The EU CO2 target of 95 g/km for 2020 is having a lasting impact on the car market. But how does the CO2 fleet value per manufacturer come about in the first place??
Table of contents
- One gram of CO2 too much can cost 100 million euros a year
- e-cars have considerable added value for manufacturers
- CO2 limit from Brussels will shape the cars of the future
- CO2 limit changes market more than oil crises
- Fleet value calculation: the mills of the EU grind slowly
- Each manufacturer receives an individual CO2 target
- By 2020, e-cars and phevs will be double counted
- Smaller manufacturers have advantages
Thomas wusten, autoambition
Calculating the CO2 fleet value per manufacturer is a subject in itself. Although all newly registered cars in the european union are to comply with the maximum CO2 value of 95 grams per kilometer from 2020, this value is calculated as an average target per manufacturer. This means that every manufacturer must achieve an average of 95 g CO2/km or less for its newly registered cars in europe.
This also means that in 2020 and beyond, it can sell car models with CO2 emissions higher than 95 g/km as long as other models are below this level and compensate for the excessively high CO2 emissions. However, as soon as the manufacturer’s average fleet value exceeds the limit, heavy fines become due to the EU.
One gram of CO2 too much can cost 100 million euros a year
As of this year, that’s 95 euros per gram of CO2 above the 95-g limit per registered car in europe. In concrete terms: for a manufacturer like mercedes, for example, which sells around one million cars a year in europe, a fine of just under 100 million euros is due for exceeding the limit value by one gram. Against this background, it seems only too logical to invest immense sums in the development of more economical and cleaner drive systems instead of paying such sums to the EU.
"car professor ferdinand dudenhofer of the university of duisburg-essen has weighted the threat of fines in a simulation model per manufacturer. Based on the current CO2 fleet value, each registered electric vehicle (BEV) has a very high value to its manufacturer, above the price of the new car. This value is calculated from the avoided fines, as each BEV lowers the CO2 fleet value.
E-cars have considerable added value for manufacturers
Without e-cars, dudenhofer predicts that the VW group, for example, will have to pay fines of almost four billion euros. According to dudenhofer, Volkswagen needs around 350.000 bevs to avoid these penalties. From this, the automotive market expert at VW concludes an additional value per BEV of around 11.400 euro.
At the BMW group, 11.900 euros and at mercedes-smart even 12.400 euro. Against the backdrop of these figures, dudenhofer concludes that "it is essential for mercedes-smart to establish smart as a pure electric brand.
This is how we’ll be driving in 20 years – part 1
The "autoprofessor" explains another connection: "since the additional values are independent of the size of the electric car, it makes sense for the car manufacturers to offer inexpensive small and compact cars that don’t have quite as much range." aha, that’s why smart will soon become an e-only brand and why VW is starting the big electric rollout with the I.D. Neo in the compact class.
CO2 limit from brussels shapes cars of the future
The above analysis may be one-sided and strongly cost-focused, but it makes it abundantly clear how strongly the forthcoming EU CO2 limits will have a direct impact on automotive development. CO2 targets will shape our automotive mobility for decades to come. In the long term, the trend may be toward smaller, more compact models.
A similarly strong influence on automotive development has already been seen before. Let’s remember the oil crisis of 1973, which gave Germany four car-free Sundays and a speed limit of 100 km/h on the autobahns for six months. The second oil price crisis in 1979 underlined once again how dependent europe was on "cheap oil" is.
CO2 limit changes market more than oil crises
As a result, fuel consumption was given a much higher priority in the development departments of the auto industry. The technicians worked on particularly long-translated "economy" transmissions and create engines, usually with more displacement, that deliver sufficient power and torque even at lower engine speeds.
VW christened the gearboxes with the long last gear "3+E" and "4+E" and gave the new versions of the "formula E" a new lease of life also a gearshift indicator on the way. Even back then, the passat and santana models were fitted with a start-stop system on request, as we know it today in almost all passenger cars. At the beginning of the 1980s, the field of aerodynamics also served almost exclusively to reduce fuel consumption.
