network readiness’.12
An existing network and communications infrastructure is a
prerequisite for ‘V2X’ (vehicle to vehicle, grid, and infrastructure) communications. This
makes it more likely for a V2X market to develop early in Europe, particularly compared with
emerging markets that have less well developed communication infrastructure, standards
and regulations.
4.4 Cross-industry fertilisation
Technological synergies exist between the automotive, aerospace, microelectronics,
microsystems and embedded systems industries. Europe is one of very few regions in the
world to have players in all these industries. Examples of potential cross-industry fertilisation
that could benefit the automotive sector include the following:
A move to a new modular architecture for ICT could improve quality and reduce costs
The aerospace industry has moved away from segregated, function-specific electronic
control units towards a new modular architecture. This move was motivated by the potential
for the use of commercial off-the-shelf components, increased reliability and fault tolerance
and reduced maintenance requirements. A similar move could benefit the automotive sector
in FEVs.
11
McKinsey & Company, 'Boost! Transforming the powertrain value chain - a portfolio challenge', 2011. Available online at:
http://autoassembly.mckinsey.com/html/resources/publication/b_Boost_Transforming_powertrain_2011-02.asp
12
INSEAD, 'The Global Information Technology Report 2010–2011, Transformations 2.0', 2011. Available online at:
http://www3.weforum.org/docs/WEF_GITR_Report_2011.pdf

AEA 26
Increased use of virtual testing could reduce vehicle development costs
Virtual testing is an industry norm within aerospace, where full physical testing is often cost
prohibitive. Advanced simulation and modelling technologies are widely used for mechanical
and electronic systems, shortening development cycles and reducing the cost of prototyping.
While virtual testing already occurs in the automotive sector, greater use could boost overall
industry competitiveness and exploit synergies with the EU computing industry.
A systems approach to diagnostics could reduce costs and address battery concerns
The aerospace industry focuses on on-board diagnostics, where an on-board maintenance
system computes information to give relevant warnings. This significantly reduces the need
for additional complex off-board diagnostic systems and services. Automotive diagnostic
troubleshooting focuses on individual components, but a systems approach could give cost
advantages, increase vehicle utility and improve the overall ownership experience. A
prognostic approach could be of particular benefit to FEVs, where the battery’s health and
future value represents a significant risk to the owner.
Further integration of ‘X-by-wire’ systems will enhance active safety capabilities
’X-by-wire’ has reached a significant level of maturity within the aerospace industry, but wide
use of control with no mechanical connection in the automotive sector still faces cost,
regulatory and acceptance barriers. Further development of steer-by-wire offers improved
crash response of vehicles, optimised design of the engine bay and improved ergonomics.
Replacing other mechanical components with electronic counterparts can eliminate high-cost
components, reduce vehicle weight and introduce active safety functionality
Improved microelectronics will increase FEV efficiency and range
The insulated gate bipolar transistor (IGBT) is a critical component for high-voltage, high-
current coupling between the power source and traction motor in an FEV. The frequency at
which IGBTs can perform high-voltage switching and the temperature limits at which they
can operate will be a key determinant of efficiency. Component manufacturers are
developing composite semi-conductor materials that offer increased thermal performance
and a reduction in energy consumption.
Multicore microcontroller units (MCUs) may simplify architectures and improve safety
Automotive microcontroller units (MCUs) for vehicle systems may be integrated into a single
controller. New functions demand greater computing power and OEMs are gradually shifting
to multicore MCUs in their electronic systems architectures. These offer the ability to
consolidate control of multiple systems, and for more segregation between safety critical
functions and general-purpose functions to enhance vehicle safety.13
A similar transition has
already been seen in the telecoms industry.
Improved MEMS technology will improve driver safety and navigation systems
Micro-electro mechanical systems (MEMS) are miniaturised sensing and actuation devices,
including gyroscopes, accelerometers and electronic compasses. The huge appetite for
smart phones and tablet devices is spurring rapid innovation and driving down component
costs, with Europe at the forefront of development. The implications of these developments
for automotive applications include enhanced offerings to predictive and adaptive cruise
control, advanced driver safety systems and navigation. However, new safety standards in
13
Monet, A., Navet, N., Bavoux, B. & Simonot-Lion, F. ‘Multi-source software on multicore automotive ECUs - Combining runnable sequencing
with task scheduling’ 2012. Available online at: http://www.loria.fr/~nnavet/publi/ECU_TIE_2012.pdf

