EU car makers have no other option than going electric
Car manufacturers will need to get their customers to buy electric cars to reach CO2 targets imposed by the EU. If not, they will face massive fines for each car sold. For 2021, phased in by 2020, the average maximum CO2 emissions for manufacturers are set at 95 grams per kilometre.
According to Jato Dynamics, with an average for 2018 of 120,5 grams, the challenge is huge. Especially since the CO2 figures are on the rise. In 2016, the average for all cars sold in the EU was 117,8 grams per kilometre.
The emissions increase is due to the growing sales of heavier and less aerodynamic SUVs and the steep sales decline of diesel-driven cars that produce less CO2 than their petrol counterparts.
Going electric to avoid fines
If car manufacturers don’t reach the imposed CO2 limits, the penalties are huge. According to Jean-Pierre Imparato, General Manager of Peugeot, each gram above the average of 95 grams per kilometre will cost the PSA Group 400 million euro.
To avoid this cost, PSA has started a CO2 committee presided by group president, Carlos Tavares, himself. Its objective is to conceive a product offer that makes reaching CO2 targets possible.
Sell more EVs
The solution for car manufacturers to decrease their CO2 average is to sell more electrified cars, such as plug-in hybrids or fully electric cars. The latter are awarded a bonus by the EU, which makes them even more interesting to achieve the average. Manufacturers with a tradition in electric cars are at an advantage.
Renault sold 40.000 electric Zoe models last year, 3% of its total sales. It hopes to speed up sales to avoid penalties. 12% of Nissan sales in Europe since the start of this year are electric, with a target of 42% by the end of 2022.
Electric offer on the rise
Porsche might have shocked some of its customers announcing the next-generation Macan will only be offered as an electric car. The model accounts for 33% of its 256.000 sales, so the decision shows confidence in electric and the willingness of the brand to force buyers to adopt it. Other manufacturers don’t go that far, but the number of new electric models offered is increasing rapidly.
At PSA, the first new electric models will be launched by the end of 2019. Volkswagen will invest 44 billion euro by 2023. Hybrid car pioneer Toyota will offer its first fully electric model in Europe by 2021. This will have a positive impact on electric car sales.
However, car manufacturers will need to convince customers to go electric and address electric car pricing. Volkswagen will make its electric platform available to other manufacturers in an attempt to reach higher production volumes.
The industry is also counting on government support to make electric cars more affordable. In France, the all-electric Peugeot 208 could have a premium of only 11% over its petrol equivalent.
Training sales people to sell more electric cars and giving them incentives to do so might help as well. Some manufacturers might even accept to sell electric cars at a loss if it can help them avoid European penalties. Lets’ hope all this helps to achieve the goals set, because by 2030 the CO2 average will need to be even 37,5 % lower.