Alternative powertrains have significantly advanced since the launch of Toyota Prius in 1997, the introduction of combined combustion systems (CCV) by Volkswagen in 2003 and the Mercedes DiesOtto in 2007. But the question whether they stand a chance against the conventional internal combustion engine is met by the inconvenient truth that the gasoline-guzzling beast would still win the buyer over with its price and functionalities.
Upfront cost for electric vehicles is still perceived by most people as unbearably high. In addition the speed and distance travelled without re-charging can be reasonably compared with a scooter; and charging stations are all but abundant. So, what holds OEMs back from influencing the demand and making the low-carbon vehicle a mass product?
The question whether they stand a chance against the conventional internal combustion engine is met by the inconvenient truth that the petrol guzzling beast would still win the buyer over
Tomorrow’s Value Rating 2013 (TVR) findings provide a good foundation to answer this question. Research has revealed that there is a new competition emerging in the industry; a fierce battle for the throne of the most sustainable automotive brand. Ambitious statements are trumpeting throughout the public disclosures: reducing the negative effects on climate change is always at the core of a company’s environmental commitments.
To measure their progress, most OEMs have set targets for reducing GHG emissions per vehicle resulting from their own production operations and/or reducing GHG emissions per kilometre during vehicle use. But as of yet no OEM goes beyond the time horizon established by the upcoming 2020 regulatory requirements for maximum tail-pipe emissions. However, the magnitude and urgency of the climate change challenge calls for a shared and stretching vision across the entire sector. Whether developments in battery and other technology – or price reductions happen quickly enough to increase sales of low emissions vehicles – can enable the timely and significant impact needed to reduce emissions remains to be seen.
Current OEM commitments are focused on the roughly 80% contribution to climate change caused by the entire automotive value chain. However, there are still no disclosed targets or performance metrics to measure the reduction of GHG emissions arising from the supply chain, which still has significant impact. A closer look at the CDP disclosures reveals that a clear methodology for calculating supply chain related GHG emissions is what holds the auto giants back from measuring, then acting upon, their supply chain impacts. To date, only Volkswagen, Honda and Nissan have included a Scope 3 emissions breakdown in their sustainability reporting. Even they openly acknowledge the imperfections of their approach.
To date, only Volkswagen, Honda and Nissan have included a Scope 3 emissions breakdown in their sustainability reporting. Even they openly acknowledge the imperfections of their approach
Two Tomorrows’ research also suggests that manufactuers that have low-carbon vehicles included within their business model are better prepared to realise their low-carbon vision. Nissan, for example, makes it clear that sustainability is code-wired into its business DNA, through its carbon targets and performance. The company has set an ambitious goal to get “1.5 million zero-emissions vehicles sold” by 2016 and has demonstrated its strong commitment to be part of the solution to climate change. In fact, that ambition is well sustained by results: Nissan holds a 49% share of the global EV market and produces the world’s best-selling electric car, the Nissan Leaf.
Overall the industry is moving towards defining its contribution to limiting climate change. Approaches still differ but the intention is there, backed with billions of R&D investment in new technologies. However, for an EV, or a zero-emissions vehicle, to become a mass product, players across the entire sector should align their carbon vision to their business profitability and set stretching GHG targets that go beyond the regulatory requirements and capture the entire value chain. Furthermore, to demonstrate exceptional commitment to meeting the challenges of climate change, the carbon vision of an automotive company should incorporate the fundamental need for affordable low carbon vehicles in a world where population is set to reach 9 billion by 2050, and clearly identify their role in the setting-up of the necessary infrastructure to support new technologies.
The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.
Ivaylo Dimov is a consultant with Two Tomorrows, the leading international sustainability adviser and part of the DNV GL Group.
The AutomotiveWorld.com Comment column is open to automotive industry decision makers and influencers. If you would like to contribute a Comment article, please contact editorial@automotiveworld.com.
The full results of the 2013 Tomorrow’s Value Rating can be viewed at www.twotomorrows.com/tomorrows-value-rating. The 2013 Tomorrow’s Value Rating examines the sustainability programmes of 50 companies eligible for the 2012 Dow Jones Sustainability Index (DJSI), providing in-depth analysis of sustainability practices and performance in each of five sectors: automotive, energy utilities, food and beverages, ICT and oil and gas.
