BEVs to drive demand in the aluminium foundries; fear of overcapacity lurks - AluMag Automotive

Jost Gaertner, Manging partner and editor for AluMag Automotive said that battery electric vehicles will bring new possibilities for the aluminium foundries, but there could be an overcapacity situation in the sector.

According to him, improving battery technology and forthcoming regulation / ban of ICE vehicles are boosting the outlook for EVs. Components for EV (HEV, PHEV and BEV) offer new opportunities for the aluminium foundries that cast automotive parts. The switch of the automotive industry towards complete electric cars like this Tesla will have a major impact on aluminium foundries as suppliers. However, if the BEV share rise considerably faster than that of the PHEV and Full HEV combined, an overcapacity could hit the aluminium foundries by the end of the next decade.

EV battery prices are falling faster and EVs are offering longer range and shorter charging time with improved technology. Buying costs are expected to reach parity with ICE as early as 2018 in Europe. The list of countries imposing regulation / ban of ICE vehicles is getting longer with the Netherlands and India recently announcing a complete sales ban of ICE vehicles from 2025 & 2030.  China and EU have a sales quote system on the agenda for Plug-in electric and battery electric vehicles.

If indeed the next generation of BEVs will have a range of +400 KM, charging times of about 15 minutes and cost parity with ICE engines is met due to falling battery prices,

The penetration of BEVs will increase rapidly with the falling cost and increasing range and charging time. According to him, based on the latest projections from 24 different automotive forecasting institutes and Tier suppliers a worldwide BEV penetration of 6,86% [Range between 2% - 15%] is expected by 2025 growing to 18,56% [Range between 5,75% - 34%] in 2030.

AluMag Automotive is continuously analyzing the consumption of lightweight materials in automotive applications. According to them, fast developing BEV segment could lead to an overcapacity in the aluminium casting industry around 2025 - 2030.

To cater to the additional demand for HEV & PHEV cast aluminium components, extra capacity is being added by the foundries, as well as by screw, hose & pipe manufacturers, some of which will become redundant as the BEV share increases. BEV vehicles contain much less cast aluminium components in the powertrain area compared to ICE, HEV and PHEV vehicles. And though BEVs features cast aluminium intensive powertrain applications too they are expected to shed around 35-40kg of cast aluminium within the powertrain area compared to the average N. American ICE vehicle.

If only the BEV share grows considerably faster than that of the PHEV and Full HEV combined, it will lead to a state of overcapacity.  The decreasing demand for cast aluminium created by the growing penetration of BEVs would be compensated by the increasing demand for PHEV and Full HEV applications. Furthermore some regions like Africa, Russia and parts of Asia are not likely to be hit due to the expected low penetration of BEVs.

Increasing use of cast aluminium for structural applications is expected to offset a possible declining demand for powertrain applications. Structural cast aluminium applications are being used increasingly in the premium segments for applications like suspension domes, longitudinal carriers, cross-members, doors / gates and A-B-C pillars. In Europe the demand for structural cast aluminum applications increased by around 65% in 2017.

It is expected that rolled aluminium applications will take the better of cast aluminum applications in near future. about cast aluminiium applications, we need to wait and watch how the penetration of  BEVs take shape in the next two decades.