What will shape the market for electric cars?

By: Dr Peter Wells, Wednesday, November 25, 2009, AutomotiveWorld.com

A report from the well-known environmental transport lobby group T&E has highlighted that as far as many organisations and individuals are concerned the low-carbon framework adopted in Europe is not the end of the matter until 2020. On the contrary, by bringing electric vehicles into the equation for OEMs in terms of their average fleet emissions, the European Commission has opened up the opportunity for massive distortions in the market that could yield problems for regulators and OEMs alike.

The T&E report makes two basic arguments. First, that by allowing OEMs to offset 'normal' internal combustion engine sales against electric vehicle sales the incentive to reduce the CO2 emissions is reduced. Second, that by counting electric vehicles as having zero CO2 emissions the European Commission is neglecting the CO2 emissions of the electricity generating capacity in the countries concerned.

As new intermediary technologies emerge, and as the quest to drive down CO2 emissions intensifies to take on a whole life cycle energy perspective, so the difficulty of enshrining plausible regulation increases.

The problem is, of course, that the whole picture gets complicated when trying to trace CO2 emissions in electricity generation by country of sale or indeed use. Say an electric car is bought in Denmark with its high proportion of wind generation, or France with its high proportion of nuclear generation, but then actually used in, say, Poland with a much more traditional mix of fossil fuel power stations. Moreover, with plug-in hybrids the proportion of time that the vehicle is used in pure electric mode may be unknown.

As new intermediary technologies emerge, and as the quest to drive down CO2 emissions intensifies to take on a whole life cycle energy perspective, so the difficulty of enshrining plausible regulation increases. Right now the discussions in the corridors of power are about making regulation on emissions fit against some categorisation of utility on a per-vehicle basis. No matter what the decision on how utility is defined, it will distort the market still further and introduce another layer of complexity.

contemporary regulatory frameworks appear too crude relative to the emergent complexity of the problem, and this in itself may distort the emergent shape and size of the electric vehicle market in unknown ways

In short, contemporary regulatory frameworks appear too crude relative to the emergent complexity of the problem, and this in itself may distort the emergent shape and size of the electric vehicle market in unknown ways.

The best way for the automotive industry to respond to this situation is to concentrate on dramatic reductions in the CO2 emissions of conventional petrol and diesel vehicles. For individual OEMs this also makes competitive sense. Either way, this strategy would reveal a healthy, competitive automotive industry able to achieve real-world CO2 emissions per vehicle lower than is likely in a long time with electric vehicles.

The automotive industry has one last chance to prove that it can perform better than regulation demands, or it is in danger of losing the strategic initiative.

This is not to say that electric vehicle programmes should be stopped, it would be politically and commercially disastrous to do so. Rather, those electric vehicle programmes must not be considered as sufficient for the industry to have 'done its bit' for low-carbon futures. In fact, industry groups like the Environmental Transport Association are already arguing that the most certain way to promote electric-powered transport is to tighten long-term CO2 standards for cars to 80 g/km by 2020 and 60 g/km by 2025 whilst at the same time increasing fuel taxes.

The automotive industry has one last chance to prove that it can perform better than regulation demands, or it is in danger of losing the strategic initiative.

To see the report visit: http://www.transportenvironment.org.

Published on Wednesday, November 25, 2009

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