Automakers Miss U.S. Fuel Economy Targets For First Time Since 2004

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> Christiaan Hetzner


Automotive News Europe

March 15, 2017 06:01 CET

The European Commission is set to reshape the landscape of the global auto industry later this year when it agrees on even more stringent carbon emission targets for the next decade that could mark the beginning of the end for traditional combustion-powered vehicles in the world's largest economic bloc.

Experts believe regulators, most likely in the third quarter, could dramatically slash the future amount of greenhouse gases produced by new passenger cars in a bid to reverse rising emissions from the road transport sector in time for the European Union to meet its 2030 target. Brussels has committed to a binding CO2 cut of at least 40 percent on 1990 levels as part of the first global pact to combat climate change signed in Paris. Automakers currently must reduce their CO2 emissions in Europe to 95 grams per kilometer by 2021.

Major powertrain trends such as downsizing and turbocharging were the result of pressure from EU regulators in the past. It's fair to say the next round of targets, which could include limits for both 2025 and 2030, will have an even more drastic effect on the automakers' powertrain strategies.

Major metropolitan areas such as Paris, Madrid, Athens and Oslo are already planning to ban diesels in the city centers in the coming years to tackle smog problems. By the end of the next decade, European new-car sales of models with full or partially electrified drivetrains are expected to surpass those of vehicles with traditional combustion engines.

Speaking on behalf of vehicle manufacturers in his role as president of industry association ACEA, Daimler CEO Dieter Zetsche sounded worried last month when the conversation turned to the further de-carbonization of road transport.

"We need to pull every lever at our disposal, including hybrids, fuel cell, gas and battery-electric vehicles," he said during ACEA's annual reception in Brussels last month.

Electric power

The move toward electromobility comes at a time when manufacturers are already pouring billions of euros into developing autonomous and connected cars. Alternative drivetrains will require investments of more than 40 billion euros by 2020 by the German auto industry alone, according to the VDA, the country's auto association, making the push to reducing carbon emissions the greatest challenge facing automakers.

While new business models can be created by selling mobility-on-demand packages, real-time parking information or robotized ride-hailing services, the potential to generate fresh revenue growth simply by offering cleaner, eco-friendly cars is largely non-existent. Customers are unwilling to pay extra solely to improve ambient air quality, despite the estimated 100 million euros in incremental costs per each gram of CO2 reduction undertaken by carmakers such as the Volkswagen Group.

Currently, each manufacturer is subject to weight-based limits that require the fleet CO2 average to reach 95g/km by 2021 based on New European Driving Cycle (NEDC) guidelines.

By comparison the ceiling for 2015 was 130g/km, which the industry easily met with a level of 119.5g/km even though plug-in hybrids and battery-electric vehicles comprised only 1 percent of the overall new car fleet at the time. Under new regulations, this target could potentially sink as low as 68g/km for 2025 – a reduction by half in the space of just a decade. That’s roughly the same amount of time between the initial development of a new car and the end of the model's life cycle. Meeting such a limit would undoubtedly require a substantial penetration of electrified cars, tough even for a company such as Toyota with its fuel-efficient fleet of gasoline-electric hybrids. The VW brand, for example, estimates it would have to sell 1 million battery-electric vehicles in 2025 alone, compared with the tens of thousands it currently sells, to meet future emissions targets around the world.

During a speech in January, VW brand sales chief Juergen Stackmann told his German dealers at a gathering in Bonn that "global environmental standards are expected to be intensified drastically" starting in the next decade.

Another challenge facing automakers in Europe is that they will need to comply with the so-called Real Driving Emissions (RDE) test procedure starting in September. Originally introduced to address excess nitrogen oxide (NOx) emissions from diesels, now experts believe the RDE test can also help with reducing CO2. Certified NEDC fuel consumption for plug-in hybrids for example is about 30 percent to 40 percent lower than in real life use.

As a consequence, German supplier Schaeffler estimates that half of the 111 million vehicles produced globally in 2025 will no longer be powered purely by internal combustion engines as output of hybrids gains speed. Over the following five years, the share of battery-electric vehicles produced is expected to double, reaching 30 percent in 2030 and matching the number of vehicles made with combustion engines by then.

Schaeffler ally Continental acknowledges that the two companies may be able to increase sales of their fuel-saving solutions, such as their 48-volt mild hybrids, as automakers race to reach the new targets but Continental CEO Elmar Degenhart refutes speculation the companies will profit from this.

"We all are sitting in the same boat," Degenhart told Automotive News Europe. "What's not good for our customers cannot be good for us suppliers."

