How the CO2 timebomb will transform your next car
We’re just two years away from tight new regulations that will force car makers to prioritise electrification like never before. By Phil McNamaraT HINK ELECTRIFICATION IS something for other drivers? Think again. Within two years, car makers may have to ration petrol car sales to hit CO2 targets, or face multi-million-euro fines. Groups that have been slow to embrace plug-in cars – Ford, Fiat-Chrysler, Mazda, PSA Groupe – will almost certainly have to cap their own sales until their product range catches up with the regulations. The industry is furiously developing pure EVs, and plug-in and mild hybrids: it needs them on the market as soon as possible, ahead of new emissions targets coming into force in 2021. This countdown is focusing minds big-time. European Union legislators have introduced the world’s toughest emissions regulation: new cars sold in the region must emit on average 95g/km of CO2 in three years’ time. At the end of 2017, the industry’s cars were averaging 118.5g/km. Given that average actually went up on the 2016 figure, there is no doubt that some car makers will miss their individual targets, typically calculated on a group-wide basis and making allowances for vehicle weights. Any group that misses its target will be hit with swingeing financial penalties. CAR MAKERS FACE MILLIONS IN FINES ‘The fine for 1g over your target is €95 multiplied by all of your volume,’ says Kia Europe’s Artur Martins. ‘For Kia that’s 500,000 cars.
SUVs anaconventional cars, so emit more carbon. Concurrently, negative publicity for compression-ignition engines has led to a collapse in registrations. VW is culpable for its emissions-test cheating, but politicians have exacerbated the situation with some blanket criticism of diesel particulate and nitrogen dioxide emissions, failing to point out the marked improvement in the latest engine tech. The flipside is that the more efficient diesel emits around 15-20 per cent less CO2 than a petrol engine, so the slump in demand could not have come at a worse time as manufacturers scramble to hit their targets and the world worries about climate change. THE FINANCIAL PAIN BEYOND FINES Opel-Vauxhall is one of the biggest laggards on CO2, which wasn’t a big priority for its previous owner, General Motors. But now PSA Groupe is in charge an electric Corsa will be unveiled this year, with a battery-powered all-new Mokka X and zero-emissions Vivaro van following in 2020. Electrification can only happen once Vauxhall models switch to PSA architectures, so a plug-in Astra or Insignia will trail well behind the Peugeot 3008-based Grandland X PHEV, due in 2019. Vauxhall’s Stephen Norman has been given an average CO2 target to hit in the UK to help PSA meet its Europe-wide obligations, and the managing director is under no illusion that he will have to micro-manage supply to keep a lid on emissions. ‘If the demand we’re able to create for low-emission vehicles is below the [required] percentage of the predetermined mix, the consequence would be a limit to the number of vehicles we’re able to sell. If the amount of pure combustion engines goes up and we go beyond [our CO2 target], the financial penalty is so great the company cannot afford to take that risk.’ It’s an unenviable position for car makers, having to extend waiting lists or forbid customers from their choice of vehicle. And there’s a knock-on effect – if factories are forced to slow down, jobs may be at risk. ‘If you don’t have the powertrains, the only way to sell cars in Europe is to reduce your volumes,’ explains Kia’s Martins. ‘And if you reduce your volume, there’s an impact on production.’ The shockwave would travel across the value chain, with suppliers and dealers taking a hit too. THE ECONOMICS OF ELECTRIFICATION An electric Corsa looks to be a hard sell, given the supermini is a budget-conscious battleground and Vauxhall’s battery-powered flagship could conceivably cost £10,000 more than a midrange VW Polo.
Even at a high price point, Vauxhall willnt down. But the pressure will be on brands to price EVs competitively to hit their CO2 obligations, which could cause carnage for the bottom line. The UK government’s plug-in car grant will become even more influential in convincing consumers on a lower budget to go green. But last November, the electric car subsidy was reduced from £4500 to £3500, and the £2500 inducement for plug-in hybrids abolished completely. It was a move that left Hyundai UK’s outgoing CEO Tony Whitehorn astonished, as the Ioniq EV became almost £2000 cheaper than the plug-in hybrid version. Whitehorn’s view is that it’s too soon to pull any funding for this nascent market – a logical point given that PHEVs are a gateway drug for pure electric cars, uncompromised by the range-anxiety issues that will hamper EVs until Britain’s charging infrastructure is bulletproof. So the transformation of the European car fleet is going to accelerate markedly over the next few years. High-power, low-efficiency engines will become a hindrance, heavy SUVs may go out of favour, and mild hybrids will become the bare minimum on the road to pure electrification. Volvo sewed up The Times’ front page in 2017 when it announced that, from this year, it will never launch another purely combustion-engined car. ‘This is for the customer,’ announced CEO Hakan Samuelsson. Partly. But it’s also to help Volvo defuse the CO2 timebomb of 2021 and beyond.