Powertrain is a major component of a vehicle which generates power and delivers it to the road surface. Powertrain includes engine, transmission, drive shafts and various other parts. Globally, there is a big debate going on regarding the future of powertrain technologies in the automotive industry. The need for alternative powertrains is emerging due to the increase in customer demand and getting-stringent global emission standards.
Alternate powertrains include propulsion systems that are not exclusively based on the internal combustion engine (ICE). Many possible solutions are emerging, such as hybrid (mid plus full), plug-in hybrid electric vehicle (PHEV), pure electric vehicle (PEV), fuel cell vehicle (FCV), etc.
However, at this point, it is extremely difficult to predict which technology will emerge and will be accepted across the globe. It is not just the auto-makers and regulators who will decide the future of alternate powertrain technologies, but also the customers and other stakeholders who will play an important role in decision-making.
In order to succeed, the alternate powertrain technology cost should not be prohibitive, and in the initial stages, some incentives will be required to promote the technology. Again, the customers should wholeheartedly accept the technology. Alternate powertrain can be successful if is promoted after conducting thorough research regarding its sustainability benefits. In the past, some technologies such as diesel have been promoted without conducting sufficient research on their impact on environment. And research is critical as the initial investment is very large. In addition, a clear regulation with a sufficient time-frame should be provided for a smooth transition to the right alternate powertrain technologies.
The growth of environment-friendly vehicles based on alternate powertrain technologies is not significant and is in the range of 3-3.5% in the overall global light vehicle assembly. PwC Autofacts predicts that the share of alternate propulsion vehicles will be 7.8% in the overall global light vehicle assembly by 2022—from 2.8 million vehicles in 2015 to 8.8 million vehicles in 2022. The share of gasoline vehicle propulsion will continue to remain significant, at around 74% in 2022 compared to 77% in 2015. Similarly, the share of diesel (powertrain vehicle) will be roughly 17% compared to 20% currently. This forecast is made taking into account current developments (including regulatory) across different regions.
Amongst alternate powertrain technologies, hybrid and electrical vehicle population looks promising. The developments in powertrain technologies are different in each region. If we look at North America, currently 91% share belongs to gasoline, 6% to diesel and alternate fuel vehicles is less than 3%. This is expected to change by 2022—gasoline vehicles will continue to lead the market at around 84%, diesel at about 7% and the remaining 9% for hybrid, PHEV and electric vehicles.
In South America, no major changes are expected between gasoline and diesel vehicles until 2022. Diesel proportion will continue to be less than 10% of the total vehicle population.
In the European Union, the story is similar to India—gasoline and diesel vehicle share is around 49% each and the rest 2% comprises of alternate fuel vehicles. By 2022, the proportion of gasoline vehicle propulsion is expected to be 45%, diesel 42% and the rest will be hybrid, PHEV and electric vehicles.
The proportion of diesel vehicles may change depending upon regulatory developments in the region. In East Europe, there will be a drop in diesel vehicles from 33% in 2015 to 23% in 2022; gasoline share will increase from 67% to 76%, and that of alternate fuel vehicles will be 1%.
In the Middle East and Africa, no significant changes are expected. Gasoline vehicles will contribute 80% to the market-share and the rest will be diesel.
In the developed Asia-Pacific, the share of gasoline vehicles will decline from 72% in 2015 to 65% in 2022, and diesel vehicle proportion will increase from 14% in 2015 to 18% in 2022. Currently, the market-share of alternate fuel vehicles is 14%.
In developing Asia, during 2015-22, gasoline vehicles will continue to dominate the market and increase their share from 70% to 76%, while there will be a drop in diesel vehicles from 29% to 22%. Currently, hybrid and PHEV vehicles contribute to 1% of the market. By 2022, considering the uncertainty around diesel vehicles in India, we expect a drop in the range of 20-25% from the current 45%. However, this depends upon regulatory developments related to diesel vehicles.
By Abdul Majeed
The author is partner, Price Waterhouse, and an auto expert