EU Regulations Impact On EV sales
This time around there is no doubt that plug-ins are here to stay and that we are in a transition toward zero fossil fuel and even zero emission in the EU. The question now is only how fast it will go, and which solutions will be used during the transition period.
To know a bit more about what we can expect, I decided to look into the EU-regulations which will regulate the CO2-emissions with the emission limit for average new car sales in EU. This is being set to a maximum of 95 g/km in the NEDC testing cycle, starting in 2020; to be fully implemented when 2022 ends.
- There is a one-year phase-in period, requiring 95 percent of new car sales to comply with the target in 2020 and 100 percent from the end of 2020 onwards.
It means that for example, if the most emitting 5% of the manufacturers’ new cars averages 250 g/km, it will add up to a total of 102.75 g/km instead of 95 g/km during the phase-in year of 2020.
- If a manufacturer fails to reach their target it will have to pay €95 per excess gram per registered car per year, implemented straight away in 2020.
Let’s say a manufacturer sold 1 million cars in the EU in a year and missed the target by a single gram then the fee would be €95 million, two grams and it’s suddenly €190 million etc. That is a lot of money even for the large manufacturers, and the 95 g/km target never goes away nor the fee for excess grams so it makes no sense to not comply and comply straight away.
- The manufacturers have individual targets which are based on vehicle weight as the underlying utility parameter.
This means that manufacturers selling heavier cars will have lesser targets, benefiting the heavyweight (pun intended) German trio of Mercedes, BMW and Audi. This reflects the influence Germany has had during the negotiations which also has resulted in the less strict regulations than originally proposed. Only FIAT has a really tough goal because of their lightweight cars, and will likely have a really hard time reaching it – even with a good EV strategy (which they seem to totally lack today).
- There are Super-credits in play between 2020 and 2022. A Super-credit is given to every car with CO2 emissions of less than 50 g/km and will make it count as more than one car. In 2020 a car given a Super-credit will count as 2.00 cars, in 2021 as 1.67 and in 2022 as 1.33 (2022). During the three years 2020–2022 the limit for the use of super-credits is set at a maximum of 7,5 g/km combined.
Almost every PHEV gets under 50 g/km so it will be fairly easy for the manufacturers to gain enough super-credits to be able to use the full 7,5 g/km if they need them. Then it’s just a matter of how to distribute them. The car manufacturer could for example choose to spread out the 7,5 g/km equally over the 3 years, making it 2,5 g/km per year or “spend” it all on a single year.
To better understand the numbers and what impact these EU-regulations will have I will give a comparison to Norway, the EV capital of the world. Let’s say a manufacturer reach their target like this:
– 2020 – 102,75 g/km (95 g/km for 95% of the fleet + 5% high emission cars)
– 2021 – 102,5 g/km (95 g/km + all of the 7,5 g/km super-credits)
– 2022 – 95 g/km (no super-credits left to “spend”)
I will compare that to the three first months for new car sales in Norway in 2015:
January – 101 g/km on average – 18% BEVs and 3,1% PHEVs – total 21.1% plug-ins
February – 101 g/km on average – 18% BEVs and 2% PHEVs – total 19.9%
And the record breaking last month in Norway which was the first month ever anywhere to go below 95 g/km.
March – 93 g/km on average – 23,9% BEVs and 2,5% PHEVs – total 26,5%
During the last three months Norway has almost copied what the whole of EU will have to do in a few years time. Can you imagine that? It puts the goal and numbers into a whole new perspective.
ICEs will of course become a bit more efficient until then and light hybridization might be a factor but the major reduction in the label on new cars for CO2-emissions will likely come from electrifying them. The most popular way to get there seems to be to make almost every car model into a PHEV, something that Volvo, BMW, Mercedes, Porsche and Volkswagen have started to show or communicated. Something that will significantly increase the percentage of plug-ins needed to reach the target compared to Norway’s (almost) all BEV strategy.
I can give a personal guarantee that the plug-in sales in the EU will reach a bare minimum of 20% plug-ins sold in 2020, which is at least a 20-fold increase compared to today. Do you agree?
2020 is less than 4 years and 9 months away…
(Some of the) sources used: Ofvas.no, ICCT (theICCT.org), European Comission