A PERFECT STORM
As you may have noticed, I am located in the land of whinging Pommie bar stewards. Presently all forms of communication are monitored so I’d just to like to make it clear the Right Hon Sir KR Starmer KC, the Glorious Prime Minster of United Kingdom, is thriving. Now the unpleasantness is out of the way, down to business.
Motorists zoom about
Motor insurers scope risk and provide cover for all sorts of unintended action. Collision repairers restore the vehicle back to pre-accident condition, which may be even better than that.
Vehicle manufacturers build vehicles and dream of keeping “customers” after the initial purchase. The most numerous vehicles weigh anything upwards of 1200kg, are packed with multiple sub-systems which are steadily increasing in number as the main technologies become cheaper. Add into the mix the way a vehicle is powered can be via one or more powertrains, using at least two sources of on-board energy.
To meet not only the requirements of Australian type of approval, but to also show well in ANCAP, stripping the vehicle content back and reducing complexity was left back in the 1990s. Until now.
Electricity for some, not all
Electrified powertrains are here to stay, at least until the ultimate battery is discovered which can store lots of electric power, cost less than half the weight, and less than half of today’s Li-ion technology. As we know, given Li-ion was a revolution, making double digit improvements with energy storage is a very long walk off a very short plank, whilst at sea.
The broader point would be via considerable investment in power generation as well as an almost as vast investment in power distribution systems which could get BEV powered vehicles to those who’s daily commute in circa 80 km or less in total. Make no mistake, there are so many diverse vehicle requirements in Australia, not one single powertrain type will do – and the public should be able to choose what works best for them.
The problem: Vehicle manufacturers can build vehicles at a profit with pure mechanical drive, and diminishing profit all the way down to small(er) BEVs. In Europe the vehicle manufacturers, the EU27 commission and Right Hon Sir KR Starmer KC, the Glorious Prime Minister of the United Kingdom have decided to improve sales, small and cheap is just the ticket.
Except: The design development, tooling and manufacturing investment for a new model is pretty uniform, so the choice is to sell vehicles further up the market at a bigger margin, or sell smaller vehicles with substantially less profit per unit at far higher sale volume. All of the costs have to be covered, somehow, and it’s easier to do so with higher priced vehicles.
Then there’s the BEV market penetration, which seems to only go above 20% market share when incentives are on offer, only to slide back towards 15% at best when they are withdrawn.
To give an idea of the incentives:
- Cheaper electricity if charging at home, below the domestic rate – subsidised by the public.
- No annual tax – subsidised by the public.
- No congestion charges – subsidised by the public.
- Increased write-down for business users – in effect, subsidised by the public.
Up front incentives for new vehicles from vehicle manufacturers (there goes the profit) and Government (there goes more of our tax revenue).
Baldrick’s got another cunning plan
With most long-term model plans in ruins, the manufacturers who kept building internal combustion engine powered vehicles – usually combined with a few varieties of electrification – have continued to weather the massive global economic instability. This was done in the face of multiple governments screaming that the only way was BEV – until it was painfully evident mass adoption was not happening.
So, how does this get solved?
Smaller than usual electric cars which can be retailed for less than the cheapest BEV, aimed at daily commutes 40 km with a 200 km-ish range. This solves in part selling more units, but of course makes the power generation/distribution problem significantly worse.
Having developed the cunning plan in a matter of almost seconds, the glorious leadership have saddled up and are pushing this with all their combined might. The Right Hon Sir KR Starmer KC, the Glorious Prime Minister of the United Kingdom and the Glorious President Emmanuel Macron of France even considered crushing one grape between them. I know. Awesome.
Historic and new market trends clash
While the BEV saga with its peskily expensive energy storage system adding back more than all the cost savings by deleting internal combustion engines, there are a few trends which conspire to damage vehicle residual value.
1. A vehicle will fall in value throughout its life, with the rate of depreciation set when a model is introduced, and edited in light of actual aged vehicle prices in later life.
2. Motor insurers in the UK and EU27 want to get a vehicle out of the repair network and flipped for cash via salvage agents. While this process has existed for decades, the scale of the business has increased dramatically in the past five years.
3. Can you guess what happened in the past five years? The BEV roll-out in Europe was supposed to happen, and instead with endless lock downs there was a shortage of new vehicles to sell, plenty of people with some money which pushed up residual values. This collapsed like a soufflé in 2023, but the effect was significant new vehicle advertised price inflation, weakening finance and near worthless older vehicles.
Danger ahead
The present European plan is to get as many new BEV cars and light commercial vehicles under a magic 2000 Euro threshold, where in effect the unsustainable tax revenue funded incentives are replaced with inherently cheaper products with fewer, if any, incentives. The collective governments noted when imports from China were given a significant increase in import but the response was… “We’re still going to import, and we are still making a profit.”
The panic was included by the European manufacturers of smaller vehicles, mainly Renault and Stellantis, who are vulnerable to the wave of products arriving from China. This commercial battle is way below the products of Tesla and Co., but is being studied by every single automotive company.
The answer is make the vehicle with fewer parts than ever. Renault for example will base the 2026 BEV Twingo on the architecture of the BEV 2024 Renault 5 E-Tech Electric, but use 30% fewer parts. Volkswagen Group have said similar things about the BEV ID.1 due in 2027.
These claims are unverified at the moment, but from what has already arrived in the market we can see:
- BEVs frequently have no front chassis rail sections, because it’s inherently shorter than an ICE application. This means after the serviceable front plate is replaced, the next stop is a combination of an entire rail or structure up to the firewall.
- BEVs frequently have super reinforced rear chassis rails, especially if there is a rear drive module. This limits impact repair.
- BEVs have higher strength side structures, especially in the region of the rocker, to prevent intrusion into the battery pack during side impact.
Now consider a vehicle made with even fewer parts.
- Has the single-use vehicle arrived?
Something has to give. In Europe the vehicle manufacturers are lobbying for a ‘Kei’ class, to allow discontenting of vehicles which will bring break-even closer to reality. Publicly Euro NCAP have remained quiet, but the idea of reducing safety on smaller vehicles which need better protection in order to ‘tread water’ is not likely to be welcomed. Western Europe already has such a type of vehicle – the quadricycle, which is limited by engine size, dimensions and weight.
Collision repairers sell skill by the hour
If design trends make common repairs more difficult by requiring deeper structural intervention, with an ultra-low value starting point, surely this will work in one of two ways:
- A vehicle which might be repaired is less than a year old.
- A vehicle which could be repaired for a few years more as long as the design for repair has been considered in ways we have not seen before. Even then, the drive is to reduce complexity, which means less hours to sell.
It is highly likely the whole scenario outlined above will happen, at least in Europe, and the rash of small BEVs which can be undercut by imports from places like China or Vietnam will end up as scrap. The niche may survive, but it is highly probable the European political cunning plan will fall to bits.
So, there are better times ahead, it’s just how do we get there without being ruined?
By Andrew Marsh
