CEO Insights: Electrification - from being the future to the present

By Andrew Petersen

CEO | BCSD Australia

Not convinced that sustainability isn't transforming business models?  Here's a few clear indicators across the automotive sector, as clouds form on their horizon - troubles in China, Brexit, new clean air laws, Dieselgate and the success of mobility services sharing cars, chipping away already at long-term forecasts for private car purchases.  

  • BMW and Daimler (makers of Mercedes-Benz cars) have formed a new joint venture that aims to deliver five aspects of urban mobility. The long-time competitor companies have invested a combined €1 billion to establish Reach Now, Charge Now, Free Now, Park Now and Share Now, which will focus on multimodal travel, electric car charging, ride hailing, ticket-free parking and car-sharing respectively.

  • The Model T in an iPhone case: Fiat launched at the Geneva Motor Show the Centoventi EV concept which is a preview of the next Panda (formerly sold in Australia, but not at the moment), with between 100 and 500 kilometres of electric range depending on how many batteries you opt for at the time of purchase. 

  • Japanese car manufacturer Honda has launched ambitious plans to only sell vehicles using electric powertrains in Europe within six years, which will be complemented by new energy management partnerships. The firm made the announcement at the Geneva Motor Show, where Honda representative also announced it was making the move alongside its overall global shift to electrification by 2030, which will see Honda produce two-thirds of total sales from electric vehicles (EVs) by this time. 

  • Nissan used the Geneva Motor Show to unveil a concept meant to preview the design direction of its crossovers, as well as its hybrid tech. The IMQ is a type of series hybrid where the electric motors do all the driving and the combustion engine only powers and tops up the battery, with no plug. Nissan calls it ‘e-Power’, and it’s a type of electrification that relates more to the real world where charging infrastructure is less-than perfect.

  • How’s this for an electric shock? Porsche announced that it has been stunned by its own forecasts with the revelation that the first year’s allocation of the new Taycan electric sedan is sold out. And that's despite its recent decision to inform customers of a potential 10% price rise in the face of a hard Brexit. Never before in the history of Porsche has it sold so many cars ahead of launch (20,000), and the sudden spike in demand now has the company scrambling to see if it can increase production. And when the Taycan launches, it will offer Porsche-branded fast-charging stations at so-called destinations, likely to be hotels, shopping centres and so on. Porsche will also tap into the Ionity network, part-funded by the VW Group, but said it would also have its own charging points. These will, however, be open to other electric car brands to use, too.  Buyers haven't even seen the production car yet, nor know the price estimate. In 2018 Porsche sold 35,000 911 ICE-based sports cars.

  • Motor vehicles engines are slowing becoming hybridised, and will eventually be displaced by fully electric motors, so companies like Schaeffler are trying to make the leap from a world dominated by highly precise mechanical components (its most famous product is the humble ball-bearing) to one controlled by automated and electric systems. The challenge is one of timing. During the week, this family-controlled German automotive and industrial components group scrapped its long-term earnings targets, announcing 900 job cuts and the closure of several factories. The shares tumbled 8 percent, bringing the decline since January 2018 to a wretched 55 percent.

  • Tesla announced that it is moving sales fully online - worldwide. Morgan Stanley analyst Adam Jonas said in a note to investors this "...is a major event in US auto retailing" because traditional automakers still need to go through physical dealerships. Because Tesla does not technically have any dealer franchises, and already sells without dealerships, this move online will likely also be protected, Jonas expects. If this change works, and Tesla sees the cost savings the company expects, Jonas said Elon Musk's electric-car company may be a catalyst for automakers to re-evaluate existing regulations.  Almost 100 years of auto retail franchising gone. "Then investors should look for a revival of the debate around auto dealer franchise laws," Jonas said. He compared that debate to retail banking, where evolving regulations "resulted in banks offering services on-line at lower costs to them and better pricing to consumers," Jonas added.

  • VW licences electric platform: Finally, Volkswagen announced at the Geneva Motor Show that it would share its electric vehicle architecture with any other car company to build there own car on.  A German start-up - e.Go Mobile - has become the first company to secure the rights to use the Volkswagen Group’s platform as the basis for its own electric vehicles. It’s a significant concept, both because Volkswagen is actively inviting collaboration, and because it gives small-scale manufacturers the chance to create EVs without having to invest vast sums in developing powertrains and platforms. That’s a genuinely game-changing prospect.


Electrification has gone from being the future to the present. Tesla continues to change the automotive landscape like no other manufacturer - including Henry Ford - has done. And as the outgoing Daimler CEO Dieter Zetsche noted at the Geneva Motor Show this past week new technologies offered new opportunities, that the only way forward was to “develop, change and invest”.  Firms that have long worked in isolation are now actively looking to collaborate with others to find the technology they need for the future.




All BCSD Australia members receive ongoing analysis of these and other topical sustainability issues through our weekly e-newsletter THE INSIDER.

© 2020 by the Business Council for Sustainable Development Australia

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