Over the last 20 to 30 years, all the manufacturers in the luxury performance automotive segment have developed various racing programs, for GT series and clients' racing. As the customer journey and experience have become increasingly complex over the years, these racing programs too, in many cases, have become wider and more diversified.

So, what exactly do these programs consist of? What is their importance in the involved automakers’ strategies? And what could come next?

Racing and Development Programs

The most common customer racing programs are the ones in GT racing. Here, there are several different series, either within the same vehicle’s category like GT3: Pro, Pro-Am, and Am (standing for professional and amateur), or different ones such as GT4, or GTE.

Through the Balance of Performance (BoP) mentioned previously in the context of Ferrari’s participation in the new LMH Category, it is ensured that specific restrictions are applied in order to make different models from different manufacturers able to compete with each other on the same level.

While some manufacturers do not develop cars for each one of these racing series, all of them take part in these championships to some extent through official and/or clients’ racing teams.

Type of customer racing activity by Automaker

*Current programs. In the past, some have changed or were stopped

At the beginning of 2021, Aston Martin announced it would withdraw from the WEC to focus its efforts on the F1 campaign. Its return to the Grand Touring competitions was back in 2006 with the previous-generation Vantage. Now it continues the production of both GT3 and GT4 versions of its sports car. Before the change in management and the entry into Formula One, previous CEO Andy Palmer also planned a single-marque Vantage Cup racing series.

Audi, started its program in 2009, with the R8 LMS GT3, and later on expanded it to other categories including three more models: RS 3 LMS TCR, R8 LMS GT4, and R8 LMS GT2. Also, for three years, from 2015 to 2017 Audi organised a one-make series called Audi Sport TT Cup.

Bentley celebrates its over-100-year long history including its first efforts in endurance racing such as the Le Mans 24 Hours in the 1920s, by introducing the Continental GT3 in 2018. The car now participates in different series thanks to various customer racing teams and has distinguished itself on various occasions.

Similar to Audi, BMW offers M Series models for different racing categories. M2, M4, M6, and M8 models are produced for GT3, GT4, and GTE racing. In addition, the BMW M2 CS Racing participates in multiple one-make competitions.

Mercedes too like many competitors introduced its customer racing program in the late 2000s. And with its first competing car, the SLS AMG GT3, already in 2011 it became the most successful new entrant over its first full season thanks to over 20 victories from the 40 vehicles sold to clients. Later, Mercedes introduced also a single-marque series with the CLA 45 AMG and substituted the SLS with the AMG GT3 and GT4.

Porsche has one of the longest histories of all when it comes to customer racing and a wide program. 911 GT3 Cup one-make series has separated events in many countries. Carrera Cups are held in Asia, Australia, Benelux, Brasil, Germany, France Great Britain, Italy, Japan, Scandinavia, and North America. There are other events as well like the Porsche Mobil 1 Supercup, Porsche Sprint Challenge, and Endurance Trophy.

McLaren produces both GT3 and GT4 cars for customer racing starting from its 720s and 570s models. But along with them, it recently introduced the 720s GT3X, which is a different creature, with a different purpose, that we can look at a bit later.

Going on to Lamborghini, the Italian automaker produces both the Huracán GT3 Evo and the Huracán Super Trofeo EVO2. The two cars are respectively used in Grand Touring competitions and in the single-marque Super Trofeo competition organised by Lamborghini. The program started in 2009 with the Huracán predecessor Gallardo but has always been reserved to the smaller sister of the house, not involving modified flagship cars.

This was up until one year ago with the introduction of the racing car Essenza SCV12, which in some ways is comparable with the aforementioned McLaren 720S GT3X and with the cars produced by Ferrari XX. These models are not intended for proper racing. They are not developed around a racing series, but they still effectively involve clients driving track-only cars. For instance, XX is a special program introduced earlier than the others, in 2005. It develops highly limited track-only versions of Ferrari’s most important cars. So far the line includes FXX and FXX Evo from the Enzo, 599xx from the 599 GTB, and FXX-K and FXX-K Evo both from the LaFerrari. These are kept by the company, not the owners, and delivered to the tracks on occasions of special organised track days where the clients helped by Ferrari engineers and technicians can enjoy the most extreme driving experience.

*In order Ferrari FXX-K Evo, Lamborghini Essenza SCV12, and McLaren 720S GT3X

This program is explicitly intended by Ferrari as a testing platform that involves “a group of special customers in the development of the Ferrari of the future, asking them to help provide Corse Clienti engineers with information”.

All these are part of an ongoing trend, well expressed by Stephan Winkelmann’s “What if…” when talking about Bugatti’s Bolide project. With these vehicles, automakers look for the absolute extreme in track performance without the need to abide by any restriction.

Corse Clienti is the name that indicates the overall group of activities comprised of XX Programme, F1 Clienti, with which Ferrari sells to clients previous seasons’ F1 cars that are then delivered to track days and driven on the same occasions as the XX ones, and finally the single-marque Ferrari Challenge.

Last but not least Ferrari also participates with its 488 GT3 Evo in GT and endurance competitions.

Racing divisions development

The graph shows how from the 2000s and especially toward the early 2010s the major companies involved in GT racing through customer racing programs increased their production and range variety.

Racing cars produced since 2020 by Automaker

With Porsche and Ferrari leading the way as they already had established their own one-make series, for instance, others followed over the last decade. Apart from McLaren Automotive that is effectively just 10 years old, others like Mercedes AMG, Lamborghini, and Audi, started to those years to significantly enrich their racing car offering.

Two seem to be the main reasons for this increased attention to motorsport divisions’ development. One is the overall increase in wealth in developed and developing countries such as China that translates into higher demand. According to a recent report by McKinsey, in fact, the global wealth over the last twenty years tripled, with China overtaking the US and leading with a big margin.

Secondly, the influence of the entertainment industry, especially with video games has gained massive importance over the same period and mostly with younger generations that by now have become adults with proper buying power. Among many, last week’s article about Porsche’s Vision GT is a clear indication of the importance of this sector.

But what is next?

First of all, Porsche again has shown its own vision in terms of automotive products with the Mission R presentation in Munich. Electrification is likely to make motorsport activities more accessible for a wider demographic thanks to reduced costs, so, the increase observed over the last decade could continue in the coming years.

Considering the increasing integration between virtual and real-life motorsport, OEMs could improve their opportunities by creating more dedicated programs, courses, or initiatives during events (outside of the already present highly selective ones such as official Formula 1 E-sports teams) aimed at attracting new generations into sim-racing which could be beneficial toward different purposes. First, creating interest in the sport from a young age as it has been happening so far, and increasingly in these last few years. Secondly, improving brand loyalty, and finally, creating opportunities for new talents to be discovered. These would complement well already existing and less accessible young driver programs.

