EV/PHEV – CHANGING REVENUE & PROFIT POOLS IN THE AUTOMOTIVE VALUE CHAIN REQUIRE NEW BUSINESS MODELS

OEMs need to take action to cope with the changes brought about by the shift to the electric powertrain. As EVs gain market share, revenue pools along the value chain will change significantly. Higher battery costs, decreased fuel and energy revenues, less aftermarket potential, increased variabilization of costs, more value-added services and additional revenues from recycling are all factors affecting revenue and profit pools. To adapt to these changes, OEMs need to proactively secure their future business. They can capture value in new EV components, make leasing/service their main sales channel, leverage lower variable costs or explore recycling. There is tremendous potential for suppliers of components for the new electrified powertrain. OEMs will assume a large portion of the additional value-added especially at first, but this will decline as specialization rises. The expected growth in EV and PHEV depends heavily on driving down battery costs. Even if these costs are successfully lowered, electric vehicles will still cost significantly more than vehicles with internal combustion engines. However, not enough customers are willing to pay the difference, at least in a traditional purchase. Yet viable alternatives exist if they are marketed correctly. New and existing services can be bundled into attractive mobility-oriented packages for the customer. These packages, plus partnerships with public transit providers, mean that OEMs will be acting increasingly as general mobility providers. All these changes mean that OEMs need new business models for the growing but highly competitive EV market.