LONDON / BRUSSELS (Reuters) – Remember when plug-in hybrid cars were the go-to technology for the climate-conscious driver? Apparently, according to some experts, they are not good for the environment and could be phased out by car manufacturers in the light of stricter European regulations.
EU policies for plug-in hybrid vehicles (PHEVs), which include an electric battery and an internal combustion engine, could mean that the “transition technology” has a shorter lifespan than envisaged by some leading car manufacturers.
Draft green finance regulations would prohibit manufacturers from labeling them as “sustainable investments” after 2025, potentially deterring investors. Meanwhile, planned regulations for the emission of pollutants such as nitrogen oxides could increase the production costs of these cars.
The aim of such reforms is to accelerate the transition to fully electric vehicles and meet climate goals. Yet they would shift existing EU policies, such as CO2 standards, which have treated hybrids on an equal footing with fully electric cars and prompted the auto industry to invest tens of billions of euros in the technology.
Some automakers had considered selling hybrids as a bridge to full battery electric vehicles (BEVs) until at least the end of this decade – although their shift away from the technology appears to be underway.
An analysis of car production plans in Europe up to 2028 prepared for Reuters by AutoForecast Solutions (AFS), which follows the industry’s production plans, shows only 28 PHEV models versus 86 BEV models. That’s a turnaround for an industry where PHEV models on the market have been in the minority of BEV models every year since 2015, often significantly.
Now some car manufacturers are concerned that the EU could shorten that transition prematurely. They warn that upcoming regulations could make it difficult to sell PHEVs in European markets within a few years, despite consumer concerns about the range of all-electric cars and a lack of charging infrastructure.
“It’s crazy to do this by 2025 because you’re effectively killing demand today,” said Adrian Hallmark, CEO of British luxury car manufacturer Bentley, a division of Volkswagen, referring to proposals not to classify PHEVs as sustainable investments. He plans to sell PHEVs through 2030 before going fully 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 the policy was “technology neutral”, adding that PHEVs were “a transition technology to zero-emission mobility.” To meet an overall target of climate neutrality by 2050, nearly all cars on the road must be zero emissions by then, the Commission added.
The rules, which are still under development, are taking place against the background of a shift in the position of some of the leading environmental groups, who are pushing for the removal of PHEVs’ green credentials and the abolition of their subsidies.
According to a study by the International Council on Clean Transportation in September last year, the fuel consumption and CO2 emissions of PHEVs are up to four times what they were approved for, because people don’t charge them often enough.
Julia Poliscanova, senior director for vehicles and e-mobility at the European NGO Transport & Environment, said her own research showed that the CO2 emissions of hybrids were higher than those of conventional cars when they run in combustion engine mode – they are heavier than combustion only cars therefore used more fuel.
“From an environmental and climate perspective, the current plug-in hybrid technology is worse than what it replaces.”
This is a change in the group’s position since 2018, when it saw PHEVs as a transition technology.
‘GREAT CONSUMER PRODUCT’
Car makers say that when properly used with electricity as primary power and combustion as backup, hybrids emit far less than conventional cars. They add that PHEVs are a popular transition choice for consumers looking to travel greener.
Sales of PHEVs in the EU have more than tripled to 507,000 vehicles by 2020, almost the same as the nearly 539,000 all-electric vehicles sold.
Measuring automakers’ investment in PHEVs is difficult as they only announce broad ‘electrification’ plans. Consultancy AlixPartners estimates that vehicle manufacturers and suppliers will invest $ 200 billion in electrification between 2020 and 2024.
German technical specialists FEV estimates that mounting a battery, motor and electronics on a car with an internal combustion engine to make a PHEV costs up to 4,000 euros ($ 4,700) per vehicle.
European automakers are dividing whether to fight for PHEVs, or spend their financial and political capital to accelerate the leap to all-electric vehicles and push for better charging infrastructure across the continent.
Stephan Neugebauer, president of the European Green Vehicles Initiative Association, told Reuters that technological improvements will mean future PHEVs are less dependent on their combustion engines, making them fit for the green transition of the next decade and beyond.
“Will all customers buy battery-electric vehicles in ten or nine years’ time? We don’t think so, ”said Neugebauer, who is also BMW’s director of global research collaboration.
“Why? Because sometimes you have to travel long distances, you go on vacation, you have to tow a trailer. And for that you need public charging infrastructure. And this will still be a critical problem.”
BMW and Renault SA, which have not set a date to go all-electric, are among the companies firmly in the hybrid camp.
BMW boss Oliver Zipse said last month that they were “a great consumer product” and there would be a market for them even without subsidies. Luca de Meo, CEO of Renault, said in February that PHEVs “will easily be part of the landscape for the next 10 years” and were more profitable than conventional cars.
Volvo Cars CEO Håkan Samuelsson told Reuters: “It’s a bit disappointing that they (policymakers in Brussels) don’t see the value of a plug-in hybrid.” But he said his company, which aims to be fully electric by 2030, was more focused on encouraging the EU to get member states to invest heavily in charging infrastructure.
“If we invest in electric cars in the automotive industry, and do it very quickly, I think our credibility to ask for investments in the charging network will increase,” he said.
‘THE LIMIT OF WHAT IS ACCESSIBLE’
The European Commission will propose at least a dozen laws this year to reduce emissions in all sectors.
In the current drafts of the EU taxonomy for sustainable finance, a list of economic activities that will determine what can be marketed as a sustainable investment from next year, the production of PHEVs is excluded from 2026.
That could deter the army of investors from looking for green credited assets. It could also potentially limit public funding if governments decided to align their spending with the taxonomy.
While many countries still subsidize PHEVs, the Netherlands scaled back tax benefits for them in 2016. In 2020, eight times as many BEVs were sold in the country as PHEVs, compared to four times as many PHEVs as BEVs four years earlier. vehicle technology policies can have a major impact on consumer behavior.
A consortium of researchers, commissioned by the EU and known as CLOVE, recommended this month that the so-called Euro 7 rules should tighten the emission limit values for cars, including nitrogen oxides and carbon monoxide, from 2025. the proposals from the European Commission, which are expected later this year.
Transport & Environment, part of the Commission’s expert group working on the standards, said the proposals would force carmakers to equip PHEVs with expensive technology to reduce emissions from their combustion engines.
Hildegard Mueller, chairman of the German automotive 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.
($ 1 = 0.8503 euros)
Reporting by Nick Carey in London and Kate Abnett in Brussels; Additional reporting by Costas Pitas in London and Joe White in Detroit; Editing by Pravin Char