*Cover image by Lamborghini Media

On Monday Porsche revealed its Vision GT Concept. A futuristic racing car that will be featured in the upcoming Gran Turismo 7 releasing early in 2022 as a Play Station exclusive.

*Source: Porsche Media

This is only the latest concept designed by an automaker for this series developed by Japanese Polyphony Digital. And Porsche has been featured in it since 2017, right after the expiration of its exclusivity contract with Electronic Arts.

Even before the announcement, the partnership between the German automaker and the Japanese developer was evident as several other Porsche’s vehicles were heavily featured in the new game’s trailers over other brands.

But what is the impact of the Vision GT project for an automaker? And how has the game impacted the younger generations and OEM’s marketing?

Gran Turismo and Polyphony

Polyphony Digital, like a number of different smaller game developers, is a subsidiary of PlayStation Studios a division of Sony Interactive Entertainment since 1998.

The Studio was actually founded in 1994 under the name Polys Entertainment, and it was in this period that the first Gran Turismo was released for Play Station along with a couple more titles. The success was immediate, and since then it has remained pretty much the only franchise developed by Polyphony with 12 editions released so far.

The first edition alone sold an estimated 10.8 million copies. And the trend continued. According to Goodwood’s website, the Gran Turismo franchise sold over 85 million copies worldwide which puts it in third place among the best-selling racing games of all time. Head of Polyphony Digital Kazunori Yamauchi, in an interview earlier this year, confirmed the success of the latest release Gran Turismo Sport (2017) reaching 9.5 million users.

The game’s popularity has increased as well on streaming platforms after the pandemic. With people forced at home, virtual entertainment experienced a massive boost as highlighted in the article How Covid-19 Turbocharged the E-Sports Racing Industry for official e-racing competitions. The same happened for enthusiasts’ streaming channels with some of the most popular sim-racing platforms such as iRacing and Assetto Corsa reported with the Bentley and Fanatec Partnership deal.

Gran Turismo Sport, since its release in late 2017, experienced the same growth from 2020 on with a peak in viewership of over 30,000 people on May 14^th, 2020, which is very good considering the game was already almost 3 years old.

Gran Turismo Sport Twitch Channels and Viewers ('000) since 2017 release

*Source: Twitch Tracker

Its presentation trailer released on YouTube in June 2020 has so far reached 10.7 million views, and it is only slightly behind a Need for Speed one from 2019 that reached 11 million clicks as the most-watched racing game presentation trailer. It is also ahead of its most direct competitor on Microsoft’s platform Xbox, the Forza franchise.

So, it is clear how Porsche’s and other automakers’ investments in the development of these concepts, which are usually realised as full-scale models too, has an important return. The capacity of influencing young generations of enthusiasts by transforming them into brand supporters and potential future clients. As mentioned by Luca Venturi during our interviewsome of those who went on to buy a specific luxury performance car as adults were influenced in their choice by the games they played and “their dreams” as children.

The concept is confirmed as well by Porsche’s Vice President Marketing Robert Ader claiming:

“We can engage young and digital target groups in the place where their automotive dreams are born: the world of gaming”

Not just videogames

Polyphony Digital has joined the FIA in a unique long-term deal for two official championship series: The FIA-certified Gran Turismo Nations Cup and FIA-certified Gran Turismo Manufacturer Fan Cup.

The series of events, and especially the World Finals in 2019 involved a number of personalities including several well-known internet celebrities as well as Formula One drivers such as Lewis Hamilton and Max Verstappen. This kind of participation and media coverage gave the Gran Turismo Championship huge popularity and several million views.

Additionally, involving this kind of audience, not only promotes easier access to motorsport to a wider audience but introduces also the possibility of a transition from sim-racing to real-life racing. By fulfilling a series of requirements, gamers can become eligible for the “FIA Gran Turismo Digital Licence” from their local national sporting authority.

All these factors combined created the incredible appeal of the Gran Turismo Franchise. And this is the reason why so many brands bought into this marketing opportunity with the likes of Lamborghini even presenting its concept officially during one of these events.

*Lamborghini V12 Vision GT

Along with Porsche and Lamborghini, in fact, other brands that since 2013 participated in this project are: Alpine, Audi, BMW, Bugatti, Chevrolet, Daihatsu, Dodge SRT, Honda, Hyundai, Infiniti, Jaguar, Lexus, Mazda, McLaren, Mercedes, Mini, Mitsubishi, Nissan, Peugeot, Subaru, Toyota, Volkswagen, and Zagato.

Vision GT

The Porsche Vision GT will be only available in the upcoming game, and apart from the full-scale model it will not be produced in any other real-life form. However, the release of this model shows again Porsche’s forward-looking approach to the market.

A team of young designers that developed this car, had much more freedom not being constrained by real-life restrictions and technical requirements. This is not to say that the car was developed just to showcase an eye-catching yet unrealistic design. It actually appears much more grounded in reality than several concepts developed by competitors, while still looking at the future.

The company, in fact, highlighted how the Vision GT is undeniably Porsche bringing the brand’s DNA into the design with specific cues such as the low sloping lines, pronounced wheel arches, quad headlights, and rear light bar recalling the likes of Porsche Taycan and 911 992. In the presentation, they also took the time to showcase the team’s attention to sustainability pointing out how the concept was entirely built using sustainable materials. And finally, they provided technical details about its performance as well:

• Acceleration 0 – 100 km/h: 2.1 seconds
• Acceleration 0 – 200 km/h: 5.4 seconds
• Top speed: 350 km/h
• Peak power: 820 kW (950 kW with overboost & launch control)
• Battery size: 87 kWh
• Range: 500 km (WLTP)
• Drivetrain: all-wheel drive

However, one element that was not mentioned but probably shows even more how the company is looking at its future market is this design’s resemblance with that of the Mission R presented at IAA in Munich earlier this year.

Several design elements in the front and even more in the back, as well as the overall shape, are clearly born from an evolving but univocal and cohesive design language.

A rumour that started right after the unveiling of Munich hinted that Porsche might have planned to introduce the Mission R as a substitute for the stagnating 718 line by 2024. This would be appealing for the young audience in China (Porsche’s biggest market), where the average 718 buyer is 31 years old. Porsche is also going to make the new Mission R its most innovative model in terms of interior technologies, once again showing its focus on the younger audience that this car is more targeted towards. In this context, creating the “hype” for the brand and, even more, for a specific design language in the audience that in a few years might be able to afford a sports car makes even more sense.

