Volkswagen and others not so excited about electric cars, resist EV-friendly regs in Europe

May 2, 2016

Back in October, about three weeks after the Dieselgate scandal began making headlines, Volkswagen announced a major change in strategy--one that involved focusing far more attention on electric cars. 

But oh, what a difference a few months can make. A study published earlier this week shows that Volkswagen and a handful of other automakers, along with oil giant Shell, aren't onboard with new EU fuel economy goals that encourage the adoption of electric vehicles.

Those goals include a 60 percent reduction in transportation-related emissions (compared to 1990 levels) by the year 2050. They also limit CO2 emissions on new cars to 95 grams per kilometer by the year 2021.

The Auto Fuels Coalition argument

The Auto Fuels Coalition study was conducted by Roland Berger and funded by the EU Auto Fuel Coalition, which includes BMW, Daimler, Honda, Shell, Toyota, and Volkswagen. The study argues against any rush toward electrification, insisting that the transition to electric vehicles is still decades away.

The rationale for that argument is that EV sales still make up a tiny fraction of the world's auto market. Demand won't increase until current technological limitations are overcome, a pervasive EV infrastructure is established, and the public becomes interested in electric cars.

In the meantime, the study says that auto industry ought to rely on biofuels and on cap-and-trade systems that encourage automakers to reduce emissions on new vehicles.

Speaking in Brussels, Volkswagen's new R&D head honcho, Ulrich Eichhorn, essentially picked up where his company left off prior to the Dieselgate scandal. He insisted that diesel vehicles, along with those that run on natural gas, must be part of a near-term emissions-reduction plan. He described plug-in hybrids and other low-emissions vehicles as "building blocks", suggesting that Volkswagen sees them as useful for research purposes, but not as mainstream products.

Eichhorn and others believe that moving too quickly to promote electric vehicles would damage the EU's economic leadership position. 

The counter-argument

It takes quite a bit of bravado (and other b-words) for Volkswagen to begin touting the cleanliness of diesels again when the company plainly admitted that it illegally rigged 11 million diesel vehicles because it couldn't figure out a way for them to meet emissions guidelines.

Beyond that, though, environmental advocates say that if the recommendations of the Auto Fuels Coalition study were adopted, it would put emissions-reduction efforts on hold for the next ten years. They insist that the world is, indeed, ready for electric vehicles, and they point to governmental and consumer behavior to prove their point. 

For example, people like Dr. Christoph Wolff of the European Climate Foundation frequently cite strong demand for electric cars in China, Norway, and elsewhere. Some of that demand is epitomized by the buzz around the Tesla Model 3, which has now received nearly 400,00 pre-orders. EV-friendly types also point to oil-rich Saudi Arabia and its pledge to wean itself off petroleum dependence by the year 2030 as a sign that the end is near for Big Oil.

But like the Auto Fuels Coalition study, those arguments aren't without flaws. Yes, electric cars are selling well in China, but many believe that the numbers are artificially inflated because of huge government subsidies. And there's a great deal of debate about the truth behind Tesla's reservation figures for the Model 3.  

Our take

It's readily apparent to people on both sides of this discussion that oil is on its way out, and it's likely to be replaced by electricity. (Whether that electricity comes from batteries or fuel cells remains to be seen.)

The difference between the two positions is clearly in how long the transition to electrics will take. EV fans believe the pace should be accelerated to reduce greenhouse gases and to minimize the effects of global warming. Petrol-heads and automakers like those behind the Auto Fuels Coalition study suggest that the transition should be slower so that the auto industry doesn't over-extend itself building vehicles no one wants to buy (and presumably so that they can make a few extra bucks off of existing technology). 

If things were to proceed at their current rate, we'd be likely to agree with automakers. Studies suggest that if current trends bear out, most of the 1 billion new cars on the road in 2030 will still run on gas.

However, there's no reason to think that progress can't be sped up. China has done it, even the U.S. has done it with subsidies for green vehicles. Holland is considering a ban on gas and diesel cars that would kick in by the year 2025. And as recently as last week, Volkswagen's home country of Germany proposed subsidizing electric vehicles to the tune of 1 billion euros ($1.2 billion). If the buying public plays along, we could see a world full of electric cars faster than some people imagined. 

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