THE CO EMISSIONS CHALLENGE:

The carmakers race to 2021 has started

THE CO EMISSIONS CHALLENGE: THE CARMAKERS RACE TO 2021 HAS STARTED

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THE CO EMISSIONS CHALLENGE: THE CARMAKERS RACE TO 2021 HAS STARTED

Disruption is
transforming automotive

The automotive industry is currently facing a wide

range of challenges. It is on the edge of significant
change, driven by digital developments, new
regulation, a shift in engine technologies, new ways
of collaborating and a new wave of manufacturing
automation enabled by industry 4.0. At the same time,
with Tesla making a profit for the first time in the
third quarter of 2016, we are seeing new disruptive
competitors strengthening their position and
challenging traditional manufacturers.

The major carmakers are responding with a number of

investment and innovation strategies. From Daimlers
Generation EQ concept, VWs ID vehicles, and BMWs
i brand, the leading manufacturers are now embracing
electric vehicles, increasing their range and focusing on
design and customer appeal. At the same time, VW are

planning to invest more than 10 billion in innovation

ranging from electrification to autonomous vehicles. All
this adds up to a clear commitment from manufacturers
to invest in alternative technology that has the potential
to drive significant change in the cost and capabilities of
vehicles available to consumers over the next five years.

THE CO EMISSIONS CHALLENGE: THE CARMAKERS RACE TO 2021 HAS STARTED

Figure 1: How carmakers rank on CO2 emissions some carmakers are still falling short of meeting the 2021 targets
Actual data (g CO/km)** PA forecast (g CO/km)***
Rank*

How carmakers stack up

(g CO/km)

Carmaker

2011

2013

2015

2016

2018

2021

2021 Target

Deviation

PSA (Peugeot Citroen)

128.5

115.7

104.6

100.5

94.8

87.2

88.5

-1.3

Toyota

126.4

116.8

108.3

103.1

98.9

89.8

91.8

-2.0

Renault-Nissan

129.0

119.2

112.1

109.1

102.4

90.4

91.8

-1.4

Ford

132.7

121.8

118.0

114.9

108.1

93.5

91.7

1.8

General Motors

135.0

132.8

127.0

123.4

113.1

96.8

93.1

3.7

Hyundai-Kia

134.0

129.8

127.3

124.0

115.6

96.9

91.6

5.3

Volvo

154.0

130.8

121.9

117.4

109.7

97.4

99.5

-2.1

FCA (Fiat Chrysler)

118.3

123.8

122.2

119.3

113.3

98.6

92.1

6.5

Volkswagen

135.4

128.9

121.5

118.6

110.7

99.1

96.3

2.8

10

Daimler

153.0

136.6

124.7

120.3

111.3

100.8

99.7

1.1

11

BMW

145.0

134.4

126.4

122.1

113.4

103.5

100.1

3.4

12

Jaguar Land Rover

206.0

182.0

165.0

156.7

149.5

132.8

132.0

0.8

The European automotive industry invests close to 45

billion in R&D annually, a large percentage of which
goes towards fuel-efficiency technologies, to meet EU
emission reduction targets the forthcoming EU6c
Emission Regulation. Every year, PA ranks the top
carmakers in Europe according to their performance
against the EUs CO emission targets. These require
manufacturers to ensure that, by 2021, their new car
fleet does not emit more than an average of 95 grams
of CO per kilometre.

average vehicle weight, while our performance forecast

is based on overall fleet portfolio taking into account
the super credits manufacturers receive for their share of
electric vehicles that have emissions below 50g CO/km.

In particular, it is clear that the German producers are

still struggling to get on track to meet their targets while
the French carmakers, due to their early investment in
alternative powertrains, remain at the top of the rankings.

Our method of benchmarking, which is unavailable

anywhere else in the market, examines manufacturers
performance against the overall EU target of 95g CO/
km as well as the specific targets set for each carmakers
business. It then compares this with their forecasted
performance. These specific targets are based on their

Our 2016 results show that, while manufacturers are

making major investments in hybrids and electric
vehicles, only four of the 12 are forecast to meet the
targets. The challenge is that many of these alternative
vehicles will not reach the market in time to make a
significant effect on emission levels before 2021.