With the goal of creating an immersive and long-lasting brand experience, Porsche enhances its digital entertainment partnership making it an integral part of its marketing mix.

*Cover and Gallery images by Porsche Media

The restomod trend in automotive is nothing particularly new but has been gaining traction in the last few years as the core technologies change with digitalisation and electrification.

The term indicates cars, usually classic models, that are not only restored but also updated (internally) to bring their performance, usability and safety up to modern standards while leaving the aesthetics almost untouched.

To confirm the trend, several companies started their own project just over the last five years. The graph below shows over 40 of the most active companies in these years. While some started many years ago with different activities involving motorsport or ‘simple’ vehicle restoration, many others especially since 2015 were established directly with this purpose.

Restomod firms foundation year

But what characterises these firms that decide to manufacture these unique models? And how does this phenomenon relates to the current context of the automotive industry?

About Restomod Firms

The first characteristic that defines these manufacturers is their craftsmanship. Most of these companies are or at least have started from, small workshops with a few employees. Secondly, they all come from a strong passion for a specific field of automotive, or a brand, or sometimes even a single model, as is the case of Alfaholics or Eagle.

The general purpose, along with bringing these models back with improved performance, safety, and comfort, is to offer a unique customer experience.

Naturally, these vehicles are produced in extremely limited numbers, and there will hardly ever be two equal to each other. Personalisation is a strong factor for the majority of these specialists, which, in this time and age, is key in the luxury automotive industry as discussed before in different occasions. The search of a certain target group of customers for unique, and special products, in fact, is arguably one of the reasons for the recent success of restomod.

*Photos by Automobili Amos, Kaege Retro, Eagle, Emory Motorsports, and Icon 4x4

Pricing generally reflects the manual labour involved, the personalisation level, the development costs, the scarcity, and so on. This means that one of these restored cars’ price (sometimes regardless of the initial model’s value) can vary from $150,000 to well over $1.5 million.

Also, there are a few markets where this movement has gained more momentum, and they are generally the US first, followed by the UK and Germany. There are, however, other brilliant examples from other markets with long and deeply rooted automotive history such as Italy, or France.

Established Automakers

There have been a few examples of large automotive manufacturers that applied similar principles for special projects.

One is Porsche, with the one-off Classic’s Project Gold mentioned last week developed from the original chassis of a 911 993.

Another similar and probably more peculiar project is the Jaguar E-Type Zero. Announced in 2017 first as a concept and then as a proper conversion for E-Types, it was Jaguar’s conversion of the roadster E-Type into an electric car.

According to some media outlets, the project would have been halted or just temporarily paused, but could nonetheless see the light in the future.

If these models by early adopters become popular among enthusiasts and wealthy owners, other companies might decide to take the same path set by the likes of Jaguar and Porsche. So, we could see other established manufacturers in the future deciding to start a special bespoke program for this kind of conversion.

The EV conversion though is still a project that presents several risks. Like for the E-Type Zero, a lot of enthusiasts might not have been happy about seeing such an iconic car "stripped of its identity", and the same could happen for other vehicles with similar status.

While Jaguar had a few difficult years which seriously challenged its brand reputation, the same cannot be said for other companies in the same market segment. So, it seems highly unlikely to imagine OEMs like Ferrari, Porsche, or Aston Martin turning limited, classic cars they so carefully preserved throughout the years in electric vehicles. First, for the impact that this decision could have on the brand itself, but most of all for the loss of value and collectability of a classic car being heavily modified. This would limit also more “traditional” restomod projects for these automakers.

For instance, Aston Martin in its DB5 Continuation project rebuilt 25 units of the iconic grand tourer and did not renew or apply any modification or gadget to the original models.

Restomods in the Modern Automotive Market

History is cyclical, and design trends tend to reappear after a few generations in every industry.

Today, automotive is driven by technological development with EVs characteristics often defined by the "form follows function" principle. This translates into exterior and interior design that are affected by cumbersome battery packs, and the need for low drag coefficients. So, there is a significant change in the design language of some major automakers both for this reason and for the research of a more futuristic expression.

As it happens sometimes, however, with all this sudden change, comes also an opposite push, which in this case does not mean moving backwards, but forward following specific guidelines.

The electric revolution has sparked interest in the idea of applying modern tech to a recognisable design. To see how classic lines would translate in a modern language. Or simply to avoid a complete leap of faith into “the unknown” for both the company and its customers by remaining attached to something familiar. From this idea, two of the most attention-grabbing EV concept of the last few years were born. The Honda E (successively turned into a production vehicle), presented at the 2017 Frankfurt Motor Show, and the recent Renault 5 Prototype based on the famous R5.

In this context comes the restomod trend. And the ongoing revolution could very well be one of the main reasons for its sudden surge in popularity. The will to celebrate and preserve what has been done best so far.

This factor ties well into the strategy applied recently by luxury automakers such as Ferrari and Lamborghini. Through products like the Icona Series and the new Countach, they too pay a modern tribute to the highest achievements in their history.

Secondly, as mentioned before, scarcity and uniqueness are major drivers in the modern luxury industry, and these cars’ value proposition certainly satisfies both requirements.

Finally, social media and the internet, in general, provided an extremely powerful platform for all these small specialised workshops to promote their products worldwide. Such coverage has surely been key to reaching a target audience of enthusiasts willing to pay a significant premium for this kind of unique vehicle.

The 26th Conference of the Parties (COP) or United Nations Climate Change Conference is being held in Glasgow these days and will last until the 12th of November.

The meeting of representatives from 197 countries is expected to define new improved measures to fight climate change compared to those of the 2015 Paris Agreement. This is referenced as the so-called ‘ratchet mechanism’ establishes a new accord every five years (which was delayed in 2020 due to the pandemic).

The main goals of the previous one in Paris (UNFCCC), signed a little later in 2016, were:

• Holding the increase in the global average temperature to well below 2 °Cabove pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 °Cabove pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change;

• Increasing the ability to adapt to the adverse impacts of climate change and foster climate resilience and low greenhouse gas emissions development, in a manner that does not threaten food production;

• Making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.

What appears clear is that the world is on course to exceed the limits established during the 2015 conference, so further and more binding actions are requested this time. Where previously countries were not asked to provide a roadmap or framework of how these targets would be achieved, this time it will not be the case. This meant presenting a Nationally Determined Contribution plan or (NDC), and it is around these well-defined measures, the new targets ambitions, and the negotiations going on behind closed doors that the success of COP26 will be measured.

