Extending the life of electric cars is about the business model, not just the car

This time, I’d like to discuss another important aspect of the regulation: the drive to extend product life, in keeping with the aims of a circular economy. For the automotive industry, this implies redesigning electric vehicles (EVs), in particular, to extend their lifespan – but there’s a lot more to it than vehicle design, as I’ll explain below.

Extending product life requires changes to vehicles and the supporting infrastructure

Several things need to happen to make all this possible. For example, OEMs will have to develop their spare parts ecosystems further to ensure the availability of replacement parts throughout the vehicle lifecycle and enable fast and efficient repairs. Renault’s The Future is NEUTRAL and Stellantis’s SUSTAINera are both good examples of this kind of program. They are often undertaken as joint ventures, with the intention of providing a service for third-party brands, not just the OEM’s own.

OEMs will also need to make physical adaptations to the vehicle to enable fine adjustments and continuous improvements, thereby maintaining performance. For example, connectivity will need to be improved to enable reliable over-the-air updates.

In addition, it will be necessary to facilitate repair and remanufacture by adopting the 6R principles (Reduce, Reuse, Recycle, Repair, Remanufacture, Recover) to maximize the use of resources and minimize waste. These principles need to be borne in mind from day one of the design of a new vehicle.

The new approach is associated with a paradigm shift in the business model

But the changes required go well beyond the vehicle itself, and its maintenance. The drive for longer vehicle life coincides with (and is perhaps partly caused by) changing customer expectations. Consumers are increasingly seeking access to practical, affordable services, rather than wanting to own a physical asset. For more on this trend, please listen to our podcast – Driving the Future, where François Dossa of Jaguar Land Rover tells me about the concept of selling a car for life.

This trend is in line with sustainability aims and the circular economy, where optimizing resources and reducing waste are priorities. For example, car sharing means that fewer cars will need to be manufactured for the same amount of customer use since they will spend less time standing idle. The mobility services concept also creates more opportunities for automakers to extend vehicle life: If a manufacturer retains ownership of a car, it can more easily upgrade and reconfigure that car in line with market changes, and to meet the needs of different drivers. Therefore, OEMs need to anticipate and facilitate the shift from car ownership to car use as part of their strategy for extending vehicle life.

How can OEMs make the new business model work?

OEMs should therefore start to view the car as a long-term service rather than a traditional consumer good. Here are a few features I believe that the service will need.

• Very long-term leasing: Offer leasing packages lasting several years, including maintenance and updates.
• Regular software updates: The connected car should receive software updates to improve its functionality and performance over time.
• Wide range of added services: Offer additional services such as regular maintenance, energy management, and advanced connectivity.

For automakers, these features imply major transformation, some of which is already in hand. However, there are additional complications to deal with.

For example, in the area of finance and leasing, manufacturers and their financial captives are no longer the only ones offering solutions. Banks and independent leasing companies now offer a choice of flexible packages, allowing consumers to pick the offer that best suits their needs while encouraging long-term use of the vehicle.

Therefore, OEMs will need to offer equally inventive solutions if they want to retain control of vehicle finance. Alternatively, they may want to partner with specialist players who can provide financial options that promote extended use.

A big step toward automotive sustainability

By undertaking all these innovations – both in the vehicle and in the overall business model – manufacturers can change the electric car from a product to be bought or sold into a durable asset that can be maintained and updated. This future car will typically have several drivers over the course of its life – and, in effect, several lives. As well as being incrementally updated over the air, it can be remanufactured periodically, effectively becoming a new vehicle each time – another idea discussed in our recent podcast.

Thus, the vehicle will retain a significant residual value. For EVs in particular, this residual value is an important issue. Currently, the technology is not sufficiently stable for us to predict the end of life confidently. For example, we don’t know when a battery will need replacing – it could be after five years, but it could also be after 10. Yet a battery is an expensive item, costing anything from €7-10,000. OEMs are urgently looking for solutions to this EV challenge, and innovation is key. I hope to return to this topic in a later article.

Because the new Ecodesign regulation encourages innovation in the design and use of EVs, it paves the way for more sustainable mobility. By rethinking products and engaging with a wide range of stakeholders in their management, automakers can create an economic and environmental model that both pleases their customers and also benefits the planet.

Talk to us about ecodesign

At Capgemini, we’re ready to help our automotive clients with every aspect of their circular economy journey. We’re already collaborating with major OEMs on ecodesign projects and associated software. We support automotive clients and their subsidiaries in building track-and-trace facilities for spare parts, and indeed for full lifecycle management of a car, with tracking of vehicle data, service milestones, repairs, battery health, and so forth.

And, by combining our Group’s automotive and financial services know-how, we can also help clients to address the digital requirements of new automotive business models such as subscriptions and long-term leasing packages.

Please get in touch to discuss how we can collaborate to extend the lives of vehicles and ensure sustainable use throughout those longer lives.