The financial cost for those failing to meet those targets

could be significant with manufacturers facing penalties
of 95 for every gram of CO above the limit, multiplied
by the number of cars they sell in 2020. These could range
from around 350 million for BMW, above 600 million for
Fiat Chrysler and up to 1 billion for Volkswagen.

1.

*rank on 2021 forecast **data from ICCT 2016 ***based on actual data until 2015 (ICCT) and PA forecast estimation

European Automobile Manufacturers Association: www.acea.be/statistics/tag/category/key-figures

<0

0-2

>2

THE CO EMISSIONS CHALLENGE: THE CARMAKERS RACE TO 2021 HAS STARTED

Rankings by
manufacturer

Our analysis shows that Peugeot Citroen (PSA)

continue to have the lowest emissions rate. They have
reduced emissions over the past year, and we forecast
they will have a rate of 87.2g/km by 2021 well within
their target. This performance reflects their early
commitment to hybrid, plug-in hybrid (PHEV) and
electric vehicles and their low fleet weight. This focus
will continue, with PSA having announced plans to
develop 11 new models of electric and hybrid vehicles
by 2021.

Toyota also remain on course to meet their 2021 target,

having moved up the rankings from fourth to second
place, and reduced their 2021 forecast emissions from
90.9g/km to 89.8g/km, comfortably meeting their
specific target of 91.8g/km. Their performance reflects
their dominant position in the hybrid market.
They account for 50% of European car sales in this
segment, representing 30% of Toyotas portfolio in
Europe. However, they do not currently have any electric
vehicles in their fleet, but are preparing to join the
crowded race for electric vehicles alongside their fuel cell
hybrids during the next few years.

Another French carmaker, Renault-Nissan, retains third

place in the table and are predicted to be 1.4g/km lower
than their target in 2021. Like PSA, their performance
reflects the range of alternatives in their portfolio and
low fleet weight. They have had particular success with
the Nissan Leaf which is the bestselling electric vehicle in
the world. This reflects in part, that it competes on price
with conventional cars.
Three car manufacturers will struggle to meet their
2021 targets but still may be able to turn round their
performance; Ford, Daimler, Jaguar Land Rover.

THE CO EMISSIONS CHALLENGE: THE CARMAKERS RACE TO 2021 HAS STARTED

Figure 2: CO emission reduction over time

against 2015 actual data and 2021 targets

KEY:

FORECASTED EMISSIONS 2016

FORECASTED EMISSIONS 2021

2015 ACTUAL DATA

2021 TARGET

High
BMW
DAIMLER
VW
FIAT CHRYSLER
VOLVO
CO2
emissions

Forecasted CO2
emission of
Hyundai-Kias fleet is
behind target in 2021

HYUNDAI-KIA
GM
FORD
RENAULT-NISSAN

Forecasted CO2
emission of Toyotas
fleet is ahead of
target in 2021

TOYOTA
PEUGEOT CITROEN

Low

150

140

130

120

110

100

90

80

150

140

130

120

CO2 g/km

High
CO2
emissions

JLR

190

180

170

160

CO2 g/km

THE CO EMISSIONS CHALLENGE: THE CARMAKERS RACE TO 2021 HAS STARTED

Ford, ranked fourth this year, up from fifth in 2015,

have made some progress over the past year, but they
are likely to miss their target by 1.8g/km rather than
the 1.3g/km we forecast last year. They have, however,
announced plans for major investment in a number of
new electric and hybrid cars to reduce emissions levels.
The carmaker has set a challenging goal of having 40% of
models with an electric option by 2020.
General Motors are not expected to be able to meet
their target, and while they have slightly improved their
ranking, their 2021 levels of emissions at 96.8g/km are
now expected to be higher than we forecast last year
and 3.7g/km behind their target. They have made some
investments in alternative drivetrains but their plug-in
hybrid, the Ampera, launched in 2012, failed to make an
impact in the market. However, a new Opel Ampera-e is
planned for spring 2017. This electric vehicle will have
a range of more than 500 kilometres but it is unclear
whether sales will be strong enough to make a material
impact on their overall fleet emission rate.
Hyundai-Kia are still forecast to miss their 2021 target,
having not recovered from their performance decline
in 2014. 2021 emissions are expected to be 96.9g/
km, missing their target by 5.3g/km. They are stepping
up their focus on developing new hybrid and electric
vehicles, including the IONIQ which is the first vehicle
which can be purchased in three versions hybrid,
plug-in hybrid and electric as well as the Kia Soul EV.
However, as these developments are coming relatively
late, at the same time as a shift in customer preferences
to SUVs with high performance engines, they are
unlikely to enable the company improve their emissions
performance fast enough to meet the target Kia Soul EV.
While Volvo are ranked in the middle of the table (based
on their specific CO2 emissions), we expect them to
meet their 2021 target. They are showing an improving
emissions performance and now look to be ahead of their
target by a margin of 2.1g/km. PHEVs now make up 3%