The European Union and the UK pledged to reach net-zero carbon emissions by 2050, as did the United States, the second biggest polluter in the world. As for developing countries, realistic targets have usually been set for a later date. Particular attention has been paid to China and India, respectively the world’s first and third biggest polluters who set their targets to 2060 and 2070.

COP26 AND THE AUTOMOTIVE INDUSTRY SUSTAINABILITY

Road transport accounts for 10% of the global emissions, and the change toward electrification that is seen as the issue solution for the mobility sector is underway. Despite the increasingly faster diffusion of EVs though, the transition is not advanced enough to meet the Paris Agreement goals.

To reach such targets COP26 proposes different measures:

• Countries and states: ensure that all new car and van sales are zero-emission vehicles by 2035 in advanced markets, and by 2040 in developing ones; put in place policies to accelerate the uptake of zero-emission cars, vans, buses, and trucks.

• Vehicle manufacturers:sell only zero-emission vehicles (EVs or FCEV) by 2035 or earlier.

• Fleet-owning businesses: achieve a fully zero-emission fleet by 2030 or earlier; join the EV100 initiative.

• Civil society: build support for all of the above measures.

A report by Peter Campbell et al. at Financial Times, however, claims that the deal is not getting much traction as some major automakers and governments including the US, Germany, and China are refusing to sign it. The hesitation from some governments would be the major factor stopping automakers to agree as well. In general also, the uneven deadlines for ICE phase-out that would hinder the penetration of certain automakers into developing markets, concerns over the sourcing of electricity from coal, and the exclusion of the synthetic-fuel option would be other reasons for these institutions to delay the agreement.

*Source: COP26

These targets, in fact, while extremely important, are not all there is to it. In the automotive industry, it is not just about the cars’ powertrain, but also the production, the supply chain, and energy production. The biggest task for many countries is to decarbonise the energy sector.

*Data Source: Climate Watch

According to Bloomberg, 33% of China’s CO2 emissions come from the energy sector which is also its biggest source, followed at 30% by the construction sector. In the context of its NEV sector rapid expansion and already within the largest automotive market in the world, this means an increasing demand for energy that as of now is created in most part through coal-powered plants, despite China leading in terms of renewable energy. The government has just started the construction of a 100-gigawatt renewable energy site that will be among the biggest in the world.

Renewable along with nuclear and hydrogen will be the main sources of China’s energy in the road to 2060.

*Source: International Energy Agency (data for 1990-2040); Tsinghua University (2060 estimates) via Bloomberg

By now, the chip shortage has been going on for longer than many people may think and has affected pretty much everyone in different ways.

You might have tried to purchase a product and either got the message that severe delays would occurr or simply the good you were after is out of stock.

A constant stream of news has been published in the past months about phones, gaming consoles, and the likes being delayed, or simply extremely rare to find, with soaring prices on some marketplaces. The same has been happening to automakers and dealers. Interviewed by CNBC, AlixPartner’s automotive and industrial practice managing director, Dan Hearsch claims this is a critical issue for the industry as modern vehicles, on average, need around 1,400 chips. This number is also going to increase with new vehicles, especially the electric ones, packing more and more integrated technology for ADAS, connectivity, and autonomous capabilities. The same source forecasts a loss of $210 billion for automakers in 2021, with a decrease of 7.7 million vehicles’ production. Several companies are, in fact, being forced to shut down at least parts of their production plants.   

HOW DID THE SHORTAGE COME ABOUT IN THE AUTOMOTIVE INDUSTRY?

The first cause for the auto industry was the slump in sales in the first half of 2020 due to the pandemic. But not the only one.

Automotive groups delayed or cancelled parts of their orders for microprocessors when the factories went into lockdown and certain markets lost as much as 60% in sales over the first two quarters. At the same time though, consumer electronics saw a sudden rise as people, forced to stay at home, had to upgrade their home set-up to keep working, or simply spend more on digital entertainment.

Arguably, the two most important factors in this picture however are that the concentration of the semiconductors market and the extreme difficulty of the production process. While lots of companies design their own chips, in fact, the vast majority outsources its production to very few manufacturers.

MAJOR SEMICONDUCTOR COMPANIES QUARTERLY MARKET SHARE (2019-2021)

*Source: Statista

Even though Evs have been around for a while now, it's just in the last two years that every major automaker started a proper race to catch up with Tesla and possibly outrun the rest of the competition.

And while initial forecasts predicted that EVs would have taken a fairly long time to surpass ICE cars, by looking at the current market development, the story could be different. The main drivers of the change are the so-called ACES standing for autonomous driving, connectivity, electrification, and shared mobility. A sign of this drastic shift is the number of tech companies, involved mostly in software and consumer electronics development that are entering the space:

*Major names in the Tech world entering the Electric vehicle market

I have discussed before about how automotive companies nowadays develop extremely complex customer journeys to promote brand loyalty as the competition in the market gets fiercer and just building beautiful and fast cars is not sufficient anymore.

Customer-centricity is crucial in the modern luxury market where brands are not just setting trends for their customer base to follow but are expected to offer a deeper and well-rounded brand experience coming along with the product. Every company becomes a services company too, and this is especially true in the Luxury Automotive Industry. The complementary services are conceived almost as a ‘reward’ for entering that brand’s family.

In luxury automotive, this translates into extensive marketing mixes that include higher levels of personalisation with virtually endless possibilities, events, and increasingly sophisticated and immersive digital services.

But there is something new coming to enrich the entire supercar (or hypercar, or classic car) ownership experience, and this time it does not come from an automaker, but from an architecture and design company.

SUPERCAR CAPSULE

Supercar Capsule is the latest venture born from the mind of Andrea Sensoli and his partners. Already the founder of two successful architecture firms ASZ Architetti and Superfuture Design, Andrea has brought his expertise in the luxury market into a new and very specialised niche.  Garages and Boxes for supercars.

However, these two terms, do not make justice to what Supercar Capsule realises and might look almost offensive because what these Italian Designers realise is closer to a proper art gallery or a stylish lounge than a simple storage area for cars.

At Supercar Capsule these spaces become highly bespoke display areas that do not serve just to showcase the parked car but can be whatever the client wants. A place to spend some leisure time with friends, to have fun, or indulge in some personal passion along with the one for fast and expensive cars of course.

The Supercar Capsule concept adds a completely new dimension to the Luxury Car ownership experience.

And there is more.

