Surge in EV share to help carmakers comply with looming CO₂ target

By Laio

According to a Transport & Environment report, electric vehicles (EVs) will command up to 24% of the market by 2025. As EU carmakers ramp up EV production to adhere to stringent CO₂ emission targets, a significant shift towards battery electric and hybrid vehicles is anticipated. The report highlights the adaptability of manufacturers to pool resources, offering alternative strategies to meet regulatory demands. With the German government upholding the emissions targets and the EU setting a 2035 zero-emissions goal, the stage is set for a cleaner automotive future.

Electric vehicles take the wheel in the race to reduce emissions

With the 2025 CO₂ emission targets for the automotive industry fast approaching, EVs are forecasted to take a substantial slice of the European car market. Transport & Environment’s analysis indicates that battery electric vehicles (BEVs) could represent 20-24% of new cars sold by 2025. This surge, attributable to the launch of some cheaper models, is vital for carmakers to meet the European Union’s stringent CO₂ reduction goals, which require a 15% drop in average emissions from 2021 levels.

While the automotive industry has shown some resistance, requesting postponements, the EU Commission has been unwavering. It has insisted that carmakers had ample time to adjust to these regulations. The EU Commission’s steadfast approach, coupled with the German government’s firm stand against weakening these targets, signals a commitment to a sustainable automotive future.

Pooling resources: a strategic move for compliance

The report by Transport & Environment also illuminates the strategic pooling of resources by manufacturers. This method provides a viable pathway for carmakers to reduce emissions. By forming partnerships, manufacturers can share the burden of meeting the average emissions targets set by the EU. Notably, potential alliances, such as Volkswagen with Tesla or Ford with Volvo, could significantly reduce these companies’ individual burden of BEV sales.

This pooling approach is not merely a loophole but a reflection of the collaborative efforts required to address global environmental challenges. It acknowledges that the industry must work together to meet the ambitious goals set forth for a cleaner, greener planet.

Meeting targets: from hybrids to full electrification

While BEVs are at the forefront of the transition, hybrids also play a role in the interim efforts to reduce CO₂ emissions. Manufacturers like Stellantis and Volkswagen Group are expected to rely on hybrids for a significant portion of their CO₂ reduction strategies. Nevertheless, the ultimate goal remains a shift towards full electrification, as echoed by the EU Commission president Ursula von der Leyen’s confirmation of a zero-emissions car target for 2035.

BMW is another example, with projections showing that plug-in hybrids will contribute to 18% of the emissions cut needed to comply with the EU 2025 target. These efforts demonstrate the varied approaches within the industry as carmakers navigate the transition to cleaner technologies. The diverse strategies highlight a market in transformation, preparing for a future where electric mobility takes center stage.

Subsidy for electric van charging points

Since today, business owners have the opportunity to apply for subsidies for charging points on their premises. The government funding is intended to facilitate the transition to electric vans and trucks.

Industry profits versus environmental priorities

Critics have pointed out the dichotomy between industry profits and the urgency of environmental action. Despite carmakers accruing over €130 billion in profits in the last two years, there have been calls for delay tactics, such as invoking a crisis clause. However, Transport & Environment has dismissed these demands as “cynical and absurd,” arguing that car manufacturers have had years to prepare for the upcoming targets and should not be allowed to sidestep their responsibilities.

With the average price of EVs in Europe increasing by a third since 2021 despite a drop in battery mineral prices, there’s a clear need for oversight. The industry’s profitability suggests that carmakers can and should invest more in accelerating the transition to electric vehicles rather than seeking extensions or exceptions.

Supporting the electric vehicle revolution

Amidst the backdrop of policy and industry developments, there is a call for more robust support for EV demand. Transport & Environment urges EU and national lawmakers to implement policies such as corporate fleet targets, charging masterplans, and social leasing schemes. These initiatives can encourage the adoption of electric vehicles and help create a stable regulatory environment that nurtures the growth of EVs.

With the collection of real-world data from vehicles that began in 2021, the EU is gearing up to ensure that the reported CO₂ emissions accurately reflect on-road performance. This step is crucial in validating the progress towards emission reduction and maintaining the integrity of the targets. The automotive industry’s transition to cleaner vehicles is not just about meeting regulatory demands; it’s also about building trust with consumers and stakeholders that the shift toward sustainability is genuine and measurable.