The indicator for wind resistance, the cd value, has been optimized for many models by means of small roof edge and rear spoilers. Finally, in 1982, the new audi 100 (C3) appeared with a particularly streamlined body and outperformed many of its competitors in terms of fuel consumption.
This is how we’ll be driving in 20 years – part 2
Fleet value calculation: the mills of the EU grind slowly
The EU is responsible for determining a manufacturer’s respective CO2 fleet value. the process is divided into four steps:
Step 1: at the beginning of the year, the 28 participating countries collect all the necessary data from their registration authorities on passenger cars put on the market as new vehicles. This data is then sent to the relevant authority in Brussels.
Such a data set includes the CO2 value of each individual car, because the CO2 value varies according to the tires and equipment, even for identically powered models. Step 1 should be completed by the end of the first quarter.
Step 2: In the second quarter of the year, the EU checks the country data sets and distributes them among the participating vehicle manufacturers. Currently, this is the data from around 15 million registrations per year. Ideally, manufacturers will receive the european registration data for their vehicles in the middle of the year.
Step 3: now it is up to the manufacturers to check the official eu approval data for correctness and compare it with their internal production and sales information. You can disclose errors and suggest corrections to the EU body.
As part of an adjustment, the five percent with the highest CO2 values are completely deleted from 100 percent of the data. Step 3 takes about a quarter of a year, so that the complete return of the verified data takes place around the beginning of october.
Step four: on the basis of the final data set, the EU department now makes its average calculation. The result is the final and official CO2 fleet value for the manufacturer in question. Until this value is defined and communicated to the manufacturer, it takes on average up to three months or longer.
A high-ranking emissions manager from a German manufacturer told BFP in mid-February this year: "I still don’t have our official, EU-confirmed CO2 fleet figure for 2017." so much for EU bureaucracy. However, manufacturers will know from step 3 at the latest whether they have reached the limit value, but not officially.
Each manufacturer receives an individual CO2 target
Feature 1 – vehicle weight: At the request of the German government, the CO2 limit value is corrected at the EU on a manufacturer-specific basis according to the average weight of the registered vehicles. This defined correction factor is intended to make it easier for manufacturers of mostly heavier cars, which consequently have a higher utility value, to achieve the targets. In terms of the technical effort required, they are not to be placed in a worse position than manufacturers who produce a majority of smaller and lighter passenger cars.
The average empty weight of a new car in europe is currently 1.372 kilo. The average car weight at mercedes, however, is 1.605 kilo. Accordingly, the weight-corrected CO2 limit for mercedes in 2020 is exactly 105 g/km. BMW is not much different, and manufacturers that are increasingly bringing smaller, lighter cars to the european market sometimes also have CO2 targets below 95 g/km.
By 2020, e-cars and phevs will be counted double
Feature 2 – supercredits: in the years up to 2022, the EU will include so-called supercredits when calculating the official CO2 fleet value for a manufacturer. These apply to all newly registered vehicles that emit less than 50 g/km – i.e. to phevs and bevs. In 2020, each of these vehicles will be counted twice for the manufacturer.
Electric cars, which are included twice in the calculation with zero grams of CO2, have a particularly large effect. Even one newly registered e-car can compensate for several car registrations with values well above 95 g/km. in 2021, vehicles with CO2 emissions below 50 g/km will still count 1.67 times and in 2022, thanks to supercredits, they will still count 1.33 times.
Smaller manufacturers have advantages
Feature 3 – small manufacturers: everything said so far applies to manufacturers with more than 300.000 vehicles produced per year. providers that offer between 10.000 and 300.000 units, can apply for a limit value corresponding to an average reduction in CO2 emissions of 45 percent (based on the period from 2007 to 2020) as a special rule.
Niche manufacturers with less than 10.000 vehicles per year can apply to the EU for an exemption from the limits. Small manufacturers with less than 1.000 vehicles are generally exempt from the regulation.