Plug-in hybrids saw a modest decline in Europe last year (-4%), and despite renewed government strategies and binding CO2 targets, their popularity isn’t expected to rise much.
Stricter emission rulings will prevent carmakers from launching new models. So, as the Belgian government provides some slack for these plugged fossil drivelines, nothing fundamental is about to change.
As part of the federal policy agreement under the Arizona Coalition, the deductibility of PHEVs remains at 75% through 2027. Like battery-powered cars, the percentage drops to 65% and 57.5% in the subsequent years.
The government made this decision because it considers BEVs too expensive or cumbersome in particular situations, such as for city dwellers who struggle to find charging infrastructure.
For smaller companies?
The revised ruling isn’t expected to have a substantial impact because the ship has already sailed on both the local and European levels. In Belgium, the change could only benefit smaller companies, as the large ones have already implemented car policies, which they are not eager to rewrite again.
Moreover, multinational companies must abide by the EU Corporate Sustainability Reporting Directive. These audits for CO2 emissions force them (and their subcontractors, who don’t necessarily need to report yet) to use electric vehicles.
Will these smaller companies benefit from lower-priced plug-in hybrids? Hardly. Carmakers are increasingly equipping their PHEVs with larger batteries, often reaching zero-emission driving ranges of 100 kilometers.
This immediately leverages the upfront cost. Adding up the combustion engine means these models are now, by rule, more expensive than their battery-powered counterparts. A 204 hp Golf eHybrid starts at 45.500 euros, while the 204 hp ID.3 costs 39,900 euros in Belgium, so much for affordability.
Three times higher
Access to charging infrastructure can’t be singled out as a genuine benefit, as PHEVs and BEVs depend on it. The crux of the discussion on PHEVs is the practice of their owners neglecting to plug them in.
They consume more energy and emit more CO2 because they carry the surplus weight of an empty battery. This is not an assumption. The European Union gathers data from real driving scenarios through the ‘On-Board Fuel Consumption Meter’.
The analysis that PHEVs emit three times more CO2 than homologated vehicles has motivated the European Union to revise emissions testing. Since the beginning of this year, PHEVs must comply with the new ‘utility factor’ under WLTP. This method uses a predefined utility factor curve based on trip length statistics.
The revised mathematics substantially impact the CO2 results. For the Golf eHybrid, average CO2 emissions rise from 6 g/km to 25 g/km. To meet the new standards (not applicable to cars homologated in previous years, but the utilization factor gets increasingly more stringent over the coming years), car manufacturers will install larger batteries or abandon the technology in favor of battery power.
Moreover, the new test procedure makes PHEVs less interesting to meet the average fleet emissions of roughly 94 g/km that car brands will face by the end of the year.
Premium models
Bigger batteries will drive the customer price further up unless cheaper battery manufacturing offsets them. In the latter case, this does not impact the price gap with BEVs, which also benefit from less expensive battery cells.
Considering the hurdles presented to PHEVs, their market share is expected to remain steady or increase only slightly. This is also because automakers are preserving the technology for higher-end premium vehicles. Stellantis and Renault, for example, have withdrawn the technology altogether from their compact ranges.
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