The level of refinement, research, and technology packed into this project are seriously remarkable, and I was lucky enough to have a chat with Andrea about his project, his experience so far, and his projects for the future. Check the full video of our interview below:

SOME CONSIDERATIONS   

The automotive industry is at a crossroads and in the span of a few years is changing like it never has for almost 100. Electrification, autonomous driving, and digitalisation are the most important trends right now, and the overall direction of the market is clear by looking at the amount and industry of provenance of the companies trying to enter the renewed automotive businessor have at least teased an upcoming electric vehicle. I am talking about Apple, Baidu, Foxconn, Huawei, LG, Sony, and Xiaomi to name a few.

Tech companies are taking over the automotive business, and there is a clear indication that very soon, software and connectivity could be the most relevant factors in the purchase decision.

According to a report by Bloomberg, three Chinese companies alone Baidu, Huawei, and Xiaomi are investing $19 billion in R&D on electrification and self-driving technology. Also, with a government extremely determined to dominate this new wave, at least in the domestic region, literally hundreds of companies are competing for a position in the largest car market in the world.

However, the luxury industry has and will continue to have some core differences from the wider market. The first-hand experience is surely one. So, despite the focus on the Internet of Things, and tech in general, a high degree of attention to a more personal experience will most likely remain of primary importance in luxury automotive. And here comes Supercar Capsule with its unique project.

BUSINESS AND POTENTIAL

*Tables bySupercar Capsule

Just a few days ago we witnessed the presentation of an exciting new project in the luxury automotive landscape. The fully electric hypercar Fulminea, already teased a few months back by Automobili Estrema, a new company established near Modena at the heart of the Italian Motor Valley. This week I had the pleasure to interview its Founder and CEO, Gianfranco Pizzuto.

Mr. Pizzuto is a pioneer in the field of electric mobility, and through his years of experience in this industry, he focused his attention on sustainability and the huge potential that comes with this automotive revolution.

We touched on many topics, including its past experience as an entrepreneur in electric mobility with the investment in Fisker, in an EV sector still in its infancy only a little over 10 years ago, the current development stage of Fulminea, and the vision for the future of the company. And there is a lot to be excited about! 

Here is the video of the interview and below you can find some more information about the car, the event, and the company’s future.

But now a little bit of background…

THE FULMINEA PRESENTATION

The event was focused on the presentation of the first full-scale model of the car, its styling, aesthetic, and aerodynamic solutions. The design already shows quite evidently the forward-looking approach used by the team at Automobili Estrema.

Not only the futuristic lines recalling the lightning-shaped company logo, as the headlights to create a stronger personality, but also the taillights which are the first of their kind. Estrema designers in fact used clear recycled methacrylate that works as a projector for the LED lights creating a unique aesthetic solution and also an aerodynamic feature.

Stand out of course also the massive use of carbon fibre, which includes even the wheels (developed by partner OZ Racing), the active aerodynamic elements, and finally some lines in the overall shape of the car that take inspiration from the best Italian automotive design tradition.

This way, the team at Automobili Estrema enters a very crowded and highly competitive space bringing a product that makes of technological innovation and striking design its most powerful weapons, while also reiterating its heritage rooted in the classic cues of Italian sports car manufacturing.

But there is more…

NOT JUST NUMBERS

Fulminea will be an almost €2 million hypercar, and as such is conceived to deliver hypercar-worthy performances. It will have a power output of 2040 bhp, a weight of 1500 kg, and an expected 0-62 mph (0-100 km/h) around 2 seconds. Even more impressive is the claimed acceleration from 0 to 200 mph (320 km/h) below 10 seconds.

Despite all of this, however, Estrema COO Roberto Olivo confirmed that this is not the kind of number the team is interested in. Of course, a performance matching the price point, and the kind of product is expected, but racing for the hundreds of a second in the 0-60 time is not what they are after.

Fulminea can in fact boast a much more ambitious set of objectives.

The first is to be the first car with a hybrid battery system. Meaning that along with the battery pack, the car will feature additional ultracapacitors, to further improve its performance. The synergy between the two should ensure reduced stress on the ‘regular’ battery pack, for increased range as well.

A Battery management system operated through AI which will adapt the performance to the outside conditions and the driving style of the person behind the wheel.

Finally, its battery pack will consist of solid-state lithium-ion cells, a solution that presents countless advantages over regular lithium-ion batteries with liquid electrolytes. Not only in terms of energy density (claimed around 450 Wh/kg), but also space and weight-saving, safety, and charge/discharge cycles.

This should ensure significantly better performance over other cars within this niche thanks to better range and reliability but most of all thanks to better dynamics.

THE FUTURE OF ESTREMA

Estrema has already formed strategic partnerships and joint ventures with different companies for the development of Fulminea and future projects.

Along with the design and exterior elements developed with EPTA Design, OZ Racing, Est Mobile, Pirelli, and more, the partnerships with companies in the energy storage development could lead to much more.

Estrema’s work with IMECAR Elektronik and ABEE (Avesta Battery and Energy Engineering) is aimed at creating, after the car, the first Gigafactory in Italy (and arguably one of the first in the World, even a few years down the line) for solid-state battery cells.

Ultimately, this would realise Mr. Pizzuto’s vision of establishing Estrema not only as a car manufacturer but as a leader in innovation and a technology company. This concept cannot but remind me of a claim made a while back by Mate Rimac, another great innovator in the automotive of our days, that already established his name as a major player in this newborn space. He talked about at Rimac they were forced to be a technology company first in order to survive and be a car company too.

Technology and innovation to exploit the massive potential of an electric powertrain to the maximum are surely key factors for new players who cannot rely on a long-standing brand name. Automotive is a tough arena to compete in, but in this respect, Automobili Estrema seems geared up very well for it. The people, the project, and the vision are in place, now time will tell.

In 2020, after a generally positive start of the first quarter, the world has been hit by the proverbial Black Swan. The pandemic changed profoundly our lives and, in many instances, has accelerated dynamics that were already developing in numerous industries.

After the virus diffusion, the outlook for the automotive industry got extremely negative very quickly. Trade decreased by 8% y-o-y in Q1. In April along instead the loss reached 49% compared to the previous year. In Europe, the overall number of new vehicles’ registration was down 38.1% (UNCTAD).

The most severe consequence of the pandemic was probably the shutdown of production plants that lasted several weeks. In the UK, according to Bentley CEO Adrian Hallmark who talked with Bloomberg, these weeks only cost the automaker over £7 million.

*Bentley assembly line upon restart after the shutdown. Source:Bentley Media

When a new car is unveiled, the first characteristic we appreciate is its design. It is our first point of contact with a car. The aesthetics language always carries the signature of a well-known Chief Designer who gives the direction and heads an increasingly large team. Because like in many other aspects of luxury automotive, the design too gets more and more complex for a number of reasons. It is mainly due to the higher competition and expectations by the clients not only on the exterior design but on the interior too. Then, of course, there is fine-tuning beauty and engineering performance.

