There have been a considerable number of legislative changes going on globally relating to vehicle emissions, too much to cover in a single white paper. Therefore, for this paper, we are going to talk about the changes that have been made within Europe and the further changes that may be coming soon.
In the last 9 months, we’ve seen a significant number of car manufacturers announcing the electrification of their products either in Hybrid or Full-electric form. This is great news for the environment, and also for the market, however, it would be interesting to look at the drivers behind this.
There are two different environmental drivers behind these changes, the first of which revolves around air quality. In the wake of Dieselgate, it became clear that the legislation in place to limit toxic exhaust gasses such as NOx and particulates were not achieving their desired effects in practice. In theory, this was due to NEDC testing methods that failed to replicate real-world driving conditions, allowing emissions to be cycle optimised to pass the test while being miles off in actual driving. However, this also allowed car manufacturers to implement programs in their cars which detected when they were being tested and modified the engine’s performance in response to cheat the test and produce emissions way below the actual level produced in real-world driving conditions.
The fallout from this scandal led to the introduction of a much harder testing regime. WLTP was introduced in 2018, however by 2019 this was changed to real driving environment (RDE) testing. These tests measured both the exhaust emissions and the future CO2 ratings, to avoid any cycle-optimising manipulation in the future. This means toxic emissions such as NOx and Particulate matter, along with climate-damaging CO2, are all measured in a very representative manner.
In the past, under the old NEDC testing, there were several innovations discovered by companies that could have lead to real-world emission and fuel economy benefits. However, as these did not show a benefit on the NEDC testing cycle, they were often not adopted by companies in their vehicles. This method has in the past proved frustrating to component manufacturers such as AVID, as parts produced which did not show a noticeable benefit on NEDC tests, would be doubtful to enter series production. This case was particularly notable in thermal management/optimisation products, as the NEDC test methods were carried out in a temperature-controlled lab, with the car pre-conditioned to be test-ready. Now under the RDE testing, compliance has to be measured in real-world conditions, subject to the full range of temperatures expected across numerous driving conditions. Achieving exhaust emissions compliance under the RDE regime is much more difficult, and has led to significant investments in engine and powertrain upgrades in some vehicles, with others being completely withdrawn from the market.
Another regulation which the industry is having to deal with is the new mandatory fleet CO2 reduction measures. In December 2018, the European Commission agreed to new mandatory CO2 reduction targets for manufacturers selling to Europe. This figure is calculated based on the average RDE test result across all the vehicles which a manufacturer sells. These targets call for a 15% reduction in CO2 emissions by 2025, increasing to a 37.5% reduction by 2030. Light commercial vehicles up to 3.5 tonnes are given a slightly different target of 15% by 2025 and 31% by 2030. These targets are specifically designed to push the industry towards zero-emission, or ultra-low-emission vehicles. Furthermore, there is s special incentive multiplier of 1.85 on any zero-emissions vehicles sold, up to a cap of 5% of sales.
Another compounding problem with these targets is due to the rising consumer trend moving towards less fuel-efficient SUVs. With more SUVs sold, possessing lower RDE test ratings, it is more difficult for manufacturers to meet the set targets. One easy way to achieve compliance with these targets would be to shift almost entirely to electric powertrain vehicle production. Tesla will have no problem meeting these targets; however, this would be a big gamble for traditional car makers, as they must drive down the cost and increase performance to a point which their customers will accept. Otherwise, they risk being left behind in the ever-expanding electric vehicle market. This is a high stakes game and can be a fight for the survival of some car makers in the vast European market.
So what does this mean in practice?
By 2025 most if not all cars will have to be at least a mild-hybrid with a significant level of powertrain electrification. Many of these will be mild-hybrids consisting of an electric motor to assist the engine and recover energy under braking. These will be larger than the current gen-1 “simple” mild hybrids, which have a relatively small motor replacing the alternator on the engine and driven by the belt, expect powers between 15 and 25kW. Then all of the high-power accessory systems on the engine will also be powered from this 48V system such as the cooling fans, coolant pumps and A/C compressor.