of their European sales and they plan to launch their first

electric vehicle in 2021 which will have a minimum range
of 500 kilometres.
Fiat Chrysler (FCA) faces the same issues as HyundaiKia encountered in 2014, but on a bigger scale. After
the merger with Chrysler, the fleet gained a significant
number of big cars and SUVs and, as a result, FCA have
fallen in the rankings from second to eighth place. They
have seen the most dramatic decline in performance
having moved from being expected to be 1.1g/km

ahead of target to now being forecast to miss it by

6.5g/km. The high sales of their Jeep brand, which has
heavy weights, high emission rates and the lack of an
alternative drivetrain strategy, means that FCA have
increased their average CO2 emissions levels three times
in the last five years. This performance looks unlikely to
improve and FCA will miss their target by some margin.
This is despite Maserati taking a share of their car sales
(more than 50,000 car sales are forecast for 2017) and an
electric car is on the horizon for 2019.

THE CO EMISSIONS CHALLENGE: THE CARMAKERS RACE TO 2021 HAS STARTED

EQ vehicles, with a range of 500 kilometres, are intended

to become a sub-brand that competes with the BMW i
brand as well as with Tesla.
BMW remain at the bottom of the table and their forecast
performance has worsened and they are expected to
fall short of their target by 3.4g/km. This is despite their
early support for electric vehicles through their i strategy
but this has yet to make a major impact on sales. While
their plug-in hybrid models have been more successful,
they are not currently selling in big enough volumes to
affect overall fleet emissions levels.
Jaguar Land Rover, because of the small volumes of
cars they sell (currently 174,000 a year), have their
targets worked out in a different way. Essentially they
are required to make a 45% reduction on their 2007
emissions. They have made significant progress this year,
reducing their forecast emissions for 2021 from 135.7g/
km to 132.8g/km.

Volkswagen have continued to struggle to improve

their performance and they are still expected to miss
their target by 2.8g/km. While they are now planning
to launch a number of new hybrid and electric models,
these are not going to be available until 2020. Their first
100% electric vehicle, the ID will be launched in 2020. This
together with 30 electric vehicles across their portfolio is
to support an ambition to sell one million electric cars a
year until 2025, but it is unlikely this will have an impact
in time for 2021. Skoda will launch five electric vehicles
by 2025 and the first PHEV in 2019.

Daimler have seen some improvements in performance

and are on track to come close to meeting their target
with forecast emissions levels of 100.8g/km compared
with a target of 99.7g/km. They are making good
progress with the hybridisation of their fleet and are now
making up for a slow start in this area and outperforming
their main competitor BMW.
They have ambitious plans for electric vehicles to make
up 15% to 25% of sales by 2025 by adding more than 10
electric models to their fleet. In particular, their Mercedes

Their focus was on developing or acquiring a new

generation of engines that can provide improvements in
performance and fuel economy. These smaller, highperforming engines with improved transmissions, along
with a focus on lighter body and gearbox weights,
are reported to be providing improvements in fuel
consumption of up to 15%. The new electric I-Pace
(based on high seller F-Pace) is planned for 2018.
As long as their registered vehicles per year in Europe do
not increase above 300,000 by 2020 they will come close
to meeting their target. If sales increase above that level,
the target will be impossible to reach.