Very emblematic in this respect is a quote from Klaus Busse, Vice President of Design for Fiat, Abarth, Lancia, Alfa Romeo, and Maserati, who highlights how on the newly released MC20 even the chromatic choices distinguish these two sides of a supercar development:

“[the front grill] brings together the design philosophy of the very clean, hand-sculpted upper of the car, with the very much computer-designed, purely functional, almost raw engineering low of the car, bringing these two worlds together. Beautiful sculpture but also performance-oriented engineering”

This characteristic, even with vehicles becoming more and more complex, has always been there to fulfil the need for improved capabilities. Last but not least come different cultures, changing technology, which is truly relevant now, with the integration of digital instruments, and new car ownership patterns (this last one highly unlikely to affect the luxury niche).

But let’s back up a bit and have a look at the major change in the process compared to previous generations. How do customers have a major influence on luxury automotive manufacturers?

CUSTOMERS’ BARGAINING POWER

Even if it sounds complicated enough already, there’s more, especially when it comes to catering to a restricted group of extremely demanding clients. In Porter’s Five Forces framework, the buyers have particularly strong bargaining power for various reasons. First of all, because they are a highly limited pool of people. Secondly, because a high percentage of these clients own a considerable number of vehicles relative to the total output of every manufacturer as shown by the results of my survey in the graph below. The exceptionally wealthy ones may even become collectors, owning up to 10 or more cars. One example is the one who accepted to release an interview with me on a previous occasion.

Ferrari just held the Annual General Meeting of Shareholders, and the Exor CEO and current Ferrari CEO John Elkann gave some important statements. The most-reported these days has certainly been the one about the release of a full-electric model by 2025. The year promises to be full of surprises, as many of Ferrari’s direct competitors, Aston Martin, Bentley, and rumours say even Lamborghini, plan to release their own EV in 2025.

Most of the talks, however, have been focused on Ferrari “continuing to execute the electrification strategy in a disciplined way”. But in the modern automotive industry that has become almost a necessity. The most interesting partof the statement was arguably the following one:

“our interpretation and application of these technologies both in motorsport and in road cars is a huge opportunity to bring the uniqueness and passion of Ferrari to new generations”

It shows what is the rationale and the vision behind the first claim. The renewed strategy of the company that so far, in some ways, looked more detached from its younger audience of potential future clients. It shows Ferrari’s intention to be there to inspire EV enthusiasts, which are on average much younger like it has inspired generations before them with its ICE supercars and race cars.

*John Elkann, Exor CEO and Current Ferrari CEO

Coachbuilding is one of the most interesting aspects of the luxury automotive industry. It is deeply rooted in the origins of the automotive industrywhen automakers did not have production series models and clients went directly to coachbuilders for a personalised design to be fitted on the chassis produced by the automaker. Numerous beautiful classic models such as Alfa Romeo 6C GS, Aston Martin DB4 GTZ, and Ferrari 250 GT SWB by Pininfarina are still preserved today.

This started to change after World War II when the automotive companies started to produce standardised models and vertically integrated the coachbuilding function. This led to numerous companies going bankrupt, changing business models, or being acquired by automakers.

In the graph below 97 major coachbuilders have been reviewed and a few interesting trends emerge. First, how early the industry was born. The majority of the companies were already established before War World II, some even well before 1900. Second, the effect of vertical integration started in the 50s and throughout the 60s. Of all the companies reviewed, only 24 are still active today. Third, the relative stability of the sector from the 80s on, with a slight growth happening since the 2000s.

ACTIVE AUTOMOTIVE COACHBUILDERS BY YEAR (1945-2020)

A previous article about the trend of increasing one-off supercars highlighted how more and more established luxury automakers are developing unique models working closely with the clients in a process that resembles very much the original birth of luxury cars at the beginning of the previous century. Naturally, the rationale behind these modern one-offs is very different and only addressing a current demand for a higher level of luxury and exclusivity by extremely wealthy clients. As a consequence, all of these companies develop unique designs based on their existing powertrains through in-house departments, with the exception of Bentley that revived Mulliner. The famous British coachbuilder was, in fact, acquired and merged by Rolls-Royce back in 1959.

So, how do modern coachbuilders operate? How has the industry evolved in the modern luxury automotive industry landscape?

HIGH DIVERSIFICATION

Several companies at one point started diversifying their businesses by expanding into other areas of transportation design. Others are becoming full-fledged design firms. Italian Italdesign, acquired by VW in 2010, and Pininfarina are two great examples. Since the 80s, the firms have become increasingly diversified up to today where they take on vastly different projects. From automotive to aviation, architecture, product design, and more.

*Pininfarina Battista, Italdesign DaVinci

They have also shown plans for vertical integration. At the 2019 Geneva International Auto Show, Pininfarina unveiled the Battista, a full-electric hypercar based on the Rimac C_Two chassis, and Italdesign the DaVinci concept, a four-seater GT. Both were presented under the design studios’ brand name. On this side, Pininfarina seems even advanced with Battista on track for delivery in 2021 and an upcoming electric SUV to enter production in 2022.

While they are two of the most recognisable names in the sector, they are not the only ones to have adopted this strategy. Other examples of smaller names are Boniolo Advanced Design and Spadaconcept.

CHANGING BUSINESS MODEL

Many companies due to the automotive industry evolution since the 50s and up to the 80s and 90s had to reorient their businesses moving away from bespoke coachbuilding while remaining in automotive.

Some did not change completely. Swiss Tüscher and Dutch Veth & Zoon moved to bus and trucks and vans coachbuilding, respectively. Differently from the ones mentioned in the previous paragraph though they abandoned car designing and instead of diversifying they focused on specific transportation segments, in this case, commercial vehicles. Others like Fantuzzi, Graber, and Pourtout transitioned to classic vehicles restoration.

*Bugatti Type 46 Veth & Zoon byUltimatecarpage

The luxury automotive segment is an extremely competitive niche, with just a few strong players and very high entry barriers. Over the last 30 years, many tried and very few succeeded. While electrification is partially lowering such barriers on the engine side, other aspects and services required from a modern vehicle are much more complex than before.

An electric motor, in fact, with fewer moving parts (around 20, against the combustion engine’s 2000, according to MES Insights and Drive electric) will be cheaper in terms of R&D. Superior costs for automakers so far might have included the battery packs, but with the increasing competition that too has decreased a lot.

EV BATTERY PACKS COST REDUCTION ($ PER KWH)

*Source:Statista

On the other hand, though, modern cars need a lot more attention on electronic components. Much of the competition has moved toward IoT, self-driving, and AI systems. Additionally, for a modern luxury car, there are two important considerations to make.