AEA 27
the automotive industry means that manufacturers of MEMS for consumer electronics may
face regulatory barriers to supplying into safety-critical automotive applications.
Model-based software development can reduce development time and costs
Embedded systems are forecast to grow to 35% of total vehicle value by 2015, with
development costs outstripping all other vehicle R&D areas. Software development time is
growing because of the rising number of functions, whereas development time in all other
vehicle areas is decreasing. Model-based development has the potential to shorten
development times but large investment requirements may pose a barrier to uptake.14
4.5 Feasibility of EU manufacture of FEVs and
components
Electric vehicles will continue to be manufactured within Europe if a market exists
There is a trend for expanding vehicle assembly facilities in growth regions such as China,
but analysis suggests vehicle assembly within Europe is secure and the concern that
manufacture will move exclusively to emerging economies is overstated.15
However, the FEV
value chain shifts the value-add activities upstream, particularly with batteries, and it is not
clear how much of this will occur in Europe. Automotive manufactures increasingly aim to
manufacture vehicles in the target market. Europe’s medium-term FEV market growth is
predicted to be as strong as any world region, despite overall flattening of car sales volumes.
Europe needs to increase battery manufacturing capabilities
Most European OEMs currently import batteries. Domestic manufacturing would have the
advantage of shortening supply chains, reducing risk and the capital tied up in shipping.16
In
the long term, battery and motor production is expected to be highly automated, meaning
highly skilled labour is more important than a low cost workforce. Large investments will be
needed for Europe to become a major manufacturing centre for FEV batteries, but
participation is important to keep the FEV value chain in Europe.
European OEMs are expected to increase in-house motor production
Most European manufacturers currently outsource their electric motors from suppliers but
many are now looking to develop them in-house. Analysis indicates that about 60% of the
OEMs that are outsourcing motors are planning to bring the capability in-house.17
Examples
include a Daimler-Bosch joint venture to manufacture electric motors in Germany, and a joint
venture between BMW and Peugeot-Citroen to produce FEV components in France.18
Europe leads the automotive semiconductor industry but faces growing competition
As the home of three top suppliers, Europe has a strong position in automotive
semiconductors, holding 36% of the market in 2008. This advantage was developed due to
the presence of luxury automotive brands, which lead in introducing new ICT technology.
14
Kirstan, S. & Zimmermann, J. ‘Evaluating costs and benefits of model-based development of embedded software systems in the car industry –
Results of a qualitative Case Study’. 2010. Available online at: http://www.esi.es/modelplex/c2m/docum/Paper_ECMFA_Altran.pdf
15
IBM, 'Automotive 2020: Clarity beyond the Chaos', 2008. Available online at: http://www-935.ibm.com/services/us/gbs/bus/pdf/gbe03079-usen-
auto2020.pdf
16
Roland Berger, 'E-Mobility – a promising field for the future: Opportunities and challenges for the German engineering industries', 2011.
Available online at: http://www.rolandberger.com/media/pdf/Roland_Berger_E_Mobility_E_20110708.pdf
17
Frost and Sullivan. ‘Hybrid and Electric Vehicles to boost market for Electric Motors’ 2011. Available online at:
http://www.frost.com/prod/servlet/market-insight-top.pag?docid=226755664
18
PSA Peugeot Citroen. ‘BMW Group and PSA Peugeot Citroën to Invest 100 Million Euros in Joint Venture on Hybrid Technologies’ 2011.
Available online at: http://www.psa-peugeot-citroen.com/en/psa_espace/press_releases_details_d1.php?id=1226