THE CO EMISSIONS CHALLENGE: THE CARMAKERS RACE TO 2021 HAS STARTED

What factors affect

the forecasts?
Each manufacturer has specific CO targets based on
average fleet weight. The bigger the difference between
the carmakers average fleet weight and the average
weight of all car sales, the bigger the effects on the
individual g CO/km target. To determine the individual
values for each carmaker, we assessed the average fleet
weight by looking at present and past weight trends, as
well as an assessment of each manufacturers capability
to reduce weight in the future. Overall, we expect fleet
weight reductions of between 0.2% and 1.5% per year.
Between 2013 and 2014, BMWs cars got 1.2% heavier,
while Peugeot Citroens fleet weight decreased by 6%.
GM and Toyota reduced their fleet weights, and Daimler
and VW slightly increased their fleet weights in the
same period. Between 2014 and 2015 BMW decreased
their fleet weight by about 1% and PSA by about 1.2%.

GM saw a decrease of around 1.5%, Daimler a reduction

of 1.1% and Toyota by less than 0.1%. In contrast, VW
increased their fleet weight by about 0.9%.
These figures show considerable fluctuation and volatility.
The most extreme example is FCA they decreased their
fleet weight between 2013 and 2014, but raised it between
2014 and 2015. So by 2015 the weight (at 1,242kg) was
slightly higher than it had been 2013 (1,235kg).
These fluctuations reflect the competing demands and
consumer behaviour manufacturers face. Fleet weight
has to go down to decrease emissions as lower mass
needs lower energy in order to move a certain distance.
However, CO2 emission reduction technologies are often
heavier than normal combustion engine technologies
(hybrids are heavier than standard combustion engines)
which leads to an increase in fleet weights.

Our forecasts also reflect an assessment of the

reductions in CO emissions each manufacturer will see
from developing different powertrain types, such as
internal combustion engines (diesel, petrol, and natural
gas), hybrid, plug-in hybrid, electric and other
alternatives. We expect these measures to result in
annual CO emission reductions per manufacturer
ranging from 0.5% to 3%. The next step in our analysis is
to assess the respective number of registrations of each
type of car to determine the extent of each
manufacturers sales of lower emission vehicles. We then
put this data together to develop our forecasts of
average CO (g/km) emissions in 2021.

THE CO EMISSIONS CHALLENGE: THE CARMAKERS RACE TO 2021 HAS STARTED

Figure 3: Key differences between the two test cycles discussed in Europe

The impact of the new

testing regime

Criteria

units

NEDC (current)

WLTP (future)

Duration

1180

1800

Distance

km

11.03

23.27

Mean velocity

km/h

33.6

46.5

Maximum velocity

km/h

120.0

131.3

14

Stop phases

Another complication facing manufacturers is

the impact of the new test cycles. CO emissions
performance is currently derived from a test cycle
known as the New European Driving Cycle (NEDC),
a standardised procedure designed to compare
different vehicles under similar conditions. It is
being replaced in the EU from 2017 onwards by the
Worldwide Harmonised Light Vehicles Test Procedure
(WLTP) which is designed to provide a more accurate
representation of real conditions. It lasts longer,
is conducted at higher speed and includes more
acceleration and deceleration.
A further element in the forthcoming EU6c Emission
Regulation will be the implementation of Real Driving
Emissions (RDE) as an additional type approval
requirement for the period 2017 to 2020, which will
focus on nitrogen oxide (NOx) emissions. The RDE
legislation adds road profile, ambient conditions, traffic
and driver behaviour as elements in the new environment
for emission testing and certification. The problem in
developing this approach is that current test environments
are designed and optimised for perfect reproducibility,
and a removal of external influences. Driving a vehicle
on the road under real life conditions will never be 100%
reproducible and so test comparisons between vehicles
will never be entirely accurate.

