International Council on Clean Transportation (ICCT) today reports that there’s a “good chance” that vehicle manufacturers will be able to meet their 2020/21 CO2 targets in time to avoid paying any penalties. The new optimism is based on incoming January 2020 data. In one shining example, the average CO2 level of new cars in France dropped from 113 g/km in December to 96 g/km in January, a 15% improvement in a single month.
The ICCT explained that the EU didn’t set interim targets – instead setting a decrease from 130 g/km in 2019 to 95 g/km in 2020.
Manufacturers did not have an incentive to comply early. Instead, they could optimize their portfolio to maximize profits by, for example, selling more high-end SUVs with high CO2 levels in 2019 before transitioning to electric cars in 2020.
Check out the tall bars on the right side of this graph for each country:
In Europe this year, meeting an average fleet-wide target of 95 grams per kilometer for nearly all its cars will take multiple measures. Automakers will roll out more EVs and hybrids and will take advantage of super credits.
Today’s article from ICCT contradicts what we heard last week from PA Consulting, which told us that automakers will likely not meet the targets and therefore face steep fines. PA Consulting used forecasts while ICCT is basing its hope on January sales numbers.
France’s EV market share jumped from 3.5% in December 2019 to 11% in January 2020.
The EU’s super-credit system means that in 2020, every low-emission vehicle registered counts twice towards manufacturers’ average CO2 emissions. The super credits are scaled back in the following years, and there’s a cap for each automaker.
The ICCT believes that timing for super-credits created an incentive for manufacturers to hold back EVs before this year – and then release them in 2020. The EU’s system also encourages automakers to divert EV sales from the US to Europe.
Another explanation for the sudden drop in fleet-average CO2 emissions is country-specific. In Europe, vehicle and fuel taxes set by each member state are a key factor in directing consumer purchase behavior.
- ICCT cites France for its vehicle-taxation system that penalizes high CO2 levels and uses the revenues to incentivize vehicles with low CO2 levels – a system referred to as “bonus-malus” or “feebate” taxation.
- ICCT also points to Norway’s emissions-based vehicle tax and Sweden’s bonus-malus strategy. EV market share in Norway and Sweden increased in January to 64% and 30%, respectively.
- The German government announced an increase in the cash bonus for electric vehicles from €4,000 to €6,000 in January 2020. But administrative delays likely caused customers to postpone electric vehicle purchases, which nonetheless rose from 4% to 6.5% last month.
ICCT is the organization that blew open the Volkswagen diesel-emissions scandal. It warns that “the market remains fragile.” The organization pointed to battery-supply problems and other production hiccups that have delayed EV rollouts from Daimler and Volkswagen.
The group reported that BMW CEO Oliver Zipse said his company will use a combination of EVs and more fuel-efficient combustion technology to reduce its average EU new car fleet CO2 emission level by 20% in 2020.
Europe’s January EV sales numbers tell a compelling story. They reveal how automakers respond when the right governmental regulations for CO2 emissions are put in place.
Imagine what would happen if automakers selling in the US faced a firm and rapidly approaching deadline with cutting emissions by roughly 25% in a single year.
The numbers from just the first month of the year, when those cuts first took effect, show that European automakers can indeed make the necessary changes. That’s proof positive than car manufacturers in America (and markets around the globe) have the technical and distribution means to make the switch to electric. When clear targets are set, excuses miraculously get replaced with action.
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