AEA 28
However, competition is increasing as new players enter the market, stimulated by sales
growth in China and India. Much of the hardware is small enough to be shipped economically
across the globe, so production could move to lower-cost regions. Semiconductor suppliers
have tended to keep their hardware and first level software in the same region. However,
beyond 2015 European suppliers could move their hardware design out of Europe to reduce
costs. There is a further risk that the embedded software competence will follow.19
Europe’s automotive telematics sector is under threat
The telematics market is changing rapidly, with the consumer demanding the same
functionality from their car as they can get in the consumer electronics products. Consumers
are used to smart products with common operating systems, and expect automotive
telematics to work in this way. The greatest added-value will be in the services that can be
accessed, hardware specification being less important to consumers than the software
interface.20
US companies are producing some of the most advanced telematics systems.
New entrants into this market include connectivity companies such as Airbiquity, Qualcomm,
and Hughes Telematics. Hughes Telematics is currently producing the telematics for some of
the major German OEMs - Daimler, Volkswagen and Audi. If Europe is to succeed in this
sector, it is likely that this success will come from new automotive industry players such as
TomTom / Octo Telematics or WirelessCar, rather than the traditional Tier 1 suppliers. These
companies are flexible and entrepreneurial enough to adapt to the marketplace and can
produce products within short timescales.
Success factors for European FEV manufacture
Collating opinion from industry stakeholders and automotive literature, a number of potential
success factors for European manufacture have been established. These are shown in
Figure 13 below.
19
EC JRC, 'Is Europe in the Driver's Seat? The Competitiveness of the European Automotive Embedded Systems Industry', 2010. Available
online at: http://ftp.jrc.es/EURdoc/JRC61541.pdf
20
Tech Crunch. ‘The Death of the Spec’ 2011. Available online at: http://techcrunch.com/2011/11/14/rip-spec/

AEA 29
Figure 13: Seven success factors for European FEV manufacture
Factors that can help secure a European FEV manufacturing industry
1
Europe must ensure that it retains its position at the top of global automotive
R&D; the industry must invest heavily in new FEV technologies, and public
R&D spending should be comparable with, if not leading, the other major
automotive regions.
2
Europe needs to create a strong single market for electric vehicles by
harmonising incentives and acting to address the barriers to their
deployment (discussed in more detail in Objective C - barriers to FEV
deployment). This includes issues with market and regulatory fragmentation
in Europe due to varying Member State regimes.
3
Europe needs economic stability, and the Eurozone to remain in place, to
create the right conditions for private investment in the region.
4
Europe needs to support SMEs that specialise in electric vehicle solutions.
These small companies are sufficiently flexible and innovative to adapt to the
new mobility challenge and are likely to drive growth into new value chains.
Support could be in the form of early or late-stage investment project
financing.
5
To be able to compete with the low labour cost economies, Europe must
ensure that its factories are highly automated and supplied with highly-skilled
labour that cannot easily be found in emerging economies.
6
To close the skills gap, Europe needs a recruitment drive to encourage
students to study engineering, in particular electrical, electronic and
materials engineering. This could also involve employing skilled non-
European engineers.
7
Europe should aim to create favourable conditions for automotive companies
looking to develop manufacturing facilities in Europe (likely if the European
FEV market is strong). This may include financial incentives, as offered in
the US and China.

