Registrations of plug-in cars are flying. Great news for an industry that must transition rapidly to new technology, right? Maybe. Maybe not.
Analyst and journalist Matthias Schmidt is the go-to source for tracking the evolution of the electric car market and recently he released his observations on western European for the first half of 2021.
Points of note included battery-electric vehicle (BEV) registrations surpassing those of plug-in hybrids (PHEVs) in June, the first time it has happened this year. In the same month, all plug-in registrations topped 20% of the total for only the second time ever. Germany registered most BEVs and the UK was second (148,700 versus 73,900). The Volkswagen Group dominated BEV registrations, with a 25.4% market share.
So far, so good. But the success – and growing fears around the climate crisis – has led law makers to want to get a hurry-on. The EU Commission is now pushing to change the passenger car fleet average CO2 emission targets in 2030 to be 55% below the 2020/21 average, rather than the currently regulated drop of 37.5%.
Why is this such an issue when customer demand is so strong now, and growing? Because while making the cars is no problem, someone has to pay for the cost of developing them. With BEV margins so slight, and so heavily dependent on government grants at current levels, car makers are relying on the sale of petrol and diesel (ICE) cars to drive the profits to fund the transition. And the less time they have to do that, the more they have to sell as quickly as possible.
Highlighting the problem last week, Volkswagen boss Herbert Diess said: “Maintaining high cash flows from our ICE business to finance the transition will be paramount.” It’s a brave admission, given many will see it as standing in the way of the environmental benefits (VW itself estimates it accounts for about 2% of the world’s CO2 output), but it is worth highlighting that it is the pace of progress that is being disputed, not whether change is needed.
The contradiction is clear, but the calculation required to deliver a clearer picture of the right path to take harder. Could it be that giving established car makers longer to transition would also be better for the planet? Maybe so, but who’d dare to make the case?
Admission time: a few weeks back, I stated that the average classic car owner emits as much CO2 in a year as is generated from charging a mobile phone for six months. How far out my maths was depends on who I talk to – but after much discussion, a fairer claim would be that it is as much as manufacturing and charging 40 smartphones for 12 months.
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I really do believe that people will choose to buy EVs once they are cost neutral, and can be charged as easily as filling with petrol. But right now the people picking up the cost are the tax payer. How much does the average car give the government over its life? Vat, car tax, fuel duty, CoCar tax etc. EVs generate VAT, but then we give the buyer an EV grant. We let them refeul with next to zero fuel tax. CoCar drivers get a nearly free ride too. For every car i bet the difference runs into 5 figures. This is a huge tax burden, and one that would not be needed if EVs were ready to compete on a alevel playing field.
So, if the EU reduce the CO2 target for the manufacturers, its the governments who will pick up the cost if more people buy EVS. But its also likely that car sales will fall as fewer people either want what is on offer, or can afford an EV. And fewer sales will keep the older cars on the road longer. Ironically this is probably the greenest thing people could do, but its not what the EU want
The motivation, of course, depends on whether Climate Change really exists, is man made, or is just a government 'construct' to help boost the world economy. I know which one I believe.
(Retires to bunker and awaits incoming)