Once plugged in “green” hybrid cars suddenly look like dinosaurs in Europe

LONDON / BRUSSELS (Reuters) – Remember when plug-in hybrid cars were the preferred technology for the climate-conscious driver? It turns out that they are not good for the environment, according to some experts, and that vehicle manufacturers could phase them out in the face of tougher European standards.

EU policy plans for plug-in hybrid vehicles (PHEVs), which contain an electric battery and a combustion engine, could mean that the “transition” technology has a shorter service life than some manufacturers. leading cars.

Draft green financing regulations would prohibit manufacturers from labeling them as “sustainable investments” beyond 2025, which may deter investors. Meanwhile, planned regulations on emissions of pollutants such as nitrogen oxides could increase the production cost of these cars.

The aim of these reforms is to speed up traffic to fully electric vehicles and meet climate targets. However, they would mark a change in existing EU policies, such as CO2 standards, which have treated hybrids on an equal footing with all-electric cars and helped drive the car industry to invest tens of billions. of euros in technology.

Some vehicle manufacturers had planned to sell hybrids until at least the end of this decade as a bridge for fully battery-powered electric vehicles (BEVs), although their departure from the technology seems to be underway.

An analysis of vehicle production plans in Europe through 2028 compiled by Reuters by AutoForecast Solutions (AFS), which tracks industry production plans, shows only 28 PHEV models compared to 86 BEV models. This is a change for an industry where market PHEV models have outperformed BEV models every year since 2015, often significantly.

Now some carmakers fear the EU may prematurely stop this transition. They warn that upcoming rules could make it difficult to sell PHEVs to European markets in a few years, despite consumer concerns about the range of fully electric cars and the lack of charging infrastructure.

“It’s crazy to do it before 2025, because demand is effectively killing today,” said Adrian Hallmark, CEO of British luxury vehicle company Bentley, a Volkswagen unit, referring to the proposals of not classifying PHEVs as sustainable investments. It plans to sell PHEV by 2030 before it becomes fully electric.

“For most people, a battery-powered electric car is still not practical,” he told Reuters.

A European Commission official declined to comment specifically on green funding rules, but said its policies were “technologically neutral”, adding that PHEVs were “a technology of transition to emissions-free mobility”. . To achieve a global goal of climate neutrality by 2050, almost all road cars must have zero emissions at this time, the Commission added.

The rules, which are still being drafted, come in the context of a change in the position of some leading environmental groups who are pushing to dispel PHEV’s green credentials and end their subsidies.

A study by the International Council on Clean Transport last September said that fuel consumption and CO2 emissions from PHEVs are up to four times the level for which they are approved because people do not charge them enough. frequency.

Julia Poliscanova, chief director of vehicles and electronic mobility at the European NGO Transport & Environment, said her own research showed that when driving in combustion mode, CO2 emissions from hybrids were higher than from vehicles. conventional, are heavier than combustion. only cars used more fuel.

“From an environmental and climate perspective, current plug-in hybrid technology is worse than the one it replaces.”

This is a change in the group’s position since 2018, when it saw PHEVs as a transition technology.

“GREAT CONSUMER PRODUCT”

Manufacturers say hybrids, which are used properly with electricity as the main energy source and combustion as a backup, emit much less than conventional cars. They add that PHEVs are a popular transition option for consumers who want greener travel.

PHEV sales in the EU tripled to 507,000 vehicles in 2020, almost as many as the nearly 539,000 all-electric vehicles sold.

Measuring vehicle manufacturers ’investments in PHEV is difficult because they only advertise broad electrification plans. Consulting firm AlixPartners estimates that car manufacturers and suppliers will invest $ 200 billion in electrification from 2020 to 2024.

FEV, a German engineering specialist, estimates that installing a battery, engine and electronics in a combustion engine car to obtain a PHEV costs up to 4,000 euros ($ 4,700) per vehicle.

European carmakers are divided on whether to fight for PHEVs or spend their financial and political capital by accelerating the jump to fully electric vehicles and driving better charging infrastructure across the continent.

Stephan Neugebauer, president of the European Green Vehicles Initiative Association, told Reuters that technological improvements would mean future PHEVs would be less dependent on their combustion engines, making them suitable for the green transition over the next decade and even everything beyond.

“Will customers buy electric vehicles with batteries in ten years or nine years? We don’t believe it, ”said Neugebauer, who is also BMW’s director of global research cooperation.

“Why? Because sometimes you have to make a long-distance trip, you go on vacation, you have to take out a trailer. And for that, you need a public recharging infrastructure. And that will continue to be a critical issue.”

BMW and Renault SA, which have not set a date to be fully electric, are among the companies that are firmly in the field of hybrids.

BMW chief Oliver Zipse said last month that they were “a great consumer product” and that there would be a market even without subsidies. Renault CEO Luca de Meo said in February that PHEVs “will be part of the landscape easily over the next 10 years” and will be more cost-effective than conventional cars.

Volvo Cars CEO Håkan Samuelsson told Reuters: “It’s a bit disappointing that they (Brussels politicians) don’t see the value of a plug-in hybrid.” But he said his company, which wants to be fully electric by 2030, was more focused on pushing the EU for member states to invest heavily in charging infrastructure.

“If in the car industry we invest in electric cars and we do it very quickly, I think it increases our credibility to ask for investments in the charging network,” he said.

“THE LIMIT OF WHAT CAN BE ACHIEVED”

The European Commission will have to propose at least a dozen pieces of legislation to reduce emissions in all sectors this year.

Current drafts of the EU’s sustainable finance taxonomy, a list of economic activities that from next year will determine what can be marketed as a sustainable investment, exclude PHEV manufacturing from 2026.

This could deter the army of investors looking for assets with green credentials. It could also restrict public funding if governments moved to align their spending with the taxonomy.

Although many countries still subsidize PHEVs, the Netherlands reduced their tax credits in 2016. In 2020, eight times more BEVs were sold in the country than PHEVs, compared to twice as many PHEVs as BEVs four years earlier. , showing how government policy on vehicle technology can have a significant effect on consumer behavior.

A consortium of researchers, commissioned by the EU and known as CLOVE, recommended this month that the so-called Euro 7 standards restrict emission limits for polluting vehicles, including nitrogen oxides and carbon monoxide, from 2025. Its recommendations are not binding, but aim to inform the European Commission’s proposals, which will be presented at the end of this year.

Transport and the Environment, which is part of the Commission’s expert group working on the rules, said the proposals would force carmakers to equip PHEVs with expensive technology to curb emissions from their combustion engines. .

Hildegard Mueller, president of the German automotive industry association VDA, said the proposals were “at the limit of what is technologically achievable.”

“We still have to be very careful that the Euro 7 does not make the internal combustion engine impossible,” he said.

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