AEA 30
5 Objective C: hurdles and roadmaps
The aim of Objective C: Hurdles and roadmaps is to identify barriers and hurdles to
development and deployment of the fully electric vehicle in Europe – drawing on experience
from trial deployments to date – and evaluate roadmaps towards overcoming these hurdles.
The specific aims are to:
 Identify barriers to development, industrialisation and deployment of electric vehicles,
both in terms of their successful deployment on Europe’s roads and the forming of a
competitive electric vehicle industrial value chain in Europe.
 Identify and assess possible solutions with a particular focus on the potential role of
ICT and smart systems in mitigating or overcoming the hurdles identified;
 Review existing roadmaps to overcome the identified hurdles, prioritizing solutions
with realistic targets, milestones and timescales.
5.1 Barriers to electric vehicle deployment
Many independent research studies foresee a major role for electric vehicles in the long-term
decarbonisation of the road transport sector, reducing dependence on fossil fuels and
meeting local air quality targets. However, without government support, electric vehicles are
unlikely to gain significant market share. There are a number of barriers that prevent mass
uptake; some of the most important factors are discussed here, including:
 Vehicle costs;
 Battery charging solutions;
 Standards and regulations;
 Access to raw materials; and
 Consumer expectations
5.1.1 Vehicle costs
The biggest barrier to consumer take up of electric vehicles is the high upfront cost
Current FEVs are substantially more expensive to buy than an equivalent petrol or diesel
vehicle. However, studies have found that few private car purchasers are willing to pay a
significant premium for an FEV.21,22
For fleet managers, who have a higher focus on the total
cost of ownership, high capital cost is a less significant barrier.
Higher upfront costs for FEVs are primarily due to the current cost of batteries
For current FEVs, the battery can represent up to 50% of the cost of the vehicle.21,23,24
Future
reductions in battery costs may be hampered by the high cost of skilled labour for
21 Deliotte, 'Unplugged: EV realities versus consumer expectations', 2011.
22 CENEX, 'The Smart Move Case Studies', 2011. Available online at: http://www.cenex.co.uk/consultancy/vehicle-deployment-trials/smart-move
23 An exchange rate of 0.76 has been used throughout the report to convert US$ into €.
24 AEA (2010), Market outlook to 2022 for battery electric vehicles and plug-in hybrid electric vehicles (report for the Climate Change Committee)

AEA 31
manufacture and the rising cost of material inputs. Expected reductions in battery unit costs
may also be offset by manufacturers offering larger batteries to increase vehicle range.
The total cost of ownership (TCO) for an FEV is expected to reach parity with
conventional vehicles in between one and five years’ time in some regions.
Studies of vehicle TCO indicate that in some countries, the higher purchase cost of FEVs
could be offset by lower running costs compared to a conventional ICE vehicle in one to five
years’ time without subsidies.25,26
More conservative estimates indicate TCO may not be
comparable for electric and conventional vehicles before 203027
. Calculations depend on the
future prices for fossil fuels, electricity, and FEV batteries, all of which are highly uncertain.
Private consumers do not consider the total cost of ownership, are concerned about
depreciation and expect FEVs to have high running costs.
Private car buyers typically only take the first three years of fuel use into account when
making purchase decisions.28
This means that they are less likely to purchase vehicles with a
higher upfront cost, even if the total cost of ownership is lower. Uncertainties about long term
value and depreciation are mentioned as a barrier for purchasing an electric or plug-in hybrid
car. Consumers also tend to assume the maintenance costs of electric cars to be higher,
although experts anticipate the contrary.29
5.1.2 Charging solutions
Successful business models for charging infrastructure need to be developed
Financing charging infrastructure (particularly in public places) is a major challenge.
Significant capital expenditures are needed to provide sufficient density of charging points.
The high capital costs, low energy prices and initial low utilisation for FEV charge stations
require a completely different business model to petrol refuelling stations. The payback time
can exceed the lifetime of the outlet (typically 10 years).30
Total grid capacity is not a major issue, but unmanaged peak loading could be
Even a complete electrification of the European vehicle fleet (which is not predicted in even
the most optimistic scenarios to 2050) would only result in additional electricity demand of
10-15%. It is very likely that generating capacity will be able to meet the additional demand,
at least in the short to medium term.27
However, uncontrolled charging can significantly
increase peak load, with effects at the distribution and generation level. In member states
with relatively weak electricity infrastructure, even small scale EV introduction can cause
local power-outages if charging is uncontrolled. Fast charging applications, which place
greater strain on electricity grids, could lead to bottlenecks in all Member States.31
25 The Boston Consulting Group, 2011: Powering Autos to 2020: The Era of the ElectricCar? Available online via:
http://www.bcg.com/documents/file80920.pdf
26 International Energy Agency’s EV Technology Roadmap
27 CE Delft, 'Impacts of Electric Vehicles (5 separate deliverable reports + summary)', 2011. Available online at:
http://ec.europa.eu/clima/news/articles/news_2011051701_en.htm
28 EU DG for Internal Policies, 'Challenges for a European Market for Electric Vehicles', 2010. Available online at:
http://www.icarsnetwork.eu/download/NewsEvents/itre_ep_report_electric_cars.pdf
29 LEI, CE Delft, Fraunhofer ISI 2011: Behavioural Climate Change Mitigation Options Domain Report Food
30
Electrification Coalition (ELCOA). Economic Impact of the Electrification Roadmap
31 Grid for Vehicles (G4V), Work package 3 / Deliverables 3.3. List of identified barriers and opportunities for large scale deployment of EV/PHEV
and elaboration of potential solutions. Available online under:
http://www.g4v.eu/datas/reports/G4V_WP3_D3_3_list_of_barriers_for_deployment.pdf

