Have diesels reached their sell-by-date?
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In the 1960s, before catalytic converters became standard fitment, the French government took a decision to promote diesel powered vehicles - which at the time, were considered to be cleaner than petrol alternatives. However the world and technology have changed, and today France is paying the price with high levels of NOx and harmful particulates emanating from diesel-exhaust emissions.
Despite the French experience Power Systems Research (PSR) forecasts that global engine production for all fuel types will grow steadily at a compound annual growth rate (CAGR) of 1.4% up to 2019, while in contrast, the company expects the diesel market to grow at 4.2% over the same period.
Interestingly PSR believe key drivers to this growth will be the implementation of emissions standards in line with local government legislation as well as a reduction in emissionised engine costs. This is expected to drive sales in many untapped markets such as Japan and the US.
Unfortunately "Dieselgate" may have put paid to these carefully researched forecasts. In the wake of Volkswagen AG’s emissions scandal France may be the first nation to take action after announcing plans to end tax breaks for diesel: To be fair, this decision was already announced in 2014, but undoubtedly the VW fiasco has lent credence to the decision.
Following two months of wave after wave of outrageous revelations surrounding cheat software, industry consultant LMC Automotive speculate that the scandal may result in the European diesel car market share tumbling to as little as 35 percent in 2022; from 53 percent in 2014.
Legislation and incentives will affect sales of diesel passenger cars.
The French government’s decision is significant when one considers that about 68 percent of cars and light commercial vehicles on French roads as of Jan. 1 were running on diesel, according to the CCFA, the country’s carmakers’ association.
According to French Environment Minister, Segolene Royal, the decision was made in light of the questionable diesel exhaust emissions whilst these vehicles enjoy favourable tax breaks and incentives.
This decision could well be the beginning of the end of passenger diesel vehicles in Europe, where four of the five biggest car markets impose lower taxes on diesel powered vehicles. This favorable treatment has helped diesel become the dominant technology for cars in Western Europe. But the VW revelations last month strengthened the health and pollution concerns that had already begun to erode diesel’s popularity.
While OEM’s have mostly remained silent on the future of diesel powered cars, Renault-Nissan CEO Carlos Ghosn, believes that the demand for diesel-powered cars has peaked in Europe.
Ghosn recently told journalists: "It is very difficult for us to give numbers on how much it will decline and in which countries and which categories, but I would say that today is about the maximum we can expect for diesels in Europe."
Contradicting PSR’s forecast, Ghosn believes tougher emissions standards will make diesels more expensive for customers in price-sensitive markets. In addition, anti-diesel sentiment is rising in major European cities such as London, Rotterdam and Paris because of smog and health risks from NOx emissions.
Ghosn believes the diesel's future will depend on the introduction of real-world emissions testing for new cars in the EU. These stringent requirements may escalate after-treatment costs with Selective Catalytic Reduction (SRC) and Diesel Exhaust Fluid (DEF) becoming the norm; even on small cost-sensitive vehicles.
The EU plans to introduce the EU6c regulation in 2017 demanding Real Driving Emissions (RDE) tests as an additional type approval requirement. This will make it more difficult for new cars to pass tests for pollutants such as NOx. Without expensive emissions control technology; diesel cars emit far more NOx than gasoline models.
Although the EU's technical committee of motor vehicles agreed on the 28th October to give automakers more flexibility on passing the RDE tests, industry association ACEA warned that it will be extremely difficult for automakers to conform to RDE standards in the proposed timeframe, leading to a "substantial" number of diesel models being phased out earlier than planned.
As for the future of diesel in other parts of the world, Ghosn believes that negative coverage of the VW diesel debacle will ultimately doom the technology. "This scandal will not make diesel more popular in the United States and Japan," Ghosn said. Diesels account for a 5 percent share of passenger vehicle sales in the U.S. and even less in Japan, and are unlikely to record any short to medium term gains.
Have European OEM’s and governments delayed the inevitable?
While Dieselgate was quite simply Volkswagen cheating the system to get its diesel cars to pass emissions tests in the USA, it didn’t do this with corporate malevolent intent. It did this because it couldn’t offer diesel cars to USA consumers that could comply with regulations and still meet the performance and cost expectations of the market.
In an interview with journalists Tesla CEO, Elon Musk, shared a broader auto industry perspective, pointing out that it was time to move beyond the antiquated and inefficient methods of propelling passenger cars with fossil fuels. Although the scandal has singled out VW diesels it’s common knowledge that several manufacturers are manipulating test CO emissions and fuel consumption claims.
Musk ventured that this scandal should lead automakers and legislators to speed up the move toward truly clean and high-performing electric vehicles.
However, it’s important to understand that switching to electric vehicles poses a risk to the majority of large automakers where the customer base has become familiar with traditional forms of transport. Developing and selling electric cars and fossil-fuel burning cars under the same branding is like trying to mix oil and water.
Thus, it would probably make sense for these large automakers to follow the approach of some of the German utilities, which have adopted the approach of having two arms operating independently. Maybe it’s time to cut the ties with the past and invest whole-heartedly in the future of electrification.
It’s important to take note that the problem is not that diesel engine exhaust emissions cannot be scrubbed clean, but rather the cost of doing this may be prohibitive in the passenger car market: Unlike heavy commercial vehicles, the cost of after-treatment is relatively high when compared to the market related cost of the vehicle.
Furthermore, with EV and hybrid technology maturing and costs coming down the increase in costs of green diesels will probably hasten the demise, post 2022.
In North America the slow increase in the sales of hybrids, plug-in hybrids, and fully electric cars, which currently account for about three percent of car sales, is likely to gain momentum over the next 10 years. Charging will get easier as infrastructure spreads, whilst drivers will get used to plugging in instead of pumping.
Once the anchor of European car sales, diesels will ultimately fade away, remembered as a stopgap solution en route to a cleaner, more electric future.
Sources:
France Moves to End Diesel's Tax Break Amid Emissions Scandal – Bloomberg business (Mathieu Rosemain)
Elon Musk’s Response To Dieselgate – Clean Technica (James Ayre)
Ghosn says diesel sales have peaked in Europe – Automotive News Europe (Douglas A. Bolduc)
Days Numbered For Dirtiest Diesels In Europe – Green Car Reports (Stephen Edelstein)
