{"id":8353,"date":"2020-05-05T08:57:26","date_gmt":"2020-05-05T15:57:26","guid":{"rendered":"https:\/\/blog-prod.qad.com\/blog\/?p=8353"},"modified":"2020-05-19T12:37:07","modified_gmt":"2020-05-19T19:37:07","slug":"how-the-end-of-the-ice-age-may-surprise-you","status":"publish","type":"post","link":"https:\/\/www.qad.com\/blog\/2020\/05\/how-the-end-of-the-ice-age-may-surprise-you","title":{"rendered":"How the End of the ICE Age May Surprise You"},"content":{"rendered":"

[vc_row][vc_column][vc_single_image image=”8357″ img_size=”full”][vc_column_text]If you\u2019ve been following automotive industry trends over the past decade, you might think that most auto OEMs are shifting investment to wholeheartedly embrace an all-electric revolution. After all, like me, you may notice there are more Teslas, Nissan Leafs and Chevrolet Bolts on the road (as supported by the chart below). But, what if OEMs have something else in mind?<\/span><\/p>\n

Let\u2019s take a closer look at internal combustion engine (ICE) vehicles versus electric vehicles (EVs) by comparing the R&D investment strategies of two prominent automakers, each with a drastically different vision for the future, and each at a crossroads that will likely define them for years to come.<\/span>[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_single_image image=”8399″ img_size=”full”][\/vc_column][\/vc_row][vc_row][vc_column][vc_column_text]<\/p>\n

Is Honda Focusing its R&D Efforts on ICE or EV?<\/span><\/h2>\n

In a rather surprising interview at the end of 2019, <\/span>Honda CEO Takahiro Hachigo revealed<\/span><\/a> that he does not believe in the widespread, global adoption of all-electric vehicles and that his company would be focusing its R&D efforts on gasoline-electric hybrid cars instead. Hachigo believes the future of motoring is about efficiency, and that <\/span>hybrid powertrains<\/span><\/a> are the best route to that efficiency. By 2030, he expects two-thirds of the cars Honda manufactures to be hybrids, with no mention of them having plugs.<\/span>[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_single_image image=”8355″ img_size=”full”][vc_column_text]The Honda Insight became the first mass-produced hybrid vehicle sold in the US in 1999.<\/span><\/i>[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_column_text]Hachigo\u2019s worldview is eye-opening. Could it be that we\u2019ve lost track of the end goal? At Honda, electrification is not the ultimate goal\u2014it\u2019s efficiency. Hachigo argues that EVs still have a lot of infrastructure and hardware hurdles to overcome, and that companies risk getting too optimistic about EVs and other ACES capabilities. In many ways, we\u2019ve already seen Hachigo\u2019s skeptical views validated when it comes to self-driving cars. Even as late as 2019, some thought that <\/span>level 4\u20135 automation<\/span><\/a> and autonomous taxi networks would be widely available by 2020 (that estimate has now been revised upward by 15\u201320 years). The list of ACES-related predictions that have missed the mark is long. Last year, Elon Musk claimed that Tesla would have <\/span>one million robotaxis on the road by 2020<\/span><\/a>\u2014we\u2019ve yet to see a single one.<\/span><\/p>\n

ICE to EV Transition: ICE Vehicles Aren\u2019t Going Away Without a Fight<\/span><\/h2>\n

If it\u2019s beginning to sound like I\u2019m against progress or skeptical of EVs, let me set the record straight. I am in no way saying that EVs won\u2019t (or shouldn\u2019t) enjoy strong, even exponential growth in sales and market share in the coming decade. And it may well be the \u201cend of the ICE age\u201d eventually, but internal combustion engines are not going to go away as fast as many are forecasting\u2014and I certainly don\u2019t expect the sale of ICE-powered vehicles to be <\/span>banned by 2030<\/span><\/a>. On the contrary, Scott Bailey, CEO of Tula Technology, a controls\/software company dedicated to improving ICE efficiency, argues that there are going to be roughly <\/span>2 billion more internal combustion engines<\/span><\/a> produced between now and 2045.\u00a0<\/span><\/p>\n

Bailey\u2019s numbers make sense\u2014ICE is far from dead. By volume, gasoline is <\/span>13 times<\/span><\/a> more energy dense than the best performing car battery from 2018. To put that into perspective, one gallon of gasoline has more potential energy than the <\/span>entire battery pack<\/span><\/a> of a first generation Nissan Leaf. What this means is battery technology may still be far away from surpassing the convenience of ICE for people who live in areas that lack charging infrastructure, people who only own one vehicle (and need to do everything from everyday driving to long road trips), or people who street park their cars and do not have a garage to use for charging. Until that happens, I believe ICE vehicles will continue to hold onto a sizable chunk of the market.<\/span><\/p>\n