AEA 32
There are technical and cost barriers to smart charging of FEVs
Smart charging of FEVs, where charging is automatically scheduled to take place at an
optimum time for grid energy and power balance, faces several barriers in Europe according
to stakeholders. This includes technical barriers to implementing the required market
systems, and high costs preventing a viable business model from being developed.
5.1.3 Standards and regulations
Further work is required on standards and regulations for data protection and safety
European standardisation and regulation for vehicle charging and type approval has made
significant progress but there is still work to do in areas such as data protection, safety
requirements; communications between vehicles and the grid; and other communications
standards. Industry experts were concerned that overregulation and slow progress could
hamper European competitiveness.
5.1.4 Raw materials
FEV motors and batteries currently utilise materials that could pose resource risks. In
particular, rare earth elements are only mined in a few locations, and supply is expected to
outstrip demand in the future, leading to significant price rises. Figure 14 describes the
resource risk for four materials used in FEVs. Advanced manufacturing techniques may be
able to limit the amount of rare earth elements needed, but to date it has been challenging to
eliminate them entirely.

AEA 33
Figure 14: Resource risks associated with FEVs
Material Application Risk
Most
critical
Least
critical
Dysprosium
High efficiency
permanent
magnet motors
Limited substitutes currently exist. Demand
expected to grow strongly due to FEVs.
Current reserves mainly in China; other
mines due to come on stream around 2015
but add less than 15% to current
production. China is restricting exports.
Neodymium
High efficiency
permanent
magnet motors
Limited substitutes currently exist. Demand
expected to grow strongly due to FEVs and
other motor/generator applications (e.g.
wind turbines). Demand likely to exceed
production in the short term. Current
reserves mainly in China; other mines due
to come on stream around 2015, but supply
will remain tight. China is restricting
exports.
Lithium Li-ion batteries
Sufficient reserves exist, but supply may
not be able to scale as quickly as demand,
leading to short-term price rises.
Cobalt
Battery
cathodes
Sufficient reserves exist, but supply may
not be able to scale as quickly as demand,
leading to short-term price rises.
5.1.5 Consumer expectations
Surveys of consumer attitudes towards FEVs21,32
typically find that expectations on range,
charge times and purchase price far outstrip the current reality. However, evidence from field
trial results suggest that consumer views change when they participate in FEV trials. Some
key insights reported by field trials are shown in Figure 15.
32 TSB, 'Initial findings from the ultra-low carbon vehicle demonstrator programme', 2011. Available online at:
http://www.innovateuk.org/_assets/pdf/press-releases/ulcv_reportaug11.pdf

