On the 8th of July, Volvo Cars CEO Hakan Samuelsson came out with a statement that shocked the world by committing to producing only electric cars or hybrid cars by 2019. Samuelson boasted that “This announcement marks the end of the solely combustion engine-powered car”. With this bold statement dominating the headlines, we examine the legislative commitments that the transport industry is to comply with going forward. Also, what the future for electric cars looks like.
Picture Source: Hindustan Times, 17 May, 2017
Carbon Emission Targets
Several major carmakers, including Renault-Nissan, BMW and VW, have declared ambitious plans for electric cars. These plans are supported with grants by governments, which see them as a key way of tackling air pollution and climate change. This comes off the back of legally-binding carbon targets for new cars sold in the EU from 2020. EU legislation sets mandatory emission reduction targets for new cars. Furthermore, this legislation is the cornerstone of the EU’s strategy to improve the fuel economy of cars sold on the European market.
The fleet average to be achieved by all new cars is 95 grams of CO2 per kilometre by 2021, phased in from 2010. This means a fuel consumption of around 4.1 l/100 km of petrol or 3.6 l/100 km of diesel is to be achieved. These targets will represent reductions of 18% and 40% respectively compared with the 2007 fleet average of 158.7g/km. Hence, if the average CO2 emissions of a manufacturer’s fleet exceed its limit value in any year, the manufacturer has to pay an excess emissions premium for each car registered.
This premium amounts to: –
- €5 for the first g/km of exceedance
- €15 for the second g/km
- €25 for the third g/km
- €95 for each subsequent g/km
From 2019, the cost will be €95 from the first gram of exceedance onwards.
Increase in Electric Cars Sales
Volvo, a car manufacture who currently has no all battery- operated vehicles in its fleet, has made a very powerful statement in its commitment to becoming a market leader in its fulfilment of these obligations. The cars that Volvo will produce from 2019 onward will range from battery-only to plug-in hybrid. It can run for a significant distance before switching to petrol or diesel. It would also produce mild hybrids, where a battery helps a conventional engine achieve greater fuel economy. Not only is this a sign of improvement of environmental performance, but also a clear indication of a shift in the market. This shift is visible in the graph below outlining the huge annual increase in electric cars.
Electric car sales annually since 2011, Source: The International Energy Agency
In the EU last year, 1.9% of new car registrations were for hybrids, 0.7% were plug-in hybrids and 0.6% were pure electric. In Norway, the International Council on Clean Transportation found pure electric models accounted for 15.7% of new car sales in 2016.
What does this mean for the future of both the electric car and the internal combustion engine? Bloomberg, a financial publication has predicted this growth in electric sales to continue exponentially. Also, with strict C02 targets around the corner, it is difficult to challenge these predictions. Although the sceptics will argue the fact that the oil and transport industry have a synergistic relationship in which they are almost joined at the hip. Only time will tell if this bond can be broken.