Duration

Deceleration

178

Acceleration

247

One to one comparison of test results will not be possible;

instead it will be necessary to handle and evaluate the test
data using statistical methods. Within these constraints,
the US test regime FTP75 is the one that comes closest to
measuring emissions from real driving behaviour.
All these changes mean not only will carmakers will
have to meet stricter emissions limits, but they will be
facing much more demanding test procedures. While
the WLTP test cycle will not have a direct impact on
manufacturers until 2020, it is being phased in from
2017 and consumers will have access to the results and
so emissions performance will come under scrutiny.
Carmakers will also need to respond to the fact that real
world CO2 emissions are up to 25% higher than those
measured in the NEDC tests (Figure 4). So while there
has been steady overall reduction in emissions under the
NEDC tests, only a third of this improvement is due to
technological advances; e.g. downsizing engines, start/
stop systems, hybrids, lightweight. The remainder has
been the result of optimisation of car operations to meet
the requirements of the test; e.g. tire selection, cw value
optimisation, deactivation of equipment.

Stop

280

NEDC
(current)

Constant driving

475

Stop

226

Constant
driving

66

Deceleration

719

WLTP
(future)
Acceleration

789

10

THE CO EMISSIONS CHALLENGE: THE CARMAKERS RACE TO 2021 HAS STARTED

There will be a number of counterintuitive results

from the WLTP tests. Some technologies will perform
better such as hybrids, larger engines and those
which have sailing (coasting) technology. In contrast,
smaller engines will perform less well, as will start
stop systems, turbo charging and catalytic convertors,
because there will be less stopping compared to
the NEDC. Another result of the WLTP test will be
that conventional engines will emit slightly less CO2
than under the NEDC test. The lower performance
of smaller engine cars is a particular challenge for
manufacturers with many small cars in their fleets.
While they will still have lower emissions than larger
cars, their absolute performance will be worse.
Carmakers will need to understand this new more
complex picture and look at which specific measures
can reduce emissions in real driving conditions.
These include: electrical systems that can manage
brake energy and other factors better; a greater
use of hybrids; and technical changes in areas such
catalytic convertors, transmission ratios, exhaust gas
recirculation rates and valve actuators. For instance,
the new diesel engine generation developed by
Daimler, launched in 2016, can meet all CO2 and NOx
requirements during RDE driving cycles, but this
technically feasible option comes at a higher cost for
the carmaker.

Figure 4: Real driving CO2 emissions are higher than measured in the NEDC tests - the average difference has
more than doubled

CO

For example, a warm engine will perform better in

the NEDC test than a cold one due to lower friction.
But in many real world journeys, the engine will be
starting from cold and in a short journey may not ever
reach the optimum warmth. As a result, the emissions
performance in a real world test will be worse than
in the NEDC test based on higher power spectrum,
velocity and energy consumption.

Whereas the real driving CO2 emissions have been 10 percent

higher than data from registered cars in 2002, this gap has
increased to 25 percent in 2014 - and continues to increase.

- EU average: hypothetical real driving emissions*

- EU average: CO2 car registration data

Figure 5: Technologies are benefitting or suffering from implementation of the WLTP

(relative to NEDC)
Hybrid technology: regardless of full, mild or plug-in hybrid
Manual transmissions (allows operation in load optimum)
Large volume engines
Sailing / cruising technology (high sailing share in WLTP)

WINNER

Downsizing (engines with increased efficiency in low load regions are disadvantaged)
Start-stop system (fewer stops in WLTP)
Turbo charging
Catalysator heating measures and extra equipment

LOSER

* EU average hypothetical real driving emissions based on the deviation level of fuel consumption: data from ICCT and Spritmonitor.de
Source: ICCT, 2015, laboratory road 2015 update and based on real on-board testing

11

THE CO EMISSIONS CHALLENGE: THE CARMAKERS RACE TO 2021 HAS STARTED

New developments, especially in small car segments are required;

downsizing, waste load management or lighter weight are no longer sufficient
Figure 6: NEDC and WLTP emission comparison of different vehicle segments
B: Small cars

Combustion engine: Relative gap CO2 g/km in % WLTP/NEDC for 2021

C: Medium cars

D: Large cars

E & J: Executive cars & SUVs

-4 to 2

Range of emission difference

& average deviation

Technology maturity level

I: Convential technology
II: I + Start-stop system (SSS)
III: Advanced technology
(downsizing) and SSS

Emissions lower in WLTP

Same NEDC & WLTP emissions

It is difficult to determine how the WLTP test will

influence the CO2 emission results of different vehicle
segments and technologies. However, a few statements
are possible based on the physical tests of hundreds of
cars with different configurations and technologies used

Emissions higher in WLTP

in NEDC and WLTP test procedures. Bigger cars can

benefit from WLTP, smaller cars will emit relatively more
CO2 than under NEDC regime. This is because bigger
cars have bigger engines with better performance
and efficiency in high load conditions, whereas small

engines already have a relatively high efficiency in the

predominant low load conditions in NEDC.
This effect even compensates for the higher share of
manual transmission in small cars, resulting in lower
emissions under NEDC compared to WLTP.