AEA 34
Figure 15: Five insights into consumer reaction during field trials
Consumer views: insights from field trials
1
Consumer perceptions are changed by practical experience of FEVs. Initially
trialists have concerns on range, reliability and safety – but post-trial surveys
reveal that these concerns are significantly reduced by the end of the trials.
However, private consumers remain unwilling to pay a significant price
premium for an FEV.
2
Whilst few faults are reported in the vehicles themselves (and significantly,
no safety issues), problems were reported with the integration of
communications between vehicle, charging infrastructure and support
services. This undermined consumer confidence.
3
Most trialists had access to home charging, and typically relied on this to
recharge the vehicle. Despite this, survey results show that they still view
public recharging infrastructure as an essential requirement.
4
A strong motivator for both private and commercial trialists to try electric
vehicles is their perceived ‘eco friendliness’. For this reason, there was a
strongly positive response when vehicles were provided with a ‘green’
electricity tariff so that they were charging on low-carbon electricity.
5
In general, fleet operators were more open to FEVs than private individuals
because they placed more emphasis on total cost of ownership (over capital
cost), they saw marketing benefits in the green image of FEVs, and they
were willing to modify their management processes to accommodate the
charge and range restrictions.
Inconvenience of charging is cited as a main barrier to buying an FEV.29
Most consumers expect an electric vehicle to recharge its battery in two hours or less.21
This
is substantially shorter than today’s typical charge times of 6-8 hours. However, practical
experience can shift expectations: after a three month trial, three quarters of consumers felt
charging speeds suited their daily routine.22
Most charging currently occurs at homes and
workplaces; however users appreciate the security and flexibility offered by public recharging
stations.
5.2 Solutions to overcome hurdles
A number of technological solutions to the hurdles of FEV cost and performance are detailed
in Objectives A and B. In addition to these, there are a number of business models that seek
to address the key barriers of vehicle cost and availability and use of recharging
infrastructure.
Leasing of vehicles batteries could insulate the consumer from the high capital costs
Leasing avoids both the high up-front costs of purchasing an FEV and the risks associated
with ownership. Vehicles can be leased under a service contract for a fixed rate; this model is
already employed in the commercial fleet segment but is uncommon in private vehicles.

AEA 35
Alternatively, the battery can be leased and the rest of the vehicle sold as normal. A
subscription service model, where the lease includes access to charging infrastructure or
swap stations (and possibly electricity), is another option. The service provider has full
control over the maintenance of the batteries, reducing the risk of unreliability and
depreciation to the consumer. The hurdle to both leasing systems is developing a business
model where the service provider takes on an acceptable risk for the return, whilst providing
the service at an attractive price for consumers.
A range of business models will be needed to give comprehensive charging
infrastructure coverage
 Public infrastructure requires significant upfront investment for the purchase and
installation of charging points, and will have an extended payback period as the
charging price needs to be kept low to guarantee usage. Infrastructure usage is likely
to be unpredictable and the model could increase the peak load on the local
distribution grid, which could cause problems if the network is close to capacity.
 Private infrastructure represents an investment decision and, therefore, seeks a
return. The cost to the consumer will be at a higher price over public charging, but is
expected to offer additional benefits such as convenience of location and/or
integrated IT services.
 End-to-end or network operator solution offers the consumer a single point of
contact and provides the full service from the vehicle purchase through to its
operation (charging) and maintenance (battery and vehicle). Consumers are offered a
contract where they will pay a set fee each month for the running and maintenance of
their vehicle. Contracts vary but can include in-vehicle services, managed charging
and battery swap.
5.3 Solutions offered by ICT
ICT applications offer a range of solutions to overcome hurdles to FEV take-up. ICT can
facilitate technological enhancement, or facilitate new business models or value chains in
FEVs. Figure 16 summarises the ICT applications that contribute to overcoming hurdles.