The first is that the fully electric car is not yet accepted by some buyers. The majority is uncertain or against this technology, so a new company might consider developing a powertrain based on internal combustion engine or at least hybrid technology, thus losing that ‘electric motor ease of development’ advantage. For this reason, some companies source their engines (as well as other components) from established manufacturers instead of producing them in-house.

The second is that a luxury car ownership experience is expected to come with a truly special andcustomer experience.

So, despite this new era for the automotive industry, it does not seem easier for start-ups to enter this market. But who are the new players and what do they need to succeed?

NEW ENTRANTS

Let’s have a look at some of the most interesting new companies trying to make it into this competitive niche between 2020 and 2021.

1. Automobili Estrema

The new company, founded in 2020 in the Italian motor valley, has just introduced its flagship full-electric high-performance car, Fulminea. In the land of V8 and V12 ICEs, Estrema brings innovation with a 2040 horsepower hypercar powered by 4 electric motors and a hybrid battery pack. It will in fact feature supercapacitors paired with solid-state cells. Fulminea will be produced in just 61 units.  

This company is the vision of entrepreneur Gianfranco Pizzuto, already an early investor in Fisker Automotive in 2007, a precursor of the hybrid electric technology in automotive with the Karma and many years in the sector. With him, other experienced executives worked for important companies such as Mercedes Benz, BMW, and Nio.

*Source:Estrema Automobili

Nowadays, the creation and development of a true comprehensive brand experience are two of the most important factors in an Automotive Manufacturer’s strategy. Throughout the decades the objective of creating a car that would simply fit the largest number of potential customers has significantly shifted. In the luxury performance automotive segment, the objective was never to mass produce to accommodate the highest number of clients possible, but similar trends shift are developing nonetheless. Building a beautiful product, capable of outstanding performance is not enough anymore to ensure customer emotional involvement and loyaltyas highlighted by Mr Carlo Bonzanigo, Senior Vice President Business Unit Design at Pininfarina.

The big new challenge is then creating a real ecosystem of experiences and values that fulfil the clients’ needs and that they can identify with. Only this effort creates additional value that can give a solid competitive advantage over other OEMs. From here the necessity of developing a multichannel strategy to accompany every valued client through steps, or touchpoints, toward the purchase and beyond.

So, what caused this change? How has it translated into practice so far? And where does the industry go from here?

FOUR FACTORS AND THE MARKET CHANGE

In the early 1990s, the fundamental way to market vehicles changed due to major transformations in the global economy. This change in the mass market naturally reflected on the high-end segments too.

Four are the major factors that caused this shift.

• Reduced Market Homogeneity. This change started early on as social class divisions, income inequalities, lifestyles, and age created fragmentation. This created numerous niches that were unlikely to be covered by a single company with one or a few products.

• Limits to Mass Production Process. Efficiency initially obtained through stable inputs, production process, and outputs. The capacity for mass production started to decline as Labour costs and raw material prices lost stability due to reduced productivity in the 70s. At the same time, the mentioned increasing fragmentation commanded more flexibility, which further limited the mass production capacity. Finally, oil crises in the 70s and 80s affected the demand and subsequent production output that was previously kept in check through stock manoeuvring (Pine & Gilmore, 1997).

• Instability of Demand. Two variables were the major causes of the loss of stability and predictability in demand. One was the market saturation that gave more bargaining power to the customer. It meant a shift from a sellers’ market to a buyers’ one making it more difficult to predict the future preferences, demand direction, and volume. The second was improving technology which simplified the production of higher-quality components or made the design and production of a wider variety of products cheaper.

• The Internet and Globalisation. Globalisation along with the possibilities opened by the internet, and the marketing based on big data created a desire for uniqueness and the opportunities for companies to segment, target, and satisfy extremely specific requirements. Within the Luxury Performance Automotive sector, this translates into the ever-expanding range of services offered by each manufacturer in the niche. It is not a case then that just in the last decade all the major luxury automakers greatly enhanced their personalisation services as analysed in Tailor-made: What luxury car customers can't go without. Aston Martin’s Q, Bentley’s Mulliner, Ferrari Tailor-Made, Lamborghini’s Ad Personam, McLaren’s MSO, Porsche’s Exclusive Manufaktur, and Rolls Royce’s Bespoke.

These conditions ultimately caused the shift from a Mass Production to Mass Customisationmarket (Pine & Gilmore, 1997). With digitalisation also, the key question in this market becomes: How is selling mobility services different from selling vehicles?(Candelo, 2019)

FRAMEWORK

To define the Customer Journey, a popular tool is the Customer Journey Map. It can be developed in many different ways and can go very deep into details or be more generic. There is no right or wrong answer here, as the rules and steps to follow can vary greatly from industry to industry and even from company to company. Within the same market segment are still numerous other factors that can require framework differentiation. For example, different KPIs, different services range and width, marketing mix extension, slight differences in target customers, and so on. The key factors to control and develop the map and business on are the touchpoints.

Ferrari Marketing mix gives a good indication of the kind of customer service and touchpoints strategy a company needs in the luxury performance automotive industry. Each contact with the customer has to be anticipated, and every problem addressed creating a seamless experience.

This doesn’t happen by accident; it happens by design. As is often the case in life, making something look easy is very difficult –Harvard Business Review

The mapping process starts with the client’s persona definition, involving marketing psychology analysis. Once this first phase is achieved, each step of the journey is developed with a precise target.

Here is an example of a Customer Journey Map for a generic luxury automotive manufacturer. Naturally, as mentioned previously, each company would apply specific strategies, KPIs, and touchpoints. Maps like this can become much more complicated as each service is outlined and constantly updated. So, this is a simple but broad enough template.

*Click or tap on the image to enlarge

For the German automaker, electricity is the way, but not alone. In a recent press release, Porsche’s R&D Member of the Executive Board Michael Steiner claimed that while a large chunk of the companies’ investments is going in electrification and software development, they will not stop with the development of internal combustion engine (ICE) either. This is especially true for the 911, the brand’s top range production sports car, which as highlighted in a previous article Porsche EV Development Strategy, will not be replaced by a full-electric version (at least in the foreseeable future) as the focus on driving experience is its most important asset. Two major factors in favour are the combustion engine itself with the sound it produces, and the significant difference in weight due to the absence of battery packs necessary in EVs.

