Why do manufacturers opt for the electric car in 2020?

Why do manufacturers opt for the electric car in 2020?
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“As of 2020, our entire range will be electric.” Months pass and every week there is a manufacturer that announces it publicly or drops it in an interview. This obsession with the electrification of the automobile for the year 2020, where does it come from? What is it? We are prepared?

All electric (or almost) by 2020

We have a time in which the manufacturers do not stop announcing the partial or total electrification of their ranges for 2020. Volvo, for example, in addition to an electric 100 kWh will propose a plug-in hybrid variant in all its model ranges. Mercedes-Benz will launch a new brand for the PHEV hybrids and electric models: Mercedes-Benz EQ. Even the generalist brands announce several electric models for two or three years, like Volkswagen, being the Volkswagen ID the preview of the model that we can see.

electric car

In parallel, we see that on September 1, 2018 comes into force the new protocol for homologation of consumption and CO2 emissions at European level, the WLTP.

This new homologation cycle should yield consumption closer to reality, that is, higher than with the old homologations – which, by the way, are still in force for cars already on the market until 2019. And at higher consumption, higher CO2 emissions. Obviously, it will also mean for the electric cars an autonomy announced by the manufacturer inferior to what they currently look, but in the case that concerns us now the autonomy is irrelevant.

At first glance, the interest of almost all manufacturers to have on the market electric vehicles in 2020 and the obligation to certify absolutely all new cars to enroll through the WLTP cycle from January 1, 2019 are not related. However, they are.

95 g / km of CO2 on average in 2020

The European Union, China and the United States have imposed on all manufacturers a limit of CO2 emissions (greenhouse gas). As of 2021, the average CO2 emissions of the models sold by the same manufacturer may not exceed 95 g / km.

According to the data of the European Commission it is equivalent to an average consumption of 4.1 l / 100 km in a gasoline and 3.6 l / 100 km in diesel. For small manufacturers, that is, less than 300,000 cars per year, other scales are established, but they also have to reduce their average drastically.

electric car

It is important to emphasize that it is not enough to propose one or two electrical ones for sale, even if nobody buys them, since what the European Commission takes into account for the calculation of the average are the registrations. That is, Mercedes-Benz can get tired of selling AMG models, but if it does not sell enough electric EQ smart and Mercedes Hybrid behind (like the C-Class 350), it does not help to have those more efficient models in the range.

And it is not that the diesel models, which emit less CO2, are the panacea in this regard. And is that in the most affordable and best-selling models of the market, as in segments A and B, the NOx standards make the development (R & D, anti-pollution systems etc.) of a diesel engine is not profitable.

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In case a manufacturer exceeds that average, a fine of 95 dollars will be imposed for each additional gram and per car registered. That is, the fine can easily amount to tens of millions of dollars for a large manufacturer, adding several billion dollars, according to analysts consulted by the Financial Times.

Of course there are super credits, in which a manufacturer that only produces cars with zero emissions, such as Tesla to name the most famous, can sell these super credits to a manufacturer whose average exceeds the established limits. That is to say, a car considered by the European Union as having very low emissions (less than 50 g / km of CO2) or of low emissions is accounted for by applying a multiplying factor.

electric car

Thus, each low-emission car sold has a double count until 2020. By 2021 it will count as 1.67 and so on progressively until 2023 a correction factor is no longer applied. In short, for a time you can pay to be able to manufacture less efficient cars, but a priori beyond 2021 will no longer compensate.

Thus, the manufacturers are in the position of compose with a cycle of homologation that is no longer favorable when measuring CO2 emissions (with the old NEDC protocol had managed to make it work in their favor taking advantage of the cracks in a cycle that was already obsolete) and at the same time the obligation to lower the average emissions of its production.

What will happen to taxes based on CO2 emissions?

Make no mistake, with the WLTP cycle, the average consumption measured and therefore the emissions will be higher, in some cars it could be up to 15 g / km (there are many variables from one model to another, such as weight, motor management, etc.), although it is expected that the majority does not suppose a difference of more than 10 g / km, according to a TNO report.

electric car

It may seem little, but a model whose emissions homologated according to the NEDC cycle are 112 g / km does not pay road tax, but if with the WLTP cycle those emissions turn out to be 122 g / km, your buyer would have to pay a 4.75% tax on the price of the car. The final price would go up and the brand could lose sales because of that. And it is not only in most European countries a good part of car taxation is based on CO2 emissions.

The solution? In the short term, we cannot rule out a slight loss of power in some models, but above all, manufacturers have seen the light with the electric vehicle and the hybrid of all kinds – mild hybrid or 48V, hybrid classic and plug-in hybrid or PHEV -.

In the short term, the rise of hybrid 48v systems is more than evident. With this system, little is saved, but it should be sufficient to maintain the homologated values of CO2 emissions with the WLTP at the NEDC levels. In the medium and long term, we are already entering the field of plug-in electric and hybrid cars with a real electrical autonomy equal to or greater than 50 km.

electric car

Are we really prepared to buy electric cars?

The manufacturers have to comply with the average of CO2 emissions of 95 g / km imposed by the European Union despite a cycle of homologation that is unfavorable to them and they bet everything on The electrification of their ranges (although that does not mean to stop sell combustion engines). And there arises one of the doubts: What will happen if finally the market does not buy electric cars?

The price of batteries, more than the autonomy of cars, is now a brake on their development. Currently, the price of an electric as the Renautl ZOE of 40 kWh (almost 300 km of real car) is about 30,000 dollars. It is true that the technology has improved a lot and is expected to improve even more, bringing the final prices down. Although, at the moment, the price of a ton of lithium – one of the main components of the batteries of electric and hybrid cars – has almost doubled in the last year, going from 9,100 dollars in 2017 to almost 17,000 dollars a ton.

electric car

Moreover, the manufacturers fear even that there is a shortage of batteries, as explained by R & D director of the Volkswagen group, Ulrich Eichhorn. In this case, the problem is not so much the lithium carbonate used in the batteries, since new deposits have been discovered, but the capacity of the factories.

If the demand for electric cars skyrocketed, the equivalent of 40 Tesla gigafactories would be needed. And that means more investment, that is, more expensive cars or selling them in quantities similar to those of a car with a thermal engine.

electric car

On the other hand, when we talk about a deficiency in infrastructures for the electric car, we are not only referring to the availability of recharging points, something in which groups such as BMW, Daimler, Volkswagen and Ford have taken action on the matter just as Tesla does with its superchargers, but in the capacity to generate electricity -clear to be able to be, if it is useless to promote the use of the electric car-, as well as in the capacity to deliver the necessary energy in the peaks of demand (that the generation be flexible).

In the United Kingdom for example, the production reserve is in the winters of 4%, as in 2014. It is enough that the winter is harder than usual and there will be no electricity for everyone and even less for cars. Undoubtedly, it will be necessary to boost the domestic generation and self-consumption (without crushing the citizen with taxes), otherwise it will be impossible.

In short, many unknowns are opened, but at the same time it is very interesting to witness a change without a doubt historical, in which we leave behind the combustion engines, at least perhaps partially, to massively adopt electric mobility

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