AEA 36
Figure 16: The role of ICT in overcoming hurdles to electric vehicle deployment
Photo courtesy of GM
5.4 Roadmaps for FEV deployment
Europe, along with many other world regions, has developed a number of roadmaps for
overcoming the barriers to FEV deployment. The study team reviewed and compared a
range of roadmaps from the major automotive markets.
All roadmaps target a very significant acceleration in deployment rates around 2020
Figure 17 compares deployment targets from different roadmaps. The period around 2020 is
almost universally seen as a key milestone, when deployment of FEVs enters the mass
market. This has implications for the Horizon 2020 programme: it will need to prepare
European industry for mass production of FEVs, not only to achieve European targets but to
be positioned for the growing export potential.
The roadmaps agree on the main barriers and technology areas for development
The consensus from roadmaps was that battery cost is the main barrier to deployment, and
accordingly battery technology development is one of the key focus areas. This is also seen
as a key strategic technology by many regions. Other common themes include provision of
public charging infrastructure, development of standards, and improvement of components
including motors and power electronics. ICT, and the development of a revised vehicle
architecture, are also commonly referenced.
Smart battery control
• Helps to reduce battery cost by
maximising potential of cells
• Helps to improve battery
depreciation through increased
battery lifetime
• Could also facilitate battery
leasing models by feeding back
battery health informationRange extender
integration
• Reduces range anxiety by
improving the driving range of
the vehicle
Optimising charging
• Improving the ease and
convenience of charging, and
reducing charging times, will
improve consumer acceptance
Powertrain efficiency
• Helps reduce the size and cost
of the battery (for a given vehicle
range) by improving vehicle
energy efficiency
• New motor designs using ICT
can reduce the reliance on rare
earth elements
Active load
management
energy efficiency
Energy harvesting
systems
energy efficiency
Grid integration (V2G)
• Could reduce running costs of FEVs, by charging
at off-peak rates and/or generating revenue through
demand-side management; alleviates grid capacity
concerns
Drive by wire / safety
• Battery safety systems help
address concerns over battery
stability and crash safety
Driver interface
• Helps reduce range anxiety by
providing drivers with intelligent
information on vehicle range and
recharging options

AEA 37
Figure 17: Comparison of FEV deployment targets from different roadmaps
2015 2016 2018 2020 2025 2050
IEA, 2011 (global)
1.1m
EV/PHEV
sales
7m
EV/PHEV
sales
18m
EV/PHEV
sales
106m
EV/PHEV
sales
ERTRAC / EPoSS,
2010 (EU)
1m
EV/PHEV
on the road
5m
EV/PHEV
on the road
ICT4FEV, 2012
(EU)
1m
EV/PHEV
on the road
20m
EV/PHEV
on the road
USA, 2011
1m
EV on the
road
Canada, 2010
0.5m
EV on the
road
South Korea, 2010
1.2m
EV/PHEV
produced
EU roadmaps are strong on technology development, but other world regions more
openly target commercial imperatives
The European roadmaps reviewed gave a comprehensive and detailed view of the
technological development needed, and identify R&D needs. However, there is less
emphasis on maintaining Europe’s competitive position. Roadmaps from other regions were
more explicit in this area, as described below in Figure 18. In the future, European
roadmapping exercises could integrate technology roadmaps with roadmaps for value chain
development and securing a competitive industrial position, drawing closer links between
technology and competitiveness.

AEA 38
Figure 18: Different approaches found in FEV roadmaps
EU
- The roadmaps reviewed were strongly focused on technology
- R&D needs are identified in detail by technology domain
- Technology maturity targets are set by technology
- Deployment targets are set by number of vehicles on the road
USA
- Sets targets for the cost, power density and specific power of battery
systems, and the efficiency of the electric drive train
- Similar technological focus to EU roadmaps
Canada
- Sets a target for the Canadian content (in parts and manufacture) of FEVs
- Sets targets for factors influencing uptake, e.g. cost of ownership
- Specific chapters on new business opportunities and new business
models
S. Korea
- Has roadmap targets for production as well as R&D
- Socio-economic impacts estimated including job creation and domestic
and export sales value
China
- FEV strategy integrated into industrial policy (e.g. move towards high
value manufacturing activities)
- Identifies FEVs as one of seven ‘strategic emerging industries’
- Environmental benefits seem secondary to strategic importance