Cost dilemma

The problem is when it comes time to pass on the added costs from carbon emissions compliance, even aspirational brands struggle. Porsche said last year its affluent car buyers won't open their wallets wider to pay the extra 10,000 euros needed to build a plug-in hybrid version of the Panamera or Cayenne, forcing the company to swallow a chunk of the costs itself. Daimler r&d chief Ola Kaellenius, Zetsche's likely successor as CEO, said the automaker had little choice but to offer the plug-in hybrid version of its flagship Mercedes-Benz S class at the same price as the equivalent version with a traditional powertrain. Customers pay for horsepower, not CO2 savings, he said, underlining that the added complexity is the carmaker's problem. Industry analysts say one key reason for that is that the fuel-usage levels touted by automakers can only be achieved in the utopian world of laboratory test benches.

"Given the urgency and ambition of the Paris [Agreement] commitments, legislation should be designed in a way that incentivizes manufacturers to optimize technology to lower CO2 emissions in reality rather than adapting to the test cycles," scientists wrote in a report sent to the European commission last November.

In its annual Mind the Gap study, Brussels-based advocacy group Transport & Environment refuted official EU statistics that showed a continued improvement in CO2 emissions from new cars. Analyzing third-party fuel consumption data, T&E argued that only Toyota would have met its 2015 target in real life. T&E concluded that roughly two-thirds of the improvement in CO2 emissions over 2008 levels existed only on paper because of testing-procedure loopholes, blasting the results as "no longer having any credibility" and estimating the hidden fuel costs to motorists at 549 euros a year.

A portable emissions measurement system (PEMS) is pictured on the Citroen C4 during testing near Paris. The system is used to calculate a car’s fuel consumption, CO2 and NOx during real world driving.

New tests

To address this weakness, the EU is phasing in a new method to measure emissions to create "a strong incentive for the deployment of low-carbon mobility technologies," according to Brussels. Starting this September, it will begin replacing the outdated and largely discredited NEDC cycle with the more robust Worldwide harmonized Light vehicles Test Procedure (WLTP) that better captures real driving behavior.

This, however, complicates things since the post-2021 targets are therefore no longer directly comparable. T&E, for example, argues the Commission should propose a 2025 target of 80g/km based on the more strenuous WLTP guidelines, complemented by an additional real driving test that ensures CO2 emissions are no higher than 10 percent above lab conditions rather than the 40 percent discrepancy of today.

One German official argued that the EU should only impose relative targets on each carmaker rather than an absolute figure given the lack of experience with the new cycle. The problem is none of this is really helping the overarching goal of reducing greenhouse gas emissions within the EU.

Although new cars are becoming cleaner each year, the overall carbon footprint from road transport has been growing since 1990, making it the only major sector of the economy heading in the wrong direction. According to the most current data from the European Environmental Agency published last June, road transport increased its CO2 output by 6.6 million metric tons in 2014 compared with 2013.

That was the largest increase of any sector of the EU's economy that year and meant that road transport was responsible for about 20 percent of total greenhouse gas emissions across the bloc. While part of this is due to the weakness of the NEDC system in measuring on-road emissions, another factor is that EU roads have an existing fleet of 250 million cars, which are estimated to be 9.7 years old on average.

"We would like to see proposals which do not only concentrate on new cars but also on the whole fleet," said VDA President Matthias Wissmann, hoping to shift some of the burden away from manufacturers.

One failed proposal involved including road transport in Europe's cap-and-trade system, effectively forcing drivers to pay for it in the form of higher fuel prices.

Currently, ACEA is calling for incentives to renew the aging car fleet or receive credits for Intelligent Transportation Systems (ITS) such as truck platooning – it even has a website called

German influence

Wissmann, who is a former transportation minister from Chancellor Angela Merkel's political party, used to have an easier lobbying job. When the 95g/km target was due to be passed during an EU summit in June 2013, Merkel intervened at the last minute on behalf of Wissmann's automotive members. She pushed for more lenient limits that would protect the sale of large premium sedans and SUVs -- the hallmark of companies such as BMW and Mercedes. Merkel, however, has since signed up to the Paris Agreement and must deliver on her own CO2 commitments, prompting T&E's Greg Archer to say that he doesn't expect any last-second changes to the new emissions regulations for automakers.

"There is no way that Germany can achieve its own targets on transport for 2030 unless there are significant improvements in the efficiency of conventional vehicles," Archer told Automotive News Europe. "The position of Germany is likely going to be much more nuanced than it has been in the past simply because it has its own climate plan."

Making matters worse is the negative backlash against all automakers in the wake of VW Group's cheating on emissions tests. The scandal revealed the industrywide use of legal loopholes to circumvent tailpipe emission limits as soon as vehicles are off the test bench and on the road. As a result, all vehicle emissions -- nitrogen oxide (NOx), fine particulate matter, CO2 -- have come under far greater scrutiny. This could undermine hopes the Commission will strike the more favorable balance between economic and environmental interests that manufacturers would like. Last December may have marked a watershed moment in which consumer advocacy groups notched a victory over the auto industry. EU member states forced an across-the-board cleanup of tailpipe pollutants in September 2018, requiring the retrofit of particle filters to trap soot from cars equipped with gasoline direct injection engines.

