The automotive industry – passenger cars

Summary

The climate target for domestic transport is to reduce emissions by 70 per cent by 2030 (compared with 2010), and by 2045 the vehicle fleet should be totally fossil free. For passenger car manufacturers, electrification is the main strategy for achieving the climate targets,
but biofuels are also required.

Electrification of the transport sector is a global trend driven by the need to adapt society to fossil-free energy sources. The EU and Sweden have a high level of ambition and are at the forefront in this area. By stimulating electrification, the aim is not only to reduce their own emissions, but it is hoped that this will also lead to the development of technologies, strategies and policy instruments that could then be used by the rest of the world.

It can thereby have a leverage effect that may in the long-term have a greater impact on global emissions than their own emission reductions alone.

A strong contributory reason for the acceleration of electrification in the coming years is the EU requirement that average emissions from new vehicles need to be significantly reduced over the next decade. All manufacturers have to ensure that the average CO2 emissions for the vehicles they sell in the EU are below certain limits, failing which a very high fine is imposed. A unanimous assessment among manufacturers is that passenger car requirements for 2025 and 2030 are unlikely to be met without a significant percentage of rechargeable vehicles.

Based on the manufacturers’ plans and strategies and EU vehicle requirements, a range of scenarios has been formulated for the European sales of rechargeable passenger cars between 2020 and 2030. In the low scenario, it is assumed that the EU’s vehicle requirements are barely met. In the high scenario, it is assumed that the manufacturers’ current production plans up to 2025 are achieved, and that market developments are then
slightly faster in 2025-2030, as the purchase price of the rechargeable cars is then expected to have fallen to the level of fossil-fuelled cars.

Based on this, scenarios are then constructed for Swedish sales of rechargeable cars. According to the high scenario, the fleet average emission decreases to 78 g/km in 2030, i.e. 59 per cent lower than in 2010. The industry will work to reach the higher scenario, i.e. that 80 per cent of new car sales will be rechargeable cars in 2030.

Electrification is the main strategy of passenger car manufacturers to reduce climate impact, but in order to achieve the 70 per cent emissions reduction target for 2030, biofuels are also an important tool. In the case of liquid biofuels, supply is the primary limiting factor. Biogas has the advantage that it can be produced from food waste and similar residues on a relatively large scale.

In order to achieve the ambition of lower emission cars, it is not enough for passenger car manufacturers to provide such models: consumers and businesses must also want to buy them. The vehicles sold are also affected by several factors over which car manufacturers have no control, such as vehicle taxes and subsidies, regulations governing company cars for private use, fuel taxes and the development of a charging infrastructure.

In particular, it is estimated that the deployment of fast-charging infrastructure along national main roads is a prerequisite for achieving a broad uptake of rechargeable vehicles, making it easy also to carry out longer journeys and transportation. Otherwise, the rechargeable vehicles will risk becoming a niche market for vehicles intended only for short distances, such as ‘second car’ and ‘urban transport’.

The automotive industry will work towards:

• Achieving the higher scenario, i.e. that 80 per cent
of new car sales will be rechargeable cars in 2030.

• Ensuring that the supply of vehicles is in line with
demand.

• Ensuring that skills exist in the industry to cope
with the transition.

• Becoming fossil free in both production systems
and products, i.e. the whole life-cycle perspective.

• The introduction in Sweden of energy labelling on
new vehicles.

• Cooperation with all actors in the ecosystem in the
transition to electrification.

• Being a partner for the Government and authorities
to achieve the targets.

The automotive industry cannot manage the transition
alone; the Government needs to assist with:

Infrastructure
• Develop on-road electricity, capacity and output in line with the roll-out of the vehicles.

• Support coordination of public and private charging.

• Influence the EU and selected bilateral agreements so that the charging infrastructure is developed by the Member States and work towards standardisation of technology.

• Continued support in the form of, for example, the Climate Leap programme and the Charge at Home grant.

• Raise the ambitions of the National Board of Housing, Building and Planning’s requirements concerning the proportion of charge points.

Policy instruments for purchases
• Adjust the bonus-malus system, for example by allocating the malus over 7 years instead of 3 years, taking into account all sustainable biofuels and taking into account transport benefits. The payment of the bonus should be adjusted so that the cars are not exported after 6 months.

• Extend the reduced taxable benefits for another 3 years and agreements entered into should apply for the duration of the agreement (normal lease period 36 months).

Policy instruments for use of the vehicle
• The Government should influence the EU so that car manufacturers can take biofuels into account in the emission requirements for 2025 and 2030 for passenger cars and vans.

• Treat plug-in hybrids as electric cars, for example by allowing plug-in hybrids in environmental zone class 3.

• Introduce additional incentives for vehicle owners to refuel with biofuels.

• Introduce differentiated congestion and bridge charges as well as parking costs.

• Introduce a smart kilometre tax in the long term to replace existing taxes and charges on vehicles.

Sweden’s climate target for the transport sector is that total emissions should be reduced by 70 per cent from 2010 to 2030. With the measures we have suggested above, our starting point is that we can still reach the 70 per cent target by 2030. The lower CO2 emissions per kilometre from passenger cars, under the scenario that 80 per cent of new car sales consist of rechargeable cars, are expected to make a significant contribution to the target — around 60 per cent reduced emissions in 2030.

In order to fully achieve the 70 per cent target, increased use of biofuels is also required. The reduction obligation is an important policy instrument, but we need more instruments to increase the share of biofuels and achieve a higher renewal rate.