12

THE CO EMISSIONS CHALLENGE: THE CARMAKERS RACE TO 2021 HAS STARTED

CO2 limits worldwide are becoming stricter while testing procedures are
getting longer and closer to reality posing a two-fold challenge for carmakers
Figure 7: International comparison of test cycles

NEDC
since 1992

WLTP

FTP 75

JC08

starting 2017*

since 2008

since 2015

EU, Russia, China, India, Australia, Turkey.

Nafta, Brasil, Chile,

Japan

Duration

1180

1800

1874

1200

Distance

11

23.3

17.8

8.2

131

91

80

Not considered

Considered

Considered

Considered

High amount of city tours

with many stops

More dynamic with higher

speed and acceleration

Highly dynamic

High-speed very low

Cold and warm motor starts

Cold and warm motor starts

Ambient temperature up to
30C allowed

Ambient temperature only

up to 23C

Additional test for aggressive

driving and Air Condition

Inconstant acceleration and

brake processes

Short highway drive with

limited acceleration

2 phases city tours and 2

phases highway drive

Maximum velocity
Extra equipment
Key characteristics

120

2002

CO2 targets (g/km)

normalised to NEDC

-24%

-27%

-16%

-25%
130

In discussion:
95

2015

2020

160
121

67-78
2025

2016

2020

125
91
2025

2015

121

105
2020

*2017-2020 is the phased introduction of the WLTP; however, NEDC test procedures will be used at the same time, and only results of NEDC will be taken into account for measurement
against the specific emission targets. From 2020 the WLTP will be used for 95%, from 2021 for 100% of the vehicle testing.

13

THE CO EMISSIONS CHALLENGE: THE CARMAKERS RACE TO 2021 HAS STARTED

Figure 8: CO2 emissions from cars in selected countries in the EU

Country

CO2 emissions from cars [g/km]

2014

2015

Norway

100.5

110.5

101.3

106.7

Netherlands

106.0

110.9

Denmark

110.9

113.9

France

114.3

116.9

Ireland

117.9

Italy

115.7

118.6

Spain

121.2

124.6

UK

126.2

130.8

Sweden

127.3

131.9

Germany

134.6

141.5

Switzerland

114.9

Gross National
Income [] per
capita 2015

Direct
PHEV/BEV
incentive []

PHEV/BEV
% of new
cars 2015

93,280

22.4%

48,940

9.7%

58,590

2.3%

40,580

6,300

1.2%

46,680

2,500-5,000

0.5%

32,790

0.1%

28,520

2,700-6,000

0.2%

43,340

< 6,000

1.1%

57,810

4,200

2.6%

45,790

3,000-4,000

0.7%

84,180

2.1%

Sources: PA Research, World Bank, EU Pocketbook, Jato, ACEA

150

140

130

120

110

100

90

Performance varies across countries

While the level of emissions varies significantly across
carmakers, there are also wide variations in the
emissions from individual countries car fleets. Norway
has the lowest level of emissions at 100.5g/km and the
highest use of electric vehicles, which made up 22% of
new car sales in 2015. The Netherlands has emissions
levels of 101.3g/km and electric vehicles make up
almost 10% of sales. In contrast, in Germany CO2
emissions are at 127.3g/km and electric car sales are
only 0.7% of the total, and in Switzerland emissions are
134.6g/km, although electric vehicles are more popular
at 2.1% of sales.

