In polling 200 C-level executives in the global automotive industry for the 2013 automotive survey, KPMG found that more than a quarter (26 percent) of executives say their companies will direct the most investment over the next five years toward downsizing and optimizing internal combustion engines, and 36 percent say that most of their current R&D expenditures still go into combustion engines.
In addition, 71 percent of execs believe the optimization of the combustion engine will continue to offer more efficiency and CO2 reduction potential than any electric vehicle technology for at least the next 6-10 years.
“When you look at the current MPG estimates for new cars, it’s very evident that automakers are continuing to significantly improve engine efficiency,” said Gary Silberg, National Automotive Industry leader for KPMG LLP. “Electric vehicles are still in their infancy and consumer demand so far has been modest due to concerns over infrastructure, battery costs and range. Today’s combustion engines can continue to offer consumers the fuel efficiency and performance they desire, and what’s clear is that the internal combustion engine is not going anywhere anytime soon.”
However, Silberg adds, “OEMs and suppliers are not investing in combustion engines at the expense of alternative drive trains. They will also intensify investment in electric technology, fully appreciating what is at stake in a very competitive industry.”
In fact, the KPMG survey found that in addition to combustion engines, a wide range of electric powertrain technologies will be an increased focus of the industry’s investment matrix, but executives clearly indicate that hybrid systems are the clear favorite right now over electric. Over the next five years:
- 26 percent say their companies will invest most in plug-in hybrid fuel systems,
- 17 percent say hybrid fuel systems,
- 13 percent say battery electrified vehicles with range extender,
- 11 percent say fuel cell electrical vehicles,
- 8 percent say pure battery electrified vehicles
Almost all (87 percent) agree that battery electric vehicles won’t be able to match the range of fuel-driven cars for at least another five years. Additionally, executives expect that plug-in hybrids (36 percent), non-plug-in hybrids (20 percent), battery electrified power with range extender (17 percent) and fuel cell electric power (17 percent) will be the electrified propulsion technologies to attract the most consumer demand over the next five years.
“What’s interesting is that automakers are placing bets across the board, and large bets at that, especially hybrids,” added Silberg. “In addition, although not part of our survey, automakers continue to explore powertrain opportunities that would allow them to capitalize on the U.S. abundance of natural gas.”
Executives indicate a number of measures that are very important to make electric vehicles a viable option for mainstream buyers, but the two most significant are government subsidies (79 percent) and the reduction on purchase price through leasing of expensive e-components (e.g. batteries).
Despite investment, broad e-vehicle adoption not expected by 2025
Despite investment levels, two-thirds (66 percent) of executives don’t expect electrified vehicles (meaning all e-vehicles, from full hybrids to FCEVs) to exceed 15 percent of global annual auto sales before 2025. Executives in the U.S. were the most optimistic for e-vehicles in that timeframe, with 45 percent predicting that these cars would account for more than 16 percent of vehicle registration by 2025.
For the KPMG Global Automotive Executive Survey 2013, KPMG interviewed 200 C-class global automotive executives, including 22 from North America, representing vehicle manufacturers and suppliers, in November 2012. KPMG has released an annual survey of automotive executives expressing their views on the state of the industry since 1999.
About KPMG LLP
KPMG LLP, the audit, tax and advisory firm (www.kpmg.com/us), is the U.S. member firm of KPMG International Cooperative (“KPMG International”). KPMG International’s member firms have 152,000 professionals, including more than 8,600 partners, in 156 countries.
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