LONDON / BRUSSELS (Reuters) – Do you remember that plug-in hybrid cars were the technology for the climate-conscious driver? It appears, according to some experts, that it is not good for the environment, and that they can be phased out by car manufacturers in the light of stricter European rules.
EU plug-in hybrid vehicle (PHEV) policies, which include an electric battery and an internal combustion engine, could mean that the “transition technology” has a shorter lifespan than some leading car manufacturers envisioned.
Draft regulatory regulations would prohibit manufacturers from labeling it as ‘sustainable investment’ after 2025, potentially deterring investors. Meanwhile, planned rules on the release of pollutants such as nitrogen oxides could increase the cost of manufacturing these cars.
The purpose of such reforms is to expedite transportation to fully electric vehicles and to achieve climate goals. Yet it would be a shift from current EU policies, such as CO2 standards, that have treated hybrids at the same level as electric cars and helped spur the car industry to invest tens of billions of euros in technology.
Some automakers have proposed until at least the end of this decade to sell hybrids as a bridge to full-battery electric vehicles (BEVs) – although their shift in technology seems to be underway.
An analysis of automotive production plans in Europe by 2028 compiled by AutoForecast Solutions (AFS) for Reuters, which follows industry production plans, shows only 28 PHEV models versus 86 BEV models. This is a turnaround for an industry where PHEV models have been on the market less than BEV models on the market every year since 2015, often significantly.
Some carmakers are now afraid that the EU could cut short the transition prematurely. They warn that upcoming rules could make it difficult to sell PHEVs in European markets within a few years, despite consumer concerns about the range of fully electric cars and a lack of charging infrastructure.
“It’s crazy to do this by 2025, because if you kill the demand effectively today,” said Adrian Hallmark, chief executive of British luxury carmaker Bentley, a Volkswagen unit, referring to proposals to make PHEVs not sustainable to classify investments. He plans to sell PHEVs by 2030 before going completely electric.
“For most people, a battery-powered electric car is not yet practical,” he told Reuters.
A European Commission official declined to comment specifically on the green funding rules, but said his policy was’ technology-neutral ‘, adding that PHEVs” are a transition technology towards mobility without exemption ‘. To achieve an overall climate neutrality target by 2050, almost all cars on the roads should have no emissions by that time, the Commission added.
The rules, which are still being drafted, come against the background of a shift in the position of some leading environmental groups who insist on removing the green credentials of PHEVs and doing away with their subsidies.
One study by the International Council on Clean Transport in September last year said that the fuel consumption and CO2 emissions of PHEVs are up to four times the level for which they were approved because people do not ask for it often enough.
Julia Poliscanova, senior director of vehicles and e-mobility at European NGO Transport & Environment, said his own research showed that the CO2 emissions of hybrids are higher than ordinary cars when driven in the internal combustion engine mode – it is heavier as combustion- only cars therefore used more fuel.
“From the perspective of the environment and the climate, today’s plug-in hybrid technology is worse than it replaces.”
This is a change in the position of the group from as recently as 2018 when PHEVs were seen as a transition technology.
“GREAT CONSUMER PRODUCT”
Car manufacturers say that hybrids, which are properly used with electricity as the primary power source and combustion as a backup, emit much less than ordinary cars. They add that PHEVs are a popular transition choice for consumers who want greener travel.
PHEV sales in the EU have more than tripled in 2020 to 507,000 vehicles, almost as many as the nearly 539,000 all electric vehicles sold.
It is difficult to measure car investors’ investments in PHEVs because they only disclose broad “electrification plans”. Advice AlixPartners estimates that car manufacturers and suppliers will invest $ 200 billion in electrification from 2020 to 2024.
German engineering specialists FEV estimate that the cost of a battery, car and electronics to an internal combustion engine car to make a PHEV costs up to 4,000 euros per vehicle.
European carmakers are debating whether to fight for PHEVs, or spend their financial and political capital to accelerate the leap to fully electric vehicles and strive for a better charging infrastructure across the continent.
Stephan Neugebauer, chairman of the European Green Vehicles Initiative Association, told Reuters technology improvements would mean future PHEVs would rely less on their internal combustion engines, making them fit for the green transition over the next decade and even beyond.
“Will all customers buy electric vehicles in ten years, or nine years? We do not think so, ”says Neugebauer, who is also BMW’s director of global research collaboration.
‘Why? Because sometimes you have to undertake a long journey, you go on vacation, you have to pull a trailer. And for that you need public charging infrastructure. And that will still be a critical issue. ”
BMW and Renault SA, which have not set a date to be fully electric, are among the companies in the hybrid camp.
Oliver Zipse, BMW boss, said last month that they are a “big consumer product” and that there will be a market for them, even without subsidies. Renault CEO Luca de Meo said in February that PHEVs would easily be part of the landscape for the next ten years and be more profitable than ordinary cars.
Volvo Cars CEO Håkan Samuelsson told Reuters: “It’s a little disappointing that they (Brussels policymakers) do not see the value of a plug-in hybrid”. But he said his business, which wants to be fully electric by 2030, is more focused on pushing the EU to get member states to invest heavily in charging infrastructure.
“If we invest in electric cars in the automotive industry, and do so very quickly, I think our credibility is asking for investment in the charging network,” he said.
‘THE LIMIT OF WHAT IS ACHIEVED’
The European Commission intends to propose at least a dozen pieces of legislation to reduce emissions in all sectors this year.
The current concepts of the EU’s sustainable finance taxonomy, a list of economic activities that will determine from next year what can be marketed as a sustainable investment, excludes the production of PHEVs from 2026.
This could deter the army of investors looking for assets with green credentials. It can also limit public funding if governments move to adjust their spending to the taxonomy.
While many countries still subsidize PHEVs, the Netherlands reduced tax concessions in 2016. By 2020, eight times as many BEEs were sold in the country as PHEVs, compared to four times as many PHEVs as BEVs four years earlier, showing how government policy on vehicle technology can have a major impact on consumer behavior.
A consortium of researchers, commissioned by the EU and known as CLOVE, this month recommended that the so-called Euro 7 rules should tighten the emission limits for car pollution, including nitrogen oxides and carbon monoxide, from 2025 onwards. Its recommendations are not binding, but are aimed at the European Commission’s proposals, which will appear later this year.
Transport & Environment, part of the commission’s expert group working on the standards, said the proposals would force carmakers to incorporate expensive technology PHEVs to limit emissions from their internal combustion engines.
Hildegard Mueller, president of the German Automobile Industry Association VDA, said the proposals were “at the limit of what is technologically feasible”.
“We still have to be very careful that the combustion engine is not made impossible by Euro 7,” she said.
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Reporting by Nick Carey in London and Kate Abnett in Brussels; Additional reporting by Costas Pitas in London and Joe White in Detroit; Edited by Pravin Char