Car makers escape CO2 fines… but not for long
The pandemic’s pounding of car sales could make it easier for the more nimble-footed manufacturers to meet green targets.
‘Car makers have been scaremongering. They were always going to comply’ Campaigner Julia Poliscanova ‘I wouldn’t say it’s easy, but certain cars are key to compliance’ Stuart Rowley, Ford of Europe
The coronavirus pandemic has cost the car industry billions. But this storm cloud has a faint silver lining – the threat of losing billions more in European Commission environmental fines has receded, because low new-car sales have made CO2 targets far easier to meet.
Engineers have been readying electrified vehicles and limiting the sale of high-emitting vehicles because, for the first time, European car makers must ensure the average carbon dioxide emissions of their total new car sales do not exceed 95g/km. There are caveats: each car maker has an individual target with vehicle mass taken into account, and compliance can be pooled across brands (FCA’s done a deal with Tesla, for example).
The unexpected hit to new-car sales in the first half of the year means individual car makers will have to sell far fewer electrified cars to meet those obligations.
‘Car makers have been scaremongering – they were always going to comply,’ says Julia Poliscanova, director of vehicles and e-mobility at pressure group Transport & Environment. She calculates that about seven per cent of a company’s sales must be plug-ins to hit this year’s target, and if the straitened economic times taper demand for high-performance cars or heavy SUVs then the average will be pegged lower.
‘I wouldn’t say it’s easy,’ counters Ford of Europe president Stuart Rowley. ‘But certain cars are key to compliance: if we can hold those at a fixed volume, while the total industry comes down in the region of 25 per cent year-to-year, if that comes out of the highest-CO2 vehicles then the average works favourably.’
Ford will be helped by mild-hybrid versions of the Puma, Fiesta and Focus, as well as the Kuga plug-in hybrid (PHEV), although the all-electric Mustang Mach-E will arrive too late to make much impact in 2020.
Kia is further along the electrified path: in the first three months of this year, its combined sales of pure EVs and PHEVs accounted for 19 per cent of its 113,000 European registrations. ‘The amount of EVs is higher than we expected,’ admits Pablo Martinez Masip, Kia’s European product planning boss. ‘We are on target.’ Crunch time comes next summer, when the Commission will issue notification of any fines after sieving through the 2020 numbers. Fines will be in the multi-millions: car makers are charged €95 for every gramme by which they exceed their target – multiplied by their total number of new cars sold in the year.
The UK’s future CO2 obligations are still unclear, as the Brexit process grinds on. But car companies expect to have to meet 95g/km across their UK sales from 2021 on, to meet national requirements.
And that’s a year when the regulations get tougher. This year, the top five per cent of each car maker’s most polluting cars are excluded; in 2021 car makers are judged on every single sale. Electrified cars’ super-credit value reduces from double to 1.67, and slides to 1.33 in 2022 before being eliminated altogether.
Also in 2021, the relevant fuel consumption figures will switch from the lax NEDC cycle to the tougher WLTP testing regime. ‘WLTP requires more detailed information on each car registered, so our compliance will have to become even more robust,’ says Alexandre Guignard, PSA’s head of CO2 corporate, platform and powertrain programmes.
‘Compliance is mandatory, and not just for money,’ says Guignard. ‘That’s important but it’s an ethical question: we have a responsibility to society and customers and we cannot play with that.’
Car makers will only need to sell one PHEV or EV in every 10 vehicles to hit the 2021 targets, reckons Transport & Environment’s Julia Poliscanova. But next summer sees another development: discussions begin on how to tighten the standards from 2025. The draft framework suggests a cut to around 80g/km – which Transport & Environment thinks is far too unambitious.
The lobby group may have a point, if Kia’s progress is anything to go by. The company vows it will offer 11 pure electric cars in five years, up from two today. ‘Very likely we will be below or way below the CO2 target from the European Commission in 2025,’ says Kia’s Pablo Martinez Masip. Seems like the world’s toughest emissions standards are working exactly as intended.