Comment Death of the diesel is nigh, but JLR’s playing catch-up
rigorous enough to pick up their harmful impacts. That is now changing. Diesels sales accounted for more than 52 per cent of the European car market as late as 2015, in stark contrast to other major markets where diesel sales were tiny.
That figure has fallen to 43 per cent today and could drop as low as 15 per cent by 2025, according to through car tax rates and in so doing slowed the transition to hybrids and electric cars.
Interestingly, Japanese and American car makers have gone down different technological routes in trying to tackle greenhouse gas emissions.
The Japanese and Toyota in particular went down the petrol hybrid route while US firms like GM and Tesla have gone into pure electrics and plug-in hybrids.
While BMW has at least made significant investments in electric cars like the i3 and i8, it’s the European premium players (BMW, Audi, Mercedes Benz, Jaguar Land Rover and Volvo) which are now particularly exposed to a diesel downturn and may have placed the wrong ‘bets’.
Their average CO2 emissions could rise sharply, increasing the potential for EU fines for 2020 emissions standards non-compliance.
They will also need to spend heavily on technology to replace diesels with battery-electric, plug-in hybrids or even fuel cells.
Firms like JLR and Volvo have said they would offer electrics and hybrids across their entire fleet from 2019 or 2020.
But they are playing catch-up with the likes of Tesla.
The decline of diesels also poses a major risk for banks and financing companies, which will have to write off millions due to worsening diesel residual values.
Petrol hybrids and electric cars will likely emerge as winners from the VW debacle and legislative tightening.
But so far, apart from Tesla’s inroads into the premium market, sales of pure electric vehicles (EVs) have been something of a disappointment.
EV take up has only really happened on a big scale in Norway, thanks to substantial government support.
Ultimately, the range capability of EVs needs to double and prices halve before this really becomes a serious goer outside of urban areas.
But I can see that happening by the mid to late-2020s when EVs start to out compete traditional petrol and diesel cars.
Looking ahead, the VW scandal may have given existing car firms and new entrants a big incentive to step up investment programmes in electric and autonomous cars given a demise of diesel.
And we are set for some genuinely transformational new entrants and automotive technologies.
Maybe there will indeed be a societal silver lining to this corporate diesel cloud after all. Professor David Bailey, Aston Business School
Consumers are spooked by a ‘perfect storm’ of concerns over tighter regulation in cities, new tax rates, resale values, and tighter ‘real world’ testing.