While the reasons for these results are complex, there

does seem to be a link between a countrys performance
on emissions, levels of electric vehicle use, gross national
income per capita and the sales of premium vehicles
and particular policy measures to encourage the use of
electric vehicles.
However, it is clear that policymakers face real
challenges in developing actions that will reduce
emissions. Even in Norway where the significant subsidy
for electric vehicles has driven sales, there have been
concerns about the costs. Germany has set a target of
one million electric vehicles by 2020 but the subsidy

provided to encourage sales is proving controversial

and it is unlikely this target will be met. The proposal,
currently under discussion, that all new cars must be
emissions free by 2030 also looks challenging, and a
similar debate is going on in Norway which has already
set a target to ban fossil fuel powered cars by 2025.

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THE CO EMISSIONS CHALLENGE: THE CARMAKERS RACE TO 2021 HAS STARTED

Figure 9: Increasing sales of electric vehicles can play a part in reducing fleet emissions but manufacturers sales
performance is very variable

What can carmakers do?

2014-2015 Registration
EU-28 (%)

CO emissions in g/km

HEV*

2015

2021**

Target
2021***

PSA (Peugeot Citroen)

104.6

87.2

88.5

Toyota

108.3

89.8

91.8

Renault-Nissan

112.1

90.4

91.8

Ford

118.0

93.5

91.7

General Motors

127.0

96.8

93.1

Hyundai-Kia

127.3

96.9

91.6

Volvo

121.9

97.4

99.5

FCA (Fiat Chrysler)

122.2

98.6

92.1

Volkswagen

121.5

99.1

96.3

Daimler

124.7

100.8

99.7

BMW

126.4

103.5

100.1

Jaguar Land Rover

174.1

132.8

132.0

Carmaker

Our analysis shows all carmakers need to maintain a

real focus on meeting their targets, acknowledging
the increased challenge from changes to the
testing regime; the impact of lower oil prices on
customer buying decisions; and the fallout from the
Volkswagen scandal over diesel emissions. There
are a number of specific steps they can take to
address these challenges.

* HEV: Hybrid electric vehicle

PHEV: Plug-in hybrid electric vehicle
BEV: Battery-electric vehicle
Source: MarkLines, company websites

PHEV*

BEV*

** PA forecast
*** Based on forecasted fleet
**** Based on selected mid-size sedans, smallest
engine, no extra equipment

2016-2021 new
models
HEV

PHEV

BEV

Pricing difference
PHEV vs. cheapest
conventional model****

n/a

very
low

low

mid

high

very
high

15

THE CO EMISSIONS CHALLENGE: THE CARMAKERS RACE TO 2021 HAS STARTED

Optimise engine performance to achieve compliance

with environmental regulation
For cars with traditional internal combustion engines,
the focus of their efforts should be on reducing vehicle
weights, making internal combustion engines more
efficient and cleaner as well as addressing issues around
air resistance. Additional measures manufacturers can
take to reduce fuel consumption include incorporating
a mechanism to automatically disengage the engine
when the car is stationary in traffic, and using
super turbo-charged engines to reduce the cylinder
capacity required. In addition, there is potential to
use emerging innovative technologies, from cylinder
deactivation to electro-mechanical valve control, to
improve performance, reduce emissions and support
environmental compliance. There are also clear potential
benefits from developing more efficient or alternative
powertrains and engines.
Cut vehicle weight to meet carbon emissions
reduction targets
We have already seen some progress on reducing
vehicle weights. After many years of increasing
weights to accommodate safety requirements and
customer demand, some lighter weight models are
being produced. However, given the average eight
year lifecycle of a car model, the impact of these
developments will take a long time to be felt widely
across a fleet. The benefits though are potentially
significant, for every 100kg a vehicles weight is reduced,
fuel consumption falls by 0.25l/100km, delivering
a reduction in carbon emissions of approximately
6-7g CO2/km. So carmakers need to be looking at
using innovative materials such as high-tensile steel,
aluminium, magnesium and carbon fibre in the body
shell, chassis and drive train, and in engines, seats and
axles to reduce vehicle weight.

Move beyond hybrids

Manufacturers of hybrid cars now face a major dilemma.
They do not qualify for super credits (less than 50g)
towards the CO2 targets, but plug-in and electric vehicles
do. At the same, time cleaner conventional engines are
rapidly closing the emissions gaps, so a hybrid car emits
89g/km, while one of the best petrol engines in the
Smart forfour emits 96g/km and the best diesel from
Daimler for the A180d emits 99g/km even without its
blue efficiency measures.

