Our analysis shows that a CO₂ target of 70 g/km for 2025, on average for the entire new car fleet, can be achieved with either no or only modest levels electric vehicle penetration. The total technology cost increment would be between €1,000 and €2,150 [(2014€)], and the fuel cost savings would be on the order of €450 per year.

—Dr. Peter Mock, Managing Director of ICCT Europe

The primary CO₂ and associated technology cost data used in the development of the cost curves in the study are from simulation modeling and bottom-up cost estimation work performed for the ICCT by the engineering consultancy FEV.

The FEV data are combined with supplemental data to generate CO₂ cost curves for ten EU vehicle classes (diesel B, C, D, E, SUV, and LCV classes and gasoline B, C, D, and E classes). These individual class curves are then sales weighted to estimate fleet average compliance costs for a range of potential CO₂ standards.

The study uses a 2014 baseline, reflecting the 2014 average EU vehicle market situation as closely as possible in terms of vehicle segment and technology market shares, and assumes that the split between vehicle segments and also vehicle driving performance characteristics within each segment would remain constant between 2014 and 2030, to exclude the impact of any potential shift in consumer preferences over time.

Vehicle technologies covered include direct injection, single-stage and two-stage turbocharging combined with engine downsizing, variable valve-lift and timing, cam-profile switching, exhaust-gas recirculation, cooled exhaust-gas recirculation, two-stage and fully variable compression ratio, Miller/Atkinson Cycle, low-friction design, 12-volt start-stop technology, 48-volt belt starter-generator, full-parallel P2 hybrid, 7-speed and 10-speed dual-clutch transmissions, vehicle mass reduction up to a maximum of 20%, 35% rolling-resistance reduction, 20% aerodynamic drag reduction, plug-in hybrid, battery electric, and fuel-cell electric vehicles.

Deploying the full range of combustion engine technologies, including hybrid electric vehicles, would be sufficient to reduce the fleet average CO₂ emissions to 70 g/km, the study found.

The average car buyer would recoup the investment in vehicle-efficiency technology after 3 to 4 years, and save thousands of Euros more over the lifetime of the vehicle, said Dr. Mock.

However, although a CO₂ target of 70 g/km could be met without significant deployment of electric vehicles, the study found that exhausting all the potential gains from combustion engine technology improvements before transitioning to electric drive would be a relatively costly approach for vehicle manufacturers. Switching sooner from conventional gasoline and diesel vehicles to plug-in or battery electric vehicles would reduce compliance costs.

Total incremental cost (including indirect costs but excluding taxes) for reducing the CO2 emission level of the average passenger car in the EU by 2025 in a lower bound scenario, assuming full deployment of combustion engine technologies before transitioning to electric in comparison to a least cost strategy when transitioning to electric vehicles early. Source: The ICCT. Click to enlarge.

For 2025, manufacturers can meet a 70 g/km CO₂ fleet target for €200 to €500 less per vehicle if they would start deploying electric vehicles earlier, and aim to reach a market penetration level of about 15% by 2025. We are already seeing that some European vehicle manufacturers, like Renault-Nissan and more recently Volkswagen, appear to be pursuing that product strategy.

—Dr. Mock

The underlying reason is the significant reductions in battery costs in recent years.

For the year 2030, the ICCT study considers CO₂ fleet target values of 40 g/km and lower as reachable, assuming that electric vehicles would make up a large share of new-vehicle sales by then.

Lowering the official average CO₂ emissions of new cars will not by itself mean that Europe is making progress toward its climate goals. As another new ICCT report notes, the gap between official emissions values and real-world emissions in everyday driving continues to grow, reaching 42% in 2015. (Earlier post.)

A new vehicle type-approval test procedure for the EU, the Worldwide Harmonized Light Vehicles Test Procedure (WLTP), will likely reduce that gap beginning in 2017. But the WLTP also contains loopholes that manufacturers will be able to exploit, and the CO₂ gap could grow again.

It is important that the European Commission not only set new car CO2 targets for 2025 and 2030 but also limit the gap between laboratory and real-world levels by defining an on-road conformity factor for CO2, as it has already done for air pollutants.

—Dr. Mock

With respect to light-commercial vehicles, CO₂ standards as low as 90–100 g/km (NEDC) can be achieved with few or no electric vehicles in the new-vehicle market. A CO₂ target of 110 g/km in 2025 will lead to an average cost increment of €1,000 to €3,000 per vehicle, while a 90 g/km standard in 2025 will cost on average between €2,500 and €4,000 per vehicle. Costs would be €250 to €1,000 lower when pursuing a least-cost technology pathway and transitioning to electric vehicles earlier.

Resources

• Dan Meszler, John German, Peter Mock, and Anup Bandivadekar (2016) “CO₂ reduction technologies for the European car and van fleet: A 2025-2030 assessment”