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Customer LoginsFuel for Thought: The Evolving Global EV Landscape
Automotive Monthly Newsletter and Podcast
This month's theme: The Evolving Global EV Landscape
Global compliance is still a significant concern that governments
will look to regulate and OEMs will continue to strive to achieve.
Consumers play a large role in the direction and success of both
sides of this equation with COVID having had its impact as well. It
continues to be a complex situation depending on the market, with
OEMs and other supply chain participants looking to find common
ground to increase efficiencies and profitability. Below we will
highlight some of the key considerations in each market.
Mainland China
In mainland China, the corporate average fuel consumption (CAFC)
target will tighten from Phase 4 to Phase 5 in 2021, reducing
market target reference from 5 L/100km to 4 L/100km. The more
stringent CAFC standards also go along with new energy vehicle
(NEV) requirements tightened for 2021-23 period (the "Dual Credit"
policy). The overall mainland China market in 2020 has nearly 8
million CAFC credit deficits. On the other hand, the administrative
and economic incentives during recent years have driven strong
electrification growth in the mainland China market; comparing to
NEV requirements, the market is about to generate roughly 3.6
million NEV credits in 2020. Under COVID-19, the Chinese government
has taken measures to further promote the growth for electric
vehicles, from the continuation of NEV subsidy and with a delay of
China 6 emissions standards full implementation, and also the
possibility of using 2021 NEV credits to back write off 2020
deficits. The newly finalized dual credit policy still requires
14%, 16%, and 18% NEVs in 2021, 2022 and 2023.
Europe
Calendar year (CY) 2020 is a crucial year for the European market
to aggressively reduce passenger car CO2 emission standards from
130 g/km to 95 g/km. In recent months, OEMs have been gearing up
their electrified products to comply with these CO2 targets. Major
volume OEMs PSA and VW have been launching BEV products (e.g.
Peugeot 208e, VW ID.3) at an attractive price point, also thanks to
recently increased subsidies in major markets like Germany and
France. Premium OEMs are also not lost in the race, having started
their first wave of pilot BEVs (e.g. Audi e-tron, Mercedes EQC,
Porsche Taycan). Together with the massive extension of plug-in
hybrid models this year, customers look at a much broader range of
electrified products to choose from.
For the overall EU28 market in CY 2020, CO2 compliance value is
forecasted to be 104.9 g/km, 7.1 g/km over the market average of
97.8 g/km target. This includes a 3.4 g/km reduction from excluding
the top 5% highest emitters and 5.8 g/km super credit enabled from
<50g CO2 vehicles that are predominately PHEV and BEV.
Among the top 10 manufacturer pools, which account for
nearly 90% of EU28 passenger car sales, only one car manufacturer
is expected to meet 2020 target in our baseline forecast.
Market-wide excess CO2 premiums is projected to be as high as €8.6
billion in CY2020.
United States
In March 2020, the U.S. Safer Affordable Fuel-Efficiency (SAFE)
Vehicle Rule was finalized to set relaxed fuel economy and CO2
standards for post model year (MY) 2020. The SAFE rule only
requires an annual increase of approximately 1.5% in stringency
from MY 2021 through MY 2026, compared with around 4-5% under the
Obama-era rule for MY 2021-25. In MY 2020, the US market is
forecasted to reach 42.4 mpg for passenger car fleet and 29.9 mpg
for light-duty trucks on average, including applicable credits like
air conditioning and off-cycle credits. Even with a drop in
light vehicle sales from COVID-19 pandemic conditions, the overall
US market is projected to over-comply starting from MY
2022.
The BEV market in the US accounted for 1.5% total new light vehicle registrations (+0.1% YoY), with Tesla having the lions share. Battery Electric Vehicle sales in North America will be significantly bolstered by tight competition and eager buyers within a unique regional segment: the electric pickup truck. Numerous manufacturers have announced EV truck intentions with the earliest expected at the end of 2021 and early 2022 with offerings from GM, Rivian, and Tesla. Other models are also expected from Ford and FCA. Multiple startups have also announced plans to compete in the segment, including Nikola, Bollinger, and Lordstown Motor Company. These brands are expected to produce multiple offerings that span the spectrum between lifestyle and work-oriented trucks. Electrification also offers unique benefits to the truck segment including improvements in low-end torque, acceleration, and fuel costs. While questions persist regarding market size, price sensitivity, and competitive positioning, you can be sure that within the most American of vehicle segments, this will undoubtedly be a market to watch.
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