The additional research on ICE improvement though has to take into account the environmental regulations for sustainable mobility, and it is here that Synthetic Fuel comes into play. Porsche is looking for partners for this venture and it is specifically focusing on the so-called eFuels. Differently from regular gasoline, this is produced by a combination of CO2 captured from our atmosphere and Hydrogen. Granted that the latter is obtained through renewable energy sources, eFuel can be virtually carbon neutral. Since the announcement, Porsche has cooperated with Mahle on a series of tests of eFuel in a production car.   

So, according to Porsche, while electrification is a viable option, it will not be enough to significantly reduce Greenhouse Gas emissions (GHG) at the rate required. Additionally, while complete electrification would require the substitution of well over 1 billion cars on the road today, eFuel would allow to cleanly run ICE cars with almost no modifications.

The discussion around Synthetic Fuels has been around for years now, but the solution is not as simple as it seems.

HOW SYNTHETIC FUELS WORK

First of all, the development of Synthetic Fuels is still in its infancy. There are several options for converting renewable energy sources into fuels. However, none of these processes is yet optimally developed.

CO2 can be captured from stationary sources such as industrial plants’ wastes. As of now though, it requires high costs for storage, as it is pumped deep underground, and there are still concerns regarding potential leaks. In the US, Carbon Engineering is developing a system to directly capture carbon dioxide in the air, which would be an important solution to reduce the actual CO2 present in excess in the air while also utilising it. Bill Gates himself backed this company’s investment (CNBC).

*Carbon Engineering Fans Complex - Source:Science by Carbon Engineering

Through a large fans complex and chemicals dripping in the tower the CO2 is captured and then processed. This procedure is not only clean as all the chemicals involved are recycled, but also promises to lower the cost per Ton of CO2 to $94-232 from the current $600.

 

*Carbon Engineering CO2 capturing process

 

After carbon dioxide is captured, there are two main processes to derive Synthetic Fuels. One is direct through electrochemical synthesis or photocatalysis with direct CO2 catalytic reduction. The other is indirectly completed via the conversion of biomass.

The electrochemical reduction, the one approached by Porsche, is considered the most promising technology. It can reduce GHG emissions and has numerous potential applications, not just in the automotive sector. It is performed by using renewable energy (solar, wind, or other) to reduce CO2 into hydrocarbon fuels (CO) through electrochemical conversion technology. Similar to water electrolysis, the electrochemical synthesis uses energy to cause a chemical change, substituting potentially toxic reagents and allowing for cleaner reduction.

The other direct pathway is the Photocatalytic reduction of carbon dioxide through semiconductors and solar energy.

*a)Carbon Dioxide photocatalytic reduction b)Carbon Dioxide electrochemical reduction
Source:  Xia et al. 2020, 可再生合成燃料研究进展

As for biomass-based fuels production, according to Xia et al.(2020, Progress on renewable Synthetic Fuels), despite being useful and clean, it presents several problems. First is the lack of sufficient biomass to cover the mobility industry. Then, biomass realised from edible crops is not suitable for large-scale production, especially in developing countries. Finally, the one obtained from residues of agricultural and forestry crops requires a much more complex process that results in high costs but low efficiency.

WHO ELSE IS INVESTING?

Porsche is not the only one interested in the eFuel option. To stay within the same group, Audi, Bentley, and Volkswagen have their investment programs.

McLaren’s COO Mr. Ludmann also believes that Synthetic Fuels are a viable opportunity. Bosch which has a huge R&D division dedicated to the development of automotive components also showed a strong interest in the development of this resource.

It’s not just automotive companies as well. FuelsEurope, a group that counts 40 Companies operating refineries in Europe and accounting for almost 100% of the European oil refining and 75% of the refined fuel retail sales. In an increasing focus on sustainability, the documents Vision 2050 and Clean Fuels for All outline the future of the industry through eFuel and other Synthetic Fuels.

Last but not least, China’s Association for Science and Technology (中国科学技术协会) in mid-2019 published a list of twenty scientific and engineering key issues and necessary innovation including synthetic fuel obtained with regenerative resources as one of the most urgent. This decision is even more significant when taking into consideration the huge effort the Chinese Government has gone through so far to empower the national EV market. Check China automotive market: Real openness or concealed protectionism? to know more.

WHO IS AGAINST AND WHAT ARE THE ARGUMENTS?

Not everyone is enthusiastic about this potential development. Different experts do not agree with the idea of continuing to rely on oil companies and promoting the fossil fuel industry. But there are also, at least for now, technical limitations to this technology.

A major one, especially when comparing it with the pure electrification for the automotive industry is the efficiency, or lack of. According to an analysis by the International Council of Clean Transportation (ICCT) about 48% of the renewable energy used in the synthesis process is lost in the conversion to liquid fuel which in turn, due to ICE’s efficiency of around 30% translates into a mere 15% efficiency for eFuel. On the contrary, on EVs, the energy lost is only around 10% for charging and 20% by the motor bringing efficiency up to 70%.

This point is highlighted by Mercedes COO Markus Schäfer too. In an interview with Autocar, he said that the automaker’s focus is certainly toward electric powertrain, as it is the most efficient way to utilise renewable energy.

The second important factor is the actual production cost of synthetic fuels. As mentioned earlier, right now the cost of CO2 is of $600 per ton while Carbon Engineering claims to be able to reduce it in the short-term by at least two-thirds. The same article by ICCT discusses how battery packs could soon allow bringing EVs and ICE cars to parity. In this context though is interesting to watch how much this has changed in less than a decade.

*Sources: leftBloombergNEF, rightWolfram & Lutsey, 2016, Electric vehicles: Literature review of technology costs and carbon emissions

Both the graphs even though expressed in different currencies show the drastic reduction in prices for Lithium-ion batteries that happened in just 10 years. So, there are contrasting claims coming from different parties involved with Bosch announcing that by 2030 the eFuel price will be €1.2 per litre and ICCT saying €4 would be an optimistic estimate. With battery packs price decreasing by 85 to 90% in the same time frame it is possible to expect a similar decrease in eFuel costs, as it happens for almost every new technology as it is gradually adopted by the mass market.

CONCLUSIONS

The options opened by this technology are varied and some appear really promising. Certainly, a mix of the two would at least grant major flexibility to automakers and a wider ground for competition. A crucial factor that cannot be discounted will be the approach of government regulations on this topic. Subsidies and rebates have proven necessary in the past years to foster the EV diffusion but have also ended up being double-edged swords once a government decided to revoke them.

Within the luxury performance segment, eFuels represent the best hope for ICE enthusiasts and drivers. Being able to save the combustion engine for the foreseeable future, would allow traditional automakers to preserve the engine sound and avoid the excessive vehicle weight, maintaining intact the driving experience and ultimately the status quo in the market niche.