AEA 39
6 Objective D: environmental and
health impacts
The aim of Objective D: Assessment of Environmental and Health Impacts is to assess the
environmental and health impacts of the deployment of electric vehicles compared with other
types of vehicle. The specific aims were:
• To assess the environmental and health impacts of the widespread deployment of
electric vehicles vs. petrol, diesel and hybrid vehicles
• To identify weaknesses and threats to the potential environmental and health
benefits of electric vehicles
• To investigate the role of ICT and smart systems in overcoming these
weaknesses and threats
6.1 The vehicle life cycle
Emissions of greenhouse gases (GHGs) and air pollutants have harmful effects on human
health and the environment. These emissions are produced at various stages of a vehicle life
cycle, from its manufacture to its disposal or recycling. Figure 19 shows the vehicle life cycle.
Our lifecycle analysis compares four types of vehicle:
 Petrol internal combustion engine vehicle (ICEV): A car utilising an internal
combustion engine fuelled by gasoline;
 Diesel ICEV: A car utilising an internal combustion engine fuelled by diesel;
 Petrol hybrid electric vehicle (HEV): A ‘full hybrid-electric’ car utilising an internal
combustion engine fuelled by petrol in parallel with an electric motor and battery,
allowing for limited vehicle operation in pure electric mode and regenerative braking
but not external charging of the battery;
 Battery electric vehicle (BEV): A fully electric car utilising an electric motor powered
exclusively by a rechargeable battery.
We compared the impacts of each vehicle over the life cycle, in the following areas:
 Global warming potential due to the emissions of greenhouse gases;
 Acidification potential, eutrophication potential, photochemical pollution, and
particulate matter concentrations due to the emissions of air quality pollutants.
The impacts were monetised using well-established estimates of their external costs, in order
to compare the complete impacts of each vehicle and life cycle stage on a like-for-like basis.

AEA 40
Figure 19: Overview of a vehicle lifecycle
During vehicle manufacture, the type and size of battery is likely to be the most
important factor influencing differences between vehicle types
ICEVs typically have a relatively small lead-acid battery, whereas BEVs have a much larger
battery to provide motive power. The extraction and processing of the various raw materials
needed to make the battery can lead to significant emissions; therefore in general BEVs
have higher “embedded” emissions compared to ICEVs. External costs from the
manufacturing stage of a BEV could be over 75% higher compared to a conventional ICEV,
and around 11% higher compared to a HEV.
Based on a typical European electricity generation mix, the fuel production impact for
BEVs is higher compared to impacts from petrol or diesel production.
The impact of the fuel production stage for BEVs is heavily influenced by the electricity
generation technologies used. Electric vehicles use electricity from the grid to recharge their
batteries, which leads to emissions of air pollutants upstream at power stations. These
emissions can vary widely depending on the electricity generation mix. Based on the present
day EU-wide mix, the fuel production impact from BEVs is around 15-30% higher than for
ICEVs. As the grid decarbonises, the impact of electricity production is expected to
significantly reduce.
BEVs are significantly more energy efficient than ICEVs over the full fuel cycle
In a typical fuel cycle for a diesel ICEV, only around 15-20% of total primary energy is turned
into motive power, whereas for a BEV around 40% is turned into motive power. Figure 20
shows the energy losses over the fuel cycle, from fuel production to motive power.
Reductions of in-use emissions are an important advantage of using electric-powered
vehicles – even compared to the strictest tailpipe emission standards ICEVs
The by-products of combustion in ICEVs include many harmful pollutants that are expelled
through the vehicle’s exhaust pipe. In contrast, the in-use (tailpipe) emissions of BEVs are
zero, so their only impact arises from particulate matter generated by tyre/road wear (non-
tailpipe emissions). This means that the external costs from the in-use stage are reduced by
over 90% for BEVs compared to ICEVs.
Vehicle
production
• Raw
materials
• Assembly
• Transport
Fuel
production
• Production
• Processing
• Transport &
distribution
Vehicle
operation
• Tailpipe
• Tyre &
brake
End of life
• Disposal

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