In a statement sent by the VDA, German carmakers lashed out at their own government in Berlin for failing to veto the decision, flatly condemned it as "impossible" to implement in the time allowed and warned as many as half a million fewer cars would be built that year as a result.

"The Commission's determination to make car emissions testing increasingly robust is paying off," said EU Industry Commissioner Elzbieta Bienkowska in an ominous signal to carmakers at the time. "Public health is at stake. We have no time to lose."

AUTOMOTIVE NEWS EUROPE MONTHLY MAGAZINE This story is from Automotive News Europe's latest monthly magazine, which is also available to read on our iPhone and iPad apps.> You can download the new issue as well as past issues by clicking here.

Explaining the key terms

What does RDE mean?

Starting in September, the Real Driving Emissions (RDE) test procedure will determine whether a new model can be put on the market. This test is being introduced because of a growing discrepancy in the on-road emissions such as nitrogen oxides (NOx) and particle numbers from passenger vehicles compared with the results obtained by laboratory testing. According to European Commission data, even the newest diesel models sold in Europe exceed the NOx limit by 400 percent on average in real driving conditions compared to laboratory testing. Tailpipe pollutants will be measured by portable emission measuring systems (PEMS) that are attached to cars that are driven on the road using random acceleration and deceleration patterns.

What does WLTP mean?

The new Worldwide harmonized Light vehicles Test Procedure (WLTP) is a certification laboratory test that takes effect starting in September for all new vehicle types, replacing the New European Driving Cycle (NEDC), which was last amended in the 1990s. After a period where both are employed, WLTP will be the exclusive method for measuring CO2 and fuel consumption starting 2020 under current plans.

Why introduce it?

Consumers pay more at the pump because of the inaccuracy of the NEDC, while governments that tax cars on their CO2 output miss out on revenue, and the problem is getting worse over time. Scientists reporting to the European Commission in November last year cited 8 different studies that together determined the gap between the certified and real life levels widened from 8 percent in 2001 to 38 percent in 2013 on average.

How does the NEDC work and can the test be tricked?

Before a car can be certified, the rollers on the stationary lab bench that spin in place as the wheels turn must first be properly calibrated. This is done to mimic forces acting against the vehicle, such as wind drag and tire rolling resistance. Think of it as putting a car on a treadmill and then providing variable difficulty levels. This lab setting, the "road load coefficient," is determined by the coast-down test made on a flat road, which measures how long it takes for a car traveling in neutral to come to a standstill from a given starting speed. Carmakers tape up body panel gaps, overinflate tires, use special lubricants to reduce mechanical friction and even remove the side mirrors to maximize this distance and achieve an artificially easier lab setting. Unlike in the U.S., carmakers have succeeded in classifying road load coefficients as a trade secret in Europe.

How does WLTP differ from NEDC?

It uses a more realistic driving cycle derived from a database of 800,000 km of in-use vehicle data. At 30 minutes in duration, the WLTP is 50 percent longer than the NEDC test, it covers more than twice as much ground in kilometer terms and includes an extra urban phase where speeds can reach 130 kph. Accelerations represent 44 percent under WLTP rather than 21 percent for the NEDC and are nowhere as gentle and constant as with NEDC. Previous off-cycle technologies -- such as the air conditioner -- that run directly off the engine will no longer be shut off. Fewer parameters are imprecisely defined.

What implications does this change have?

The NEDC has long idling phases equivalent to about a quarter of the test. WLTP has half that share. This will eliminate the CO2 bonus from start-stop systems, but the WLTP is particularly friendly toward 48-volt mild hybrids, which are considered a cost-effective means of downsizing engines further without sacrificing acceleration or torque. Additionally, WLTP requires CO2 emission levels for every version of a car a customer can purchase, rather than one low-spec base version.

Who will use the WLTP test?

Under development since September 2009 by United Nations body UNECE as a global standard, the European Union will be the first to implement it. Other countries participated in pooling data, and as a result Japan has committed to using WLTP, with India and Korea expected to follow. While China provided input, it remains unclear whether it will also adopt the test cycle. The U.S. withdrew in 2010, with experts saying U.S. officials never saw the need for change having had a more effective fuel consumption test than NEDC to begin with.

What remains unclear?

Automakers in Europe want the 2021 fleet CO2 target of 95g/km to be measured using NEDC rules rather than under WLTP figure as new versions of existing models sold will undoubtedly be engineered to perform better under the older, easier test.

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Christiaan Hetzner at >



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