1/ The electric vehicles market is growing quickly, and some people say we are just about to experience a true revolution of the automotive market. What are the drivers for such a change?

Electric Vehicles (EV) represent a true revolution for the automotive market. After decades during which the traditional internal combustion engine (ICE) has been the dominant automotive powertrain, the contribution of EVs to global new car sales is expected to rise from 4% in 2018 to 40% in 2035, fostered by C02 reduction targets worldwide.



Regulation and incentives at both the national and EU level are encouraging the development of the EV market. In Norway, for example, half of all passenger cars sold in 2018 were pure battery-electric (BEV) or plug-in-hybrid (PHEV), compared to only 6% in 2013, after the government set up various incentive schemes to encourage the “clean energy” market. At the European Union level, newly adopted rules setting CO2 standards for cars and trucks will ensure that zero and low-emissions vehicles have a significant market share by 2030 and beyond. By 2030, EU cars manufacturers will have to cut their fleet-wide CO2 emissions by at least 37.5%, while trucks sold in the EU will have to match a 30% decrease target.



However, the key driver of this revolution is China. The country is the number one sales and production market for new EVs and it is expected that in 7 years, 50% of EVs will be sold on the Chinese market. This positive trend is not a mere coincidence. For a decade, the Chinese government has of coaxed buyers and manufacturers into the EV market through subsidies and other incentives. Now, the government has imposed sales quotas for “new energy” cars starting in 2019; a “cap and trade” system that is supposed to power-up the local EV market that is already the biggest in the world, with rapidly growing local brands such as BYD, BAIC Group, SAIC Motor, Chery Automobile and JAC Motors.



In this context, China has secured €21.7 billion investment from European car manufacturers in 2018 to produce electric vehicles locally. This is seven times more than the €3.2 billion the same car manufacturers have invested in Europe. US champion Tesla and Japanese firm Toyota have both also announced they will open new production lines in the country. Such production capacity, coupled with its strict centralised control over battery production, means China’s manufacturing pipeline should triple the rest of the world’s combined capacities in the next years, cementing China’s leading position the rest of the market needs to adapt to. Including us at GEFCO.



2/ What is the impact of the electric revolution for automotive logistics

If the transition to EVs is a revolution for the car production market, it will also have a domino effect on automotive logistics.



Inbound logistics is expected to be impacted by the very nature of EV powertrains. For example, EVs need significantly fewer moving parts (about 20) than ICE powertrains (about 100), which means that as the EV mix in global sales increases, transportations by logistics providers will decrease. However, their expertise in complex supply chain solutions will be key when it comes to managing batteries. Classified as class 9 “dangerous goods” and thus falling under ADR rules (Agreement concerning the International Carriage of Dangerous Goods by Road) and IMDG rules (International Maritime code for Dangerous Goods), batteries require increased traceability and compliance for transport and management – a wide range of services that only experts in automotive supply chain can provide to car manufacturers.



Outbound logistics will also be impacted. EVs are significantly heavier than traditional ICE cars, (+300kg in average), which means that transportation assets and schemes will need to be adjusted. Those adjustments will result in additional costs for logistics providers who are already facing a highly competitive market. In addition, significant investments will be needed in compounds on charging and data connectivity to manage EVs.



Transition from an all ICE market to EVs is not far away, it is already a reality. The twin challenges of tackling climate change and air pollution in cities means a global transition to EVs is inevitable – the question is how soon. Europe is already lagging behind the US, China, South Korea and Japan, where investment in electric cars and batteries is massively outstripping the EU. However, despite the strides seen in China, recent regulatory changes mean EU CO2 standards are now the most stringent in the world. This should see the European market in EVs accelerate and catch up in the coming years.



3/ How is GEFCO preparing for this electric revolution, especially in China where the EV market is already a big deal?

A world leader in complex supply chain solutions and the European leader in automotive logistics, GEFCO has already started building on its unique “know-how” and capabilities – especially with regards to compliance with ADR rules – to design added-value solutions to help customers reach the next level in terms of EV management. The group already transports batteries from China to Europe for various leading car manufacturers and provides electric-specific compound services in different markets.



The group is present in China since 1995 with 20 sites and 2 joint-ventures in Wuhan and Shenzhen and now GEFCO prepares for further developments in the country with EVs OEMs and Tier 1 suppliers like CATL. A fast development of the GEFCO Group in the country is indeed necessary to face the EV market and the potential investments to be made in the next months.



In a global context where the need for sustainable development is an increasingly important issue, countries and companies, including GEFCO, are launching ever greater numbers of initiatives to advance sustainable practices. In parallel, the logistics sector is undergoing a transformation brought about by the development of digital technology and big data, as well as the upcoming arrival of autonomous vehicles.



That is why GEFCO has made innovation a key driver in its EV strategy. The group is constantly working on finding new technologies and operational solutions to improve the EV supply chain. We rely on our partnership with start-up accelerator Techstars to meet with various disruptive start-ups developing projects that are specifically adapted to the market. In addition, the group also builds on internal innovation within the GEFCO Innovation Factory, an internal incubator that offers employees worldwide an opportunity to propose and develop innovative ideas to help drive GEFCO’s business. Created in 2018 to unleash internal creativity, the GEFCO Innovation Factory is open all year long and thus provides the group with endless innovation opportunities.



Innovation, decarbonization, shared economy, the automotive sector is undergoing a profound transformation process that will shape tomorrow mobility. EVs represent the nexus of these challenges and logistics companies should be prepared.