Europe is expected to see the world’s most significant gain in EVs this year due to the hefty fines automakers face if they don’t meet fleet-average CO2 emissions, which increased in 2020 and continue to rise. PA Consulting, a global consulting firm, recently conducted a report which showed that Europe’s top thirteen auto manufacturers are likely to face over €14.5 billion in fines. While electric car sales are increasing, it’s not fast enough to meet the goal.
According to PA Consulting, increased adoptions of SUVs are undermining gains from EVs. The report, “CO2 Emissions Are Increasing; Carmakers Must Act,” wrote, “Emissions increased across the board in 2018, and all manufacturers are now set to miss their 2021 targets.”
The report found Toyota to be the company closest to meeting 2021 targets. Toyota’s head-start with hybrids is mainly responsible for the company’s lead. The researchers from PA Consulting expect more than 71% of Toyota’s portfolio in Europe to be made up of conventional hybrids and plug-in hybrids sales by 2021. “Toyota started early to transfer into hybrids, which helps them to reduce emissions,” said Michael Schweikl, an automotive expert who works at PA Consulting.
Schweikl pointed out that even though Toyota’s heavy mix of hybrids will be helpful in the next coming years, the company lacks the zero-emission vehicles it will need later on. “2025 remains a challenge for them,” he said.
Daimler claimed that in 2020 they are quadrupling their share of fully electric vehicles and plug-in hybrids in total sales. That announcement came after Daimler’s CEO, Ola Källenius, admitted that meeting 2020 and 2021 CO2 targets would be a challenge. In the report, Daimler was predicted to reduce CO2 emissions from 130.4g/km today to 114.1g/km in 2021, missing its 103.1g/km target and facing fines of €997 million.
Tesla is not included in the report. “No emissions. No fines. Tesla is out of the game for regulation,” clarified Schweikl. He indicated that other auto manufacturers are aggressively investing in EVs. However, the technology takes several years to deploy, and timetables are not quick enough to keep up. “Volkswagen owns a very complex portfolio, and it lost time to transfer into BEV or PHEV,” Schweikl explained. (Battery Electric Vehicles and Plug-in Hybrid Electric Vehicles)
By 2021, PA Consulting expects BEV and PHEV to make up about 10% of Volkswagen’s (VW) sales in Europe. The firm predicts that VW’s CO2 emissions will drop from 121.1g/km to 109.3g in 2021, meaning it will miss its target of 96.6g/km. Based on this information, Volkswagen will have to pay CO2 fines up to €4.5 billion, which is the highest of any manufacturer.
Furthermore, the report shows that manufacturers would need to sell an additional 2.5 million electric vehicles to meet EUs 2021 targets, which would require a 1,280% increase by 2021. “Selling so many BEVs in such a short time is practically impossible due to production-capacity constraints,” wrote the report.
A long list of recommendations of what auto manufacturers can do to make up for the shortfall is included in the report. Some tasks include:
- Deploying efficient smart-city strategies;
- Increasing R&D;
- Greater use of shared EV platforms;
- Upping the all-electric range of PHEVs and hybrids.
In addition to those recommendations, government support of incentives and charging structure is also necessary.
The methodology PA Consulting used is based on the number of registrations of each powertrain, average fleet weights, planned releases, future trends, super-credits, and other factors. The 2020 report is the fifth year that the firm has assessed auto manufacturers’ progress towards the CO2 targets.