Is BMW Focusing its R&D Efforts on ICE or EV?<\/span><\/h2>\n

Known for originally being big believers in EVs and for their sizable R&D investments in designing their i3 electric vehicle, BMW aims to be as <\/span>innovative as possible<\/span><\/a> through the use of new materials, tech and engineering\/manufacturing processes. But BMW has started to take a much more agnostic approach as of late. Their R&D Chief, Klaus Fr\u00f6hlich, has even gone as far as to say that most of the US and Europe doesn\u2019t necessarily want EVs. In early 2020 interview, <\/span>Fr\u00f6hlich said<\/span><\/a>, \u201cWe see BEVs (battery electric vehicles) mainly on the West Coast and parts of the East Coast, while the rest of the US will continue with conventional gasoline engines…The best assumption is that electrified vehicles [EVs and plug-in hybrids] will account for 20\u201330% of worldwide sales by 2030, but with a very diverse global distribution.\u201d<\/span>[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_single_image image=”8356″ img_size=”full”][vc_column_text]The BMW i3 was first released in 2013 and launched as part of BMW\u2019s plug-in electric vehicle sub-brand.<\/span><\/i>[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_column_text]The company\u2019s new strategy is to invest R&D funds to provide the \u201cPower of Choice,\u201d which aims to offer consumers a wide variety of powertrains (EVs, hybrids, hydrogen fuel cell cars, etc.). BMW says <\/span>this approach<\/span><\/a> is \u201csubstantially safer and more prudent than simply focusing on a single powertrain choice.\u201d Fr\u00f6hlich admitted that BMW would likely be producing gasoline engines for <\/span>at least 30 years to come<\/span><\/a>. And they\u2019re not alone. Mazda expects internal combustion engines combined with some form of electrification will account for around <\/span>95% of the vehicles<\/span><\/a> it manufactures in 2030. It could be that the ICE age ends in a gradual thaw and not the quick-paced, flash flood-inducing melt many were initially expecting.<\/span><\/p>\n

Prepare for Everything, Expect Anything<\/span><\/h2>\n

Time and time again, it has been proven that the <\/span>only thing for certain in the automotive industry these days is uncertainty<\/span><\/a>, which makes deciding on how to invest R&D money as an OEM tricky. Gone are the days when an OEM could just replace an outgoing model with a new one that has slightly improved cargo space, a better sound system and bigger wheels\u2014today\u2019s market is much more demanding and nuanced. If I were an OEM R&D leader, a risk aversion strategy a la BMW would be more prudent given the times, but they say that fortune favors the bold, so maybe it\u2019s Honda, Tesla, or another company (maybe even one that doesn\u2019t exist today) that comes out on top. Only time will tell.<\/span><\/p>\n

Until then, manufacturers can leverage QAD solutions, specifically <\/span>QAD DynaSys\u2019 \u201cWhat If\u201d planning capabilities<\/span><\/a>, which can empower automakers to cope with unexpected hurdles like shutdowns and component shortages by making it easier to keep a mindful eye on different scenarios when planning.<\/span>[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][\/vc_column][\/vc_row]<\/p>\n","protected":false},"excerpt":{"rendered":"

[vc_row][vc_column][vc_single_image image=”8357″ img_size=”full”][vc_column_text]If you\u2019ve been following automotive industry trends over the past decade, you might think that most auto OEMs are shifting investment to wholeheartedly embrace an all-electric revolution. After all, like me, you may notice there are more Teslas, Nissan Leafs and Chevrolet Bolts on the road (as supported by the chart below). But, […]<\/p>\n","protected":false},"author":89,"featured_media":8357,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[182,199],"tags":[988,989,6,7,993,1194,990,558,176,697,620,1193,450,359,991],"class_list":["post-8353","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-manufacturing-trends","tag-aces","tag-automated-vehicles","tag-automation","tag-automotive","tag-autonomous-driving","tag-bmw","tag-connected-vehicles","tag-demand","tag-demand-planning","tag-disruption","tag-electric-vehicles","tag-honda","tag-ice","tag-risk","tag-shared-vehicles"],"yoast_head":"\nHow the End of the ICE Age May Surprise You | QAD Blog<\/title>\n<meta name=\"description\" content=\"Compare R&D investment strategies of two auto giants as manufacturing transitions between Internal Combustion Engine (ICE) and Electric Vehicles (EV).\" \/>\n<meta name=\"robots\" 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