Decarbonising the automotive sector: Luxury car manufacturers investing in electromobility

It is clear for anyone watching the energy space, that hydrogen and electric vehicles (EVs) are two areas of significant investment and innovation in recent years, the two forming part of significant global efforts towards decarbonisation of the automotive sector.

In late 2020, German luxury car manufacturer, and part of the Volkswagen Group, Porsche, announced significant investments in electromobility. As a producer of high-performance, high-cost and long lasting vehicles, and under pressure internationally to reduce fossil fuel emissions and environmental performance, the company has announced its investment in the eFuels project, of which it will be one of the principal customers. The project, which is part of the Highly Innovative Fuels (HIF) Project is the product of a partnership between Porsche, Siemens Energy, AME, Enel and Chilean company Enap to produce e-fuels with the aid of wind power at the Haru Oni site in southern Chile. In this context, Porsche has invested €24m and the German Government has invested €9m.

The eFuel technology essentially uses electrolyser produced hydrogen, powered by wind energy, which is combined with atmospheric CO2 to produce methanol. This is in turn converted into a pure gasoline based on licensed Methanol-to-Gasoline (MTG) technology from Exxon Mobil. This green gasoline does not contain sulphur and is produced using sustainable energy sources. The eFuel concept represents an interesting collaborative approach from industry to supply Porsche and its customers with a greener fuel, through use of technology and expertise from a number of companies, while not necessitating engine modifications typically required where methanol is itself used as the automotive fuel. At the same time, Porsche, and its parent Volkswagen, have recently announced plans to open an EV battery cell factory in Tübingen in the southern state of Baden Württemberg, not far from HQ in Stuttgart. This move by Porsche essentially represents a two-pronged approach to minimise its emissions, on the one hand electrifying is future fleet and on the other hand using sustainably produced eFuels to reduce the overall emissions of its existing fleet. Its sister firm Bentley has similarly expressed a potential interest in eFuel technology.

While this approach will allow its existing fleet to continue, it is clear that for Porsche and many of its competitors the industry is moving to electrification, with German competitors such as Audi and BMW already selling pure electric vehicles, and with many more in the pipeline. As such, it is fitting that the majority of patent filings in battery technology over the last 10-15 years has related to EV power storage technology, generally focusing on Li-Ion battery technology, although in recent years redox-flow batteries have been increasingly investigated for stationary power storage. In many cases technical innovations on battery-based energy storage can apply equally to EVs as they do to stationary storage systems. 

The wider move towards EVs is reflected in the sharp uptick in plug-in EV registrations over the last two years, which in the UK alone has doubled since 2019, from approximately 250,000 in 2019 to 500,000 in March 2021, with battery powered electric vehicles (BEVs) accounting for most of this growth, whilst plug-in hybrid vehicles have seen a smaller growth. This move is further reflected in the overall market share for plug-in EV of new car registrations in the UK, which was approximately 3% in 2019 and has reached almost 15% in early 2021.

In the wider context of battery development and innovation, the focus is very much on Japan and Korea, with large multinational electronics companies such as Samsung, Panasonic, LG Electronics, Sony and Hitachi in pole position. Toyota and Nissan are the most active automotive players. German company Bosch comes in fifth position of overall ranking of patents filed in the battery technology space. EPO reports indicate that this is heavily influenced by the energy policies in both countries. To strengthen the UK’s position in the field of electrochemical energy storage and battery technology, the Faraday Institution was established in 2017 as the UK’s premium research programme on innovations in battery technology, market analysis and early stage commercialisation. Under the auspices of the Faraday Institution, which is a collaboration of over 20 UK universities and 50 industry partners, new innovations are taking place in Li-ion, solid-state, sodium ion and Li-S batteries. The Faraday Institution recognises that EV technology is growing and the take up of electric vehicles in the UK alone is quickly increasing and is expected to reach 60%-70% in 10 years’ time.

According to recent reports, the UK has recently overtaken France as Europe’s second largest EV market after Germany. This trend looks set to continue, and clearly Porsche is not alone amongst the high-end luxury car manufacturers going electric. Lotus has recently announced a £2.5 billion investment in the UK to retrofit its UK factory for the switch to EV, with the firm planning to sell only EVs by 2028. This interest is clearly demonstrated in the patent portfolio of Lotus owner Geely, with many of the most recent patent filings from the Chinese automotive manufacturer relating to EVs and hybrid vehicle control systems, charging and energy storage system, power conversion and thermal management systems. A similar focus is seen across many of its competitors.

Overall, it is evident across the automotive sector that efforts are being made throughout the value chain towards decarbonisation and reduction of environmental impacts, and EVs will form a significant part of this approach.

Key contact

Anthony Coleman
Business consultant