This mild-hybrid system serves two purposes: First of all, the parasitic power consumption on the engine can be reduced, and an amount of braking energy can be recovered, giving excellent CO2 benefits. Secondly, the thermal management of the engine can be significantly optimised, giving a real-world-emissions improvement. This can be done through improved control of the pumps and fans and also by using the torque from the electric motor to shift the engine around its operating curve. We talk about these systems as being gen-2 mild-hybrids, and CO2 improvements of between 15% and 20% are possible here in real-world conditions. So mild hybrids, combined with a relatively low number of fully electric and plug-in hybrid vehicles, will get manufacturers past the 15% hurdle for 2025. However, more will be needed to get the additional 22.5% reduction required by 2030. This is where the need for larger volumes of BEVs and PHEVs comes.
Being tactical with the vehicles that are manufactured as BEVs can also help, for example, if you have a mix of high-performance sports cars that emit way above your fleet CO2 average it would make sense to turn these all into BEVs or at least PHEVs. We can see this already from some manufacturers, for example, BMW announced that the new X3 would be only BEV, with its M cars all PHEV. Likewise, Porsche announced that its next would be BEV only. Similar to MHEV technology, the PHEV systems will see fully electrified engine ancillaries and as well as providing CO2 reduction, which will play a central role in real-world emissions compliance.
Conveniently, we know electrification is also great for performance, and all that low-speed torque makes for a great driving experience. There are issues around the ride and handling with a heavy battery pack to overcome, but there are some very, very good high-performance EVs out there now showing what can be done.
The final piece of the puzzle is that even within the EU regions are acting independently and making moves towards zero-emissions zones, or bans on the sale of new petrol and diesel cars. For example, the Netherlands, Ireland, Sweden, Denmark and Israel have all announced a ban on the sale of non-zero emission vehicles from 2030. With the UK, France and China currently aiming for 2040. Around 30 cities have also announced their intention to ban non-zero-emissions vehicles from their roads within the next 10 to 15 years.
In some ways, these bans actually help vehicle manufacturers, as there is then absolute clarity on what to do. Without an outright ban, there is a higher risk for the OEM with a delicate balance of technologies, investment and market acceptance with the risk that a competitor might find a way to deliver a more cost-effective solution.
With all this in mind, here are our 5 predictions for powertrain strategy in the light-duty market in the coming decade:
1. 48V Mild hybrids will be important. These will go beyond the simple front end belt drive to include electrified engine ancillary systems that help to deliver real-world CO2 and emissions targets. There will be a lot of these in the “mass market” through 2025, and while it may seem counter-intuitive, these vehicles are an excellent way to get some benefit without adding huge cost or complexity to the vehicles, as of 2025 as much as 85% of the market will still be combustion engine but with a 48V MHEV system.
2. OEM’s will increasingly adopt more PHEVs and BEVs to their fleet. Because of the maths on how the CO2 emissions are calculated, the real-world emissions compliance and the costs and margins, a significant portion of this will be on higher performance vehicles and SUVs. Expect to see a range of high-performance BEV and PHEV launches between now and 2025.
3. There will also be a lot of BEV’s at the other end of the spectrum in the “city car/van” niche. This will help to fill the need for vehicles to deal with zero-emission zones, and also to replace the current diesel super-minis that have delivered much of the emissions reduction to date. As it becomes more expensive to achieve emissions compliance with RDE testing, and with limited space to package in-exhaust after-treatment systems, full electrification in this bracket, where a smaller battery and limited range are less of a challenge, will be very significant.
4. More cities will announce zero-emission zones in some shape or form once politicians see that it can be done and is a vote-winner as well as a life-saver.
5. Battery cost will continue to fall, and performance will continue to increase. This will happen to a point where between 2025 and 2030 many vehicles will move to BEV, displacing PHEV/MHEV sales. OEM’s will get their battery supply chains under control, and the use of more costly additives such as cobalt will be all but eliminated by 2030