This suggests that the hybrid may have reached its

peak and, while it was an important step in starting the
journey to electrical vehicles, there will only be a minor
increase in sales volumes in the coming years. In the
major markets for hybrids Japan (59%), US (19%) and
Europe (13%) plug-in hybrids and especially electric
vehicles look set to become more attractive.

16

THE CO EMISSIONS CHALLENGE: THE CARMAKERS RACE TO 2021 HAS STARTED

Make electric vehicles attractive to customers

Almost all manufacturers are making big investments
in electric vehicles, but it is clear that they will need to
overcome the challenges of price, range and infrastructure
if sales are going to rise significantly. But there is evidence
that these will be addressed in the new generation of electric
cars. There are signs that the pricing challenge is being
addressed and we expect the price of electric options to
equal diesel models between 2018 and 2021. Good progress
is also being made on increasing range, with a number of
manufacturers planning, by 2020, to launch models that
have a range of 500 kilometres or more.
The infrastructure challenge is more complex, requiring
the involvement of government, electricity providers and
the car industry, and progress is likely to vary between
countries. However, all these developments will need
to be underpinned by a focus on persuading customers
that using their electric vehicle will be convenient and
comfortable. This is going to take time and is unlikely to
be achieved quickly enough to generate sufficient sales to
affect manufacturers 2021 performance.
Reshape the vehicle portfolio to ensure
environmental compliance
The focus on improving efficiency will not be enough to
bring the German manufacturers, currently at the bottom
of the table, on course to meet their targets. They will need
to look at reducing the average carbon emissions from the
fleet by reshaping their vehicle portfolios to include a higher
proportion of smaller cars and engines downsizing eight
cylinders to six cylinders for instance, or six to four or three.
They will also need to look at bold measures to increase the
number of electric and plug-in hybrid vehicles in their fleets.
We calculate that to meet the targets, BMW and Volkswagen
will need a substantial portion of their European registrations
to be of cars with alternative engines in 2021. German
carmakers have, to date, struggled to develop alternative
vehicles that their customers want to buy but this seems to
be changing with a range of ambitious strategies and clear
plans being announced at the 2016 Paris Motor Show.

17

THE CO EMISSIONS CHALLENGE: THE CARMAKERS RACE TO 2021 HAS STARTED

The road ahead

It is clear that car manufacturers face considerable
challenges in meeting the 2021 CO2 emissions targets.
It is also clear that almost all are now making significant
investments in hybrids and electric vehicles to improve
their performance. While some of these developments
will come too late for the rapidly approaching
2021 deadline, we are seeing a clear focus from
manufacturers on new models and new approaches.

18

THE CO EMISSIONS CHALLENGE: THE CARMAKERS RACE TO 2021 HAS STARTED

About our
methodology
The following assumptions were made to forecast car
manufacturers specific CO targets and emissions.
Manufacturer specific CO targets depend on the
average fleet weight of each carmaker and their
difference from the average weight of all new
registered vehicles. We forecasted the average fleet
weight of each manufacturer using a PA assessment
on present and previous weight trends, as well as
their capability to reduce weight in the future. The
expected potential of each carmaker to enlarge their
product portfolio with smaller and lighter cars is also an
important factor.
The specific CO emissions performance reflects a
weighted fleet average, taking into account super credits
for low emission vehicles (less than 50g CO/km).
Therefore, we made assumptions for each manufacturer
regarding the development of the CO emissions of
different powertrain types, such as internal combustion
machines, hybrid, plug-in hybrid, electric and others,
such as natural gas. Our 2021 forecasts are based on
the NEDC test cycle as this will remain in place for
manufacturers even though the WLTP tests will be
phased in from next year for consumer information.
We also calculated the respective number of registrations
of each powertrain type for each manufacturer using an
extrapolation of current trends and PA market insights
into the future focus of individual carmakers.

19

To find out how our experts can help you meet European carbon
emissions reduction targets, please contact us now.
Tel: +49 69 71 70 22 93
Email: Karsten.Gross@paconsulting.com
www.paconsulting.com/CO2ranking

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