The challenge, launched by Portugal Mobi Summit, was to understand whether the automobile industry is on the right path towards decarbonization. And the conclusion is that it’s not only growing faster than thought, namely in Portugal, but is preparing itself to give the big jump towards a new era. It’s as if the electrification of the automobile was already a challenge of the past for manufacturers, which are visioning this reality for years now, and just turned on the engines for the transformation of the business model itself, with the automobile sector becoming increasingly a service provider of transportation versus merely selling equipment.
This was the message that Consumer Experience Director of Volvo Cars Portugal, Aira de Mello, left during the second session of the Portugal Mobi Summit 2021, transmitted through TSF this week.
“We believe that the business model is already changing, from online shopping to the car as a service and not as individual property” revealed Aira de Mello. A strong sign in that direction is the fact that Volvo has “a new concept in five European markets, that doesn’t entail the purchase of an automobile, but a subscription that is a car but also other associated services”.
And continued: “When a 100% electric car is purchased there is always the burden of not knowing what to do with it eight years from now. It’s a pertinent question, mainly for Portuguese people that surpass the European average of owned cars. With this business model, where people do not acquire the vehicle, that burden disappears. People pay a monthly fee and benefit from extra services in the mobility sector but also in entertainment, leisure, etc” exemplified.
The director of the Swedish automobile manufacturer anticipates that “in 10, 20 years, what we will want will be total mobility where subscriptions such as this become more central, and with autonomous driving, people might not even have a car parked at the door”.
Because the use of the automobile is very short, 90% of its time stays parked “autonomous driving will be the best option, where it will be possible to book it via an app, go from point A to point B, all of this in a completely safe way, where one can read, listen to music, talk or work during the trip and, arriving to the destination, the vehicle can go to another destiny, serving other clients”.
And for automobile manufacturers, it’s not a shot on the foot? “No, the future is going towards that direction and we know that there are companies outside of the sector – such as Virgin, Amazon, Google – that will launch those solutions in the market. If those of us who are in the sector don’t accompany and lead this trend, sooner or later we will disappear” she said.
In any case, Volvo never had such a significant growth as the one since it took the electrification path. “And now we are launching the 100% electrics and de-continuing the combustion ones, that have their days counted. In some models, there isn’t even that option anymore, such as in the XC40 case, our best-seller, or the S60.
For now, there are still a couple of conditioning factors for a major expansion of electric mobility, be that the cost of batteries, which significantly influences the process of vehicles or still the fragile geographical distribution of the public charging network. In this matter, Pedro Vinagre, Executive Board Member for Mobility at EDP Comercial is optimistic: “The prices of batteries fell 13% between 2019 and 2020, and this is the most expensive part of an electric vehicle. This reduction of costs is fundamental for the democratization of electric mobility and for the consumption savings to be even more significant, leading clients to opt for electric vehicles. Today, from the point of view of the total cost in some of the usages, the economics match”, guarantees.
Pedro Vinagre believes that the tendency for the decreasing of the prices of batteries will continue in the next few years and he points out two reasons. First, the exponential growth of demand that we were already assisting. And second, from a technological point of view, strategies are being developed that will help to reduce the cost of those functions. All of that will lower the cost of production. “There is a huge potential for different types of usage – solar panels with batteries attached or the recycling of some of its more valuable components for other purposes are a good example, but we cannot leave out the issue of batteries’ second life” warns.
In electric vehicles, batteries have a limited period of life, about 10 years, but at the end of that period, they can still be used for other purposes. “Today that is a priority for all of the market’s players – actually, EDP Inovação is leading the Second Life project for batteries – and we believe that more options for a different use will be found, so not to be one of the most critical issues in electric mobility. A battery in its 60 or 70% capacity, might not work for electric vehicles but it might allow storing energy through solar panels to use in those periods of time in which it’s more expensive, substituting the network’s consumption” concluded Vinagre.
In the same line, the former Secretary of State for Mobility, José Mendes, said that “mobility is hot right now. Be in the modal choice or the level of motorization of vehicles, we still need to make substantial changes”. It reminded us that, as in everything in life, it has its negative points. “When you alter the paradigm in such a disruptive way, there are always some difficulties – first of them being the incumbent because the motorization formula associated with combustion engines still weighs in know-how and entails many jobs, and the transition is not made from one day to the other”.
That is, without vehicles, there isn’t a business line sustainable enough to install chargers and if there is no charging network, people won’t purchase vehicles either. This impasse is being overcome not only due to state investment but also due to major developments in the offer of ultra-fast chargers.
As far as batteries’ end of life problem, José Mendes underlines that the recycling industry is also growing, finally managing quantities that justify it. On the other side, José Mendes highlighted the hydrogen fuel cells that can “help to reduce the size of batteries in its volume as well as in the intensity of usage. Therefore, there is a long path to undertake”, concluded.
“We, at the Fundação Mestre Cascais, are developing research to present as recommendations to the government and companies for the renovation of its collective transportation fleets for passengers. When we look at the total cost of the operation, we verify that there are advantages in the hydrogen technology”.