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PA IN THE MEDIA

Why the SUV boom is good for electric cars

This article was first published in German in Die Presse

PA Consulting’s CO2 analysis of car makers is featured in Die Presse. Car companies will face billions in fines if they do not meet the CO2 emissions targets. The manufacturers have strict emissions regulations; on average, the fleet sold can only emit 95 grams of CO2 per km. To avoid them, manufacturers must sell more electric cars, which should lower their price.

PA Consulting's study shows that this could be expensive for manufacturers. PA experts converted the CO2 emissions forecast for 2021 from 13 leading car companies in Europe into fines – resulting in a total amount of 14.6 billion euros. According to PA Consulting, the VW Group alone can expect to pay 4.5 billion euros in fines. FCA faces 2.5 billion euros and Ford, a US carmaker, 1.5 billion euros. Even Toyota, the market leader in hybrid vehicles, just missed the mark.

The key reason for the increased consumption and higher CO2 emissions is primarily the boom of SUVs with larger engines and more horsepower. Electric cars could now benefit from this development. Because car manufacturers receive credits for every electric car sold, likewise for any car that emits less than 50 grams of CO2 per km. Each of these vehicles currently compensates two cars with a diesel or gasoline engine in the exhaust gas calculation. In 2021, the conversion factor will drop to 1.67, in 2022, every electric and hybrid vehicle will compensate for 1.33 cars with a combustion engine. These credits will be over in 2023. To avoid high fines, the best and fastest solution for car makers is simple: they need to sell more cars with electric and hybrid drives.

It is also interesting to look at the country results in PA Consulting’s study. All countries saw worsening emissions from car traffic in 2018 – except Norway and the Netherlands. Norway has reduced emissions from 83.7 grams of CO2 per km in 2017 to 72.4g CO2 per km in 2018, the Netherlands are the second best with 106 grams per km.

Driving into a low emissions future: How can car makers look beyond 2021

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