This year’s Geneva Motor Show revealed a large group of around 30 new electrified models and concepts, mostly featuring battery electric and plug-in hybrid vehicles.

• Battery electric vehicles included high performance exotica, such as the Pininfarina Battista, and those from new EV start-ups, such as the Piëch Mark Zero.
• Mass market BEV offerings include the future Peugeot e-208 (due in 2020) and SEAT el-Born.
• PHEV launches came from premium brands that included the next generation Audi TFSIe and BMW iPerformance models.
• Further information can be found in the Strategy Analytics report, 2019 Geneva Motor Show Highlights: Electrification Comes to the Fore.

Peugeot e-208 - Source: Peugeot

From this, the impression is that the automotive industry is striving hard to prove their green credentials and is making an effort to cut carbon dioxide (CO2) emissions and limit the impact towards climate change.  But is it doing enough?

According to JATO Dynamics in its latest annual analysis of CO2 emissions in Europe (CO2 emissions rise to highest average since 2014, as the shift from diesel to gasoline continues), the average emission level of new vehicles has increased 118.1  to 120.5 g/km in 2018 - the highest level since 2014 - and that many motor manufacturers were also seen to be struggling to lower their emissions and comply with the 95 g/km mandate for 2021. 

Source: JATO Dynamics

• Consumers’ increasing preference for crossover model segments has raised CO2 emissions for many OEMs, as such new vehicles require more horsepower and emit more CO2 to shift heavier metal - often reversing recent developments made to enhance efficiency in internal combustion engine technology.

• The pain is more acute for the likes of Dacia and FIAT – economy brands that sell vehicles to price-sensitive consumers, who cannot afford the cost premiums associated with fuel efficiency systems like electrified powertrains.
• While the new Mazda SkyActiv-X Spark Controlled Compression Ignition (SPCCI) engine has not yet made an impact on the market, the OEM’s second-from-bottom ranking does raise concerns over the lack of electrification in its powertrain strategy.

While many OEMs are now offering electrified models, the reality is that, in many cases, such models are not actually available for European consumers to purchase.

• Supplies of the new Hyundai and Kia compact hybrid-electric models, such as the Kia e-Niro, have only recently come onto the European market or are only available in limited volumes, as some OEMs have misjudged consumer demand in Europe.
• The Volvo “Twin” or plug-in hybrid variants of the 60- and 80-series models are only gradually being assembled, despite announcing the end of combustion engine-only model sales by 2019.
• Also, the re-validation of models under the new WLTP (World-harmonised Light-vehicles Test Procedure) has not helped either.

The Volkswagen Dieselgate scandal has doused Europeans’ love affair with diesel, which offered lower CO2 emissions over petrol.  With tighter Euro-6d emission standards, now being assessed against the tougher WLTP test cycle, diesel has become more costly in new vehicles and has suffered faster depreciation in used vehicles, dissuading consumers even further.  So is hybrid the answer?

• Based on the CO2 results, hybrid “champion” Toyota is the lowest emitting motor manufacturer at 99.9 g/km fleet average.However, the progression over 2018 was much lower than in 2017.Very few of its models are now left without a hybrid powertrain option - and those without are only sold in low volumes anyway.So if the same rate of progression in 2018 is going to be repeated in 2019 and 2020, there is the likelihood that even Toyota could miss the mandate compliance level of 95 g/km by 2021.
• Suzuki, at 114.2 g/km, may also struggle to meet compliance, since not all of its European offerings are fitted with mild hybrid powertrains as standard.
• While mild hybrids provide lower CO2 reductions per vehicle than Toyota’s full hybrids, they are more cost effective and so enable standard fitment across every new vehicle.Indeed, it is Volkswagen’s strategy to use standard 48 Volt systems in lowering its fleet CO2 emissions in the near future, starting with the Mark 8 Golf and other compact and mid-sized models across the VW Group.
• Therefore, OEMs will need to need to go beyond only having full and mild hybrids in their powertrain strategy, in order to meet compliance in Europe.
• Also, tighter CO2 mandates are expected to come into force by 2025 (76 g/km) and 2030 (60 g/km).Compliance will not be possible without developing plug-in models.
• Reliance on hydrogen fuel cell vehicles will also be a non-starter because of the lack of refuelling infrastructure.

Plug-in hybrid and electric models will be the keys to European mandate compliance as they offer a faster reduction in fleet CO2 emissions, as can be seen from Nissan’s progress over 2018 from 115.8 to 110.6 g/km - the fastest of any OEM.

• Among the mix of mostly compact models at Nissan, 38,740 units of the Nissan Leaf were also sold in Europe in 2018, making it the most popular EV model in the region and exceeding European sales of all Tesla models.
• Sales have been boosted by the incremental improvements made to the B12 generation model, when the 40 kWh, 322 km (200 mile) (WLTP) variant was launched in 2017.The 62 kWh, 458 km (285 mile) variant was launched recently this year.
• However, the progression at Nissan’s sister OEM, Renault, has worsened.Also, the Alliance does not have an electrified model in the fast-selling crossover model segments.Therefore, electrified powertrains have to be made available across the OEM’s model range and not be limited to just one “halo” model.
• Credits are given for sales of vehicles that emit less than 50 g/km, multiplying sales by a factor of 2.00 (1.67 in 2021, 1.30 in 2022) and thus enhancing the OEM’s CO2 emission ratings further.
• Other OEMs hoping to see a faster reduction in their CO2 emissions in the future will include: Volkswagen (and sister brands SEAT and Skoda), when the new “ID” range enters series production in late-2019 onwards; Mercedes-Benz, when more “EQ” models enter the line-up; as well as PSA brands Citroën, Opel and Peugeot.But the late arrival of these new battery electric models will make mandate compliance a challenge.

Meanwhile, the rollout of plug-in hybrid models by luxury OEMs, Audi and BMW, is set to increase, such as the 2019 edition of the BMW 330e that emits 39 g/km of CO2.  

• But the reason why these OEMs still have high CO2 emissions is that the sales of their PHEVs have been too low because their high cost premiums did not make them competitive against previous diesel models.
• While standard deployments of mild hybrids can lower fleet average CO2 emission levels for luxury OEMs, cost effective plug-in hybrid and battery electric models are needed to make a meaningful reduction towards compliance levels.Some OEMs, such as PSA, are using the standard mild hybrid system as a base on which a plug-in hybrid sub-system can be added at a lower cost than redesigning for a bespoke system.

Furthermore, OEMs need the backing of national governments to support efforts in CO2 reduction.  This is because the countries with the lowest CO2 emissions and have made the greatest progress in 2018, such as Norway and the Netherlands, have government strategies in place that better support the procurement and use of electric vehicles.  Support includes expanding charging infrastructure and subsidised purchasing, among others.

Kevin Mak is a Principal Analyst in the Global Automotive Practice at Strategy Analytics. 

More details about Strategy Analytics’ Powertrain, Body, Chassis and Safety service can be found here: https://www.strategyanalytics.com/access-services/automotive/powertrain-body-chassis-and-safety/about-powertrain-body-chassis-and-safety. 

Strategy Analytics publishes the EV/HEV Technologies Supply & Fitment Database and the Hybrid Technologies Legislation/Support database every six months. 

Strategy Analytics has also published the report, OEM Hybrid and Electric Vehicle Strategies: Chinese and European Battery Gigafactories Will Meet Growing EV Demand.