Why EU Car Manufacturers Are Actually “Slow-Walking” 2020 EV Sales

October 31, 20203 years ago Zachary Shahan 0 Comments

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This title may have caught you off-guard and made you do a double-take. After all, Europe is having a record, blowout, tremendously inspiring year for electric vehicle sales. It seems that every monthly report on European EV sales, including the one we just published, includes an exclamation mark and a ton of new sales records. So, what am I talking about with automakers “slow-walking” electric vehicle (EV) sales in the EU?

Full credit goes to Michael Liebreich, founder of what is now Bloomberg New Energy Finance*, for bringing this to my attention. Well, some credit should also go to the German journalists who mentioned this in a recent story, but here’s Michael’s summary highlight of one key part of the German article:

“Good article (in German) explaining why EU car manufacturers are slow-walking EV sales: 2020 will be taken as baseline for a 37.5% CO2 reduction by 2030. They don’t want to over-deliver this year and face a tougher target. Watch the numbers soar in 2021!”

If you’ve been following along, you know that EV market share has been soaring through the open roof of ~~Camp Nou~~ ~~Allianz Arena~~ the European auto market because: 1) automakers have to pay steep fines or buy expensive credits from Tesla if they don’t meet certain fleet emissions standards, 2) customers actually do want to buy good electric vehicles if automakers produce and try to sell them. In fact, last month, EV sales accounted for 12% of overall auto market sales, a 166% increase over September 2019.

While automakers are certainly working harder to sell EVs in order to not pay sharp fines, it appears that they are also holding back, essentially trying to keep EV sales within an ideal little box.

Let’s add a little nuance here to make sure we tease out the point Michael made briefly above:

Automakers have to have a fleet average of 95 gr/km CO2 emissions per car, with the requirement phasing in starting in 2020, or they have to pay steep fines.
The requirement gets stricter as time moves on.
Additionally, CO2 emissions probably need to be cut by 37.5% by 2030, based on 2020 emissions.
The lower emissions are in 2020, the lower they need to be in 2030, so automakers that really want to slow-walk the transition to electric cars are aiming to barely meet 2020 requirements rather than blow past them and set a more ambitious bar for 2030.

European EV sales have been exciting and exhilarating in 2020, one of the best things about 2020 and one of the biggest cleantech wins of the year. 10% plugin vehicle market share is several times higher than 2019’s market share in Europe, and it makes the USA’s 2.3% or so plugin vehicle market share look like a joke. However, José Pontes keeps previewing that 2020 is just the appetizer and 2021 will be #Disruption ’21. This quirk or mistake in EU policy that Michael Liebreich highlighted, combined with lack of ambition and lack of leadership among automakers, explains one reason why that’s the case. It also explains the importance of policy.

The US has a simple federal tax credit for people who buy a new electric vehicle. (Though, buyers of Tesla and GM electric vehicles no longer qualify for this, since they passed 200,000 US plugin vehicle sales and then went through the incentive phaseout period.) This federal tax credit is up to $7500, which is pretty substantial, but it’s a simple policy, one that many car buyers can’t take advantage of, and one that I’m sure most people don’t even know about. More comprehensive policies that essentially force automakers to electrify more vehicles go a lot further in hastening the industry transformation to an electric era. Automakers, like other companies, like and respond to very clear signals about where they should be headed. They will follow regulations, but they will also drag their feet and use delay tactics if there aren’t strong policies persuading them to change.

This is why we need good politicians in office who are capable of paying attention to detail, who can focus enough to determine and include critical nuance and context for new legislation, who will actually try to push industries and society forward instead of trying to drag them backward, and who are just, you know, not crazy sociopaths.

For more analysis of the nuance of European auto policy and how it relates to the speed of change in 2020, look into these 4 stories:

The final piece in that list also highlights a way that automakers have been working to reach the 95 gr/km CO2 standard with minimal effort, minimal appeal to consumers, minimal pace of innovate, minimal change, and, due to faulty analysis, minimal emissions reductions. Instead of going all-in on fully electric vehicles built electric from the ground up, instead of going the full Tesla route and trying to bring low-cost mass-market electric vehicles to the table, most automakers have been rolling out lame, often misused and abused plugin hybrid electric vehicles that do not even live up to their expectations or emissions ratings.

What are solutions to this problem? Michael has an idea, which he proposed in response to the second article in that list above. Check out his brilliant suggestion:

"The EU should close this loophole by using the expected CO2 emissions in the first year(s) of usage." No, the EU should demand aggregated telemetry data from auto manufacturers, not lab tests or estimates, and use it to set model-level emissions. Manufacturers have the data.

— Michael Liebreich (@MLiebreich) October 16, 2020

However, responding to my followup question about this, Michael indicated that he is unaware of any organized effort to pursue that idea. Perhaps it is a matter that some members of the CleanTechnica community should take up.

Not yet, to my knowledge. But it's manifestly a good idea (ergo will be fiercely resisted by the incumbency).

— Michael Liebreich (@MLiebreich) October 16, 2020

Do you have any additional thoughts on EU electric vehicle policy, how the market is evolving, and how to improve or hasten the transition to electric vehicles in Europe?

*Check out the history of Bloomberg New Energy Finance here: “The History of Bloomberg New Energy Finance (Michael Liebreich Interview Series).”

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