Future of Green Cars

Paul Clarke Alphera Event London May 2016

Paul Clarke Alphera Event London May 2016

Will there be a significant growth of green cars? Today consumers can choose between cars with petrol, diesel, hybrid, plug-in hybrid or pure electric powertrains. However the vast majority of new cars still have either a petrol or a diesel engine, with ‘alternatively-fuelled’ cars representing a very small percentage of sales; will this situation continue, or will the focus turn to the growth of green cars? To answer this question we need to look at some background issues.

Reasons why manufacturers have to lower the emissions of cars

Firstly, the UK government has to reduce its greenhouse gas emissions by 2050 by 80% compared to 1990 base levels. One of the easier ways for the government to achieve this is by encouraging people to buy cars with lower CO2 emissions – and so far incentives such as Benefit in Kind tax have driven the market in this way, and this policy is likely to continue.

There’s also the fleet average CO2 targets that car makers in Europe have to achieve – the next one being 95g/km CO2 by 2021. Manufacturers have to find ways to make cars more efficient otherwise they face the prospect of huge fines.

So diesel cars have been a great solution to these two previous challenges – and in recent years we’ve had incentives such as road tax and the London Congestion Charge encouraging low CO2 cars and so encouraging lots of diesels. However many people in the industry have known for a long time that there’s also the issue of local air quality, and the adverse impact that diesel emissions have on people’s health, thanks to NOx and particulates. Then along came the saviour of the air quality lobby – Volkswagen – and blew the issue of air quality onto the front pages.

Thanks to Volkswagen’s Dieselgate scandal, the focus on ‘non-CO2’ emissions from cars has been, and will continue to be, intensified. So a key change in the future will be more of a focus on clean air rather than just low CO2. Be prepared to see more ultra-low or zero emission zones appear in cities near you.

So how will car manufacturers reduce emissions?

Pure electric vehicles are an ideal solution to lower emissions. However the current limited range from most EVs is a barrier for car buyers, and despite government subsidies, the perception from consumers is that EVs are expensive compared to petrol and diesel cars.

Plug-in hybrids are a fantastic way to reduce CO2 emissions to less than 50g/km CO2 in many cases, and to generate fuel economy figures in excess of 150mpg. But such figures are only based on the short and low-load NEDC test conducted in a laboratory. If you drive 10,000 miles in a petrol plug-in hybrid (and all plug-in hybrids on sale in the UK today are petrol plug-in hybrids, apart from one, the Volvo V60) then most people won’t enjoy the advertised 150mpg. There are two key things that impact on real-life mpg – for motorway driving: aerodynamics; and for stop-start driving: weight. A two-tonne petrol 4×4 is not going to be economical when driving on its petrol engine – you’ll be enjoying around 35mpg on long motorway runs.

But of course, ultimately, real-life mpg completely depends on a person’s driving patterns. A new economy and emissions test cycle is coming, the Worldwide harmonised Light vehicles Test Procedure (WLTP) – which is supposed to make the test closer to real-world performance, but it won’t change the fact that people need to be educated and informed about buying a car that is most efficient for their particular driving patterns.

At the moment we have plug-in vehicles from the likes of BMW, Nissan, Renault, Tesla and Mitsubishi. But most manufacturers are developing EVs – with serious players such as the Volkswagen Group (including Audi, Porsche and Bentley) and Jaguar Land Rover working on new products that will rival the performance and range offered by Tesla. Such manufacturers would not invest billions in the development of EVs if they didn’t think there was a market – and although currently small, EV sales are growing rapidly. There were 3,665 sales of plug-in cars for the year up to October 2013. There were 26,225 sales of plug-in cars for the year up to October 2015. That’s a 716% rise over two years.

Automotive Council Passenger Car Technology Roadmap

In terms of future green car technologies, the combined brains of the UK car industry have worked on this. The Automotive Council has published the Passenger Car Technology Roadmap. This shows that there is still life in petrol and diesel internal combustion engines for a few years yet – there are lots of technology ‘fixes’ such as electric turbos and superchargers to make petrol and diesel engines more efficient.

Hybrids will continue to increase in sales, as will plug-in hybrids – and probably the trend for petrol plug-in hybrids will continue due to global market demands. But the belief is that pure electric vehicles will ultimately be one of the key solutions – when battery technologies, capacities and ranges have increased, and when prices have come down. Over 300,000 orders were taken in just a few days after the launch of the Tesla Model 3 (now 400,000 orders after a month). A key issue here is that globally, younger drivers are not wedded to the expectation of driving a car with a V8 petrol engine – so they are more open to the idea of an EV – just as they won’t expect to own a car, but instead they will pay for mobility solutions when they need them.

Of course we can’t review green car technologies without mentioning hydrogen – often seen as the ideal future fuel (or more accurately ‘energy carrier’). Although we now have more hydrogen cars appearing from manufacturers (which are essentially electric cars with their own on-board electricity generation and supply), they’re expensive, and we still don’t have a developed hydrogen supply infrastructure in the UK. But perhaps the key issue is that currently, at the moment, most hydrogen (in the UK) is not genuinely low CO2.

Summary

So in summary, there’s still life in petrol – and even diesel – engines for a while longer; plug-in cars are coming and more rapidly and in greater numbers than most people think; and hydrogen is still seen by many as the ideal future fuel – but it still needs to overcome a number of barriers before we’re all driving around in cars with fuel cells.

Clean air will be more of an important driving force than it has been to date, and after the successor to the NEDC test, we will be moving towards whole life-cycle sustainability, where vehicle tailpipe emissions aren’t the only measurement of how green a car is. Cars will not only be connected to essentials such as Facebook and Twitter but also to the electricity grid, which will also (hopefully) be in the process of becoming greener. My Electric Avenue, a project run by SSE and EA Technology over the last three years, has shown that some local electricity networks will struggle to cope with demands of charging clusters of plug-in cars at peak times, but that technology can provide a solution. It has also shown that the future of the car isn’t reliant on just the automotive industry, but the energy industry will also play an important part as plug-in cars become more widespread.

This content is based on a presentation given to motoring media by Paul Clarke, Founder & Editor of Green Car Guide, and Managing Director of Automotive Comms, at an Alphera ‘Financing the Car of the Future’ thought leadership event in London on 17 May 2016. Other speakers included Spencer Halil, Alphera; Daniel Dowling, Google UK; and Andy Eastlake, LowCVP.

ALPHERA Financial Services launched its report – ‘Financing the Car of the Future’ at the event. With the full ‘Financing the Car of the Future’ study scheduled for publication in November 2016, Alphera has released the first in a series of six chapters – ‘Vehicles that run on alternative fuels: negotiating a changing landscape’ – as part of its commitment to ensure maximum industry involvement in the project. A further five chapters will be delivered over the course of the year, with themes including connected vehicles, customer behaviour, online relationships, regulation and a review of the past decade in motor finance – connected to Alphera’s milestone celebration of 10 years in the UK market.

Money Advice Service can offer you a wide variety of options, including alternatives to petrol and diesel cars, which suit both your needs and budget.