Professor Lutz Eckstein: “CO2 – the world after 2020”
Prof. Lutz Eckstein, from the Institute for Automotive Engineering (ika) at RWTH Aachen, gave a talk to around 120 Audi employees from the Ingolstadt and Neckarsulm locations at the end of October 2015. As a member of the National Platform for Electric Mobility, Eckstein is an advisor to the German government on e-mobility and presented the key findings of an extensive study on CO2 regulation in Europe after 2020, commissioned by the Federal Ministry for Economic Affairs, at the Audi Forum Ingolstadt.
Professor Eckstein, by the end of 2020 the European new-car fleet needs to achieve the limit of 95g CO₂/km on average. You conducted a study to indicate how the limits might progress beyond 2020. How did you set about such a complex task?
In macroscopic terms we proceeded in three steps:
The basis of any academic study is a systematic analysis of the starting situation. In this instance we needed to analyse the current composition of the European vehicle fleet, in terms of both its composition by segment and the mix of drive concepts and fuels. In preparation for the second step of forecasting what potential for reducing CO2 is technologically possible, we also forecast the efficiency potential, the manufacturing costs and the weight impact of all technologies currently under discussion based on the available literature, synthesised the individual technologies into technology packages and verified the plausibility of the findings through discussions with experts. To reflect variation in the boundary conditions such as the development in fuel costs, we drew up three scenarios – one conservative, one progressive and one trend scenario.
Based on this preliminary work the next step involved first determining the technologically feasible potential for reductions in CO2, independently of the associated costs and the preferences of various customer groups. That result then constitutes a kind of limit value assessment that assumes that each of the technology packages would be rolled out 100% in the vehicle segment in question.
The third step focused on a consideration of the economic dimension; here we modelled the purchasing behaviour of both private and business customers. This made it possible to identify, segment by segment, those technology packages that appear to be the most economically attractive to each customer group. With this as our basis, we were able to forecast the CO2 emissions for the European vehicle fleet for the three scenarios and the two analysis periods 2025 and 2030.
The data basis thus obtained also makes it possible to calculate what the average manufacturing costs would be if a stricter CO2 limit were imposed. Finally, we examined how robust the statements obtained were by conducting a comprehensive sensitivity analysis.
Looking at the most likely of the three future scenarios, what CO2 limits are realistic for 2025 or 2030?
The analysis fundamentally reveals that the economy of the technology packages is the decisive factor from the customer’s viewpoint, and that in turn is strongly influenced by the development in fuel and energy costs. In the trend scenario we assumed the same development in annual price rises for diesel and petrol that occurred over a ten-year period up until 2015. This produced prices of € 3.09 and € 3.01 per litre of petrol and diesel respectively for 2025; the prices per litre that we use in the trend scenario for 2030 are € 3.80 and € 3.77 for petrol and diesel. We assumed electricity costs of € 0.33/kWh in 2025 and then € 0.47/kWh. For an observation period of four years, without additional monetary and/or non-monetary incentives for high-efficiency technologies, in 2025 only very few customers will invest in technology packages that particularly enhance efficiency, such as plug-in hybrid drives. By 2030 the economic attractiveness of even comparatively costly technologies will rise markedly. In the trend scenario, it would take until 2025 for the fleet emissions of 95 g CO2/km that are enshrined in law from the end of 2020 to be achieved through market forces, progressing to approx. 80 g CO2/km by 2030 for the European new-vehicle fleet.
So especially in light of the current decline in fuel prices, which contradicts the assumptions in all the scenarios investigated, a further toughening of the CO2 emissions target for the year 2025 could only be attained through significant subsidies for technologies that particularly boost efficiency – either from the state or from the vehicle manufacturers. Obviously all vehicle manufacturers in Europe will want to avoid having to pay penalties for missed CO2 targets to the European Commission and will consequently make a huge technical and financial effort to achieve the limit of 95 g CO2/km for their new-car fleet by the end of 2020. But because no company can subsidise the market introduction of technologies over the long term, I consider a further tightening of the CO2 limit in 2025 to be ill-advised. Regarding the year 2030, the variation in the results between the scenarios considered in our study shows that it is still too early to discuss those limits.
What technological scope do car manufacturers have for achieving these limits? What drive forms or concepts do you believe will lead the way after 2020?
First of all, allow me to remark that alongside their technological scope, car manufacturers will need to methodically refine their product portfolio and globally optimise their cost structures. Bearing in mind the trend of urbanisation, smaller vehicles will play a more important role in the future.
In terms of the technological scope, systematically reducing driving resistance will be as prominent a factor as optimising the drive train. After 2020 the electrification of the drive train will be a necessity – ranging from the mild hybrid based on a 48-volt system to the all-out electric vehicle. Specifically plug-in hybrids, which can drive significant distances of 50 km or more purely electrically while also covering larger distances without refuelling, will play a significant role in the next decade – at the latest with the introduction of zero-emission zones where only electric travel is permitted. If we set aside disruptive technological and market developments for the time being, purely electric vehicles will become popular primarily in cities by 2030 – often in combination with new mobility solutions and business models.
What do you think: How might we be able to win customers over to the new products? What do manufacturers need to do, and where might the state need to step in?
As an academic I don’t wish to dwell on the political aspect for too long – the mere goal of strengthening Germany’s hand as an industrial base in an increasingly competitive world and of creating new jobs gives the state ample motivation to create an appropriate framework. I believe there are particular merits to offering a combination of fiscal incentives and benefits to the user for plug-in hybrids and electric vehicles, with which countries such as Norway and the Netherlands have achieved significant effects.
By all means in tandem with academic partners, the automotive industry should make much more use of the benefits of electric drive systems as a gateway to a new product experience. Improved drive train efficiency is laudable and necessary, but not in itself enough. With that goal in mind, my institute for example created and built the innovative electric vehicle SpeedE (see www.speede.de). Thanks to the electric drive on the rear axle, we were able to increase the steering angle to up to 90° so that you can turn round in a single operation on any normal road and enjoy unprecedented manoeuvrability in a car park.
The package advantages of electric drives moreover allow the vehicle interior to be redesigned, from reconfiguring the seats to reshaping the driving area or even changing the fundamental operating concept. Here again, it is about creating a new experience that instantly captivates and needs no further explanation. I am convinced that such revolutionary concepts will see the light of day – after all, an entire industry in Silicon Valley has set about reinventing the car.
Lower limits will probably mean increased costs. Who should and can absorb these costs?
In the medium term the goal must be to convince the user to absorb the cost of CO2-reducing technologies by offering an attractive product experience. It will not be possible to achieve that by marketing individual technologies; instead, their integrated use must be promoted in order to create a plausible, coherent product. In the short term a sensible approach is to spread the extra cost fairly among all market players in order to maintain – and indeed ultimately improve – the competitiveness of both the individual companies and of Germany as an industrial base.
Do you think there is a connection between future CO2 regulations and the preservation of industrial jobs in Europe?
I am no economist, but I believe there is a connection there – and it is quite sensitive: on the one hand ambitious limits are a challenge to the innovativeness of our automotive industry and the creativity of our research facilities, and with new, financially very strong competitors emerging that is good and necessary. On the other hand over-ambitious goals can result in insufficient demand for very efficient vehicles because the cost of manufacturing them is high, so there will be an even more marked shift in value added in the automotive sector towards low-wage countries.
There seems to be a straight-line downward progression in the limits. Where do the manufacturers hit their limit? Will they need a complete rethink at some point?
For the reasons I have described, a linear progression when reducing the limits is certainly unwise and the 95 g CO2/km limit enshrined in law for the end of 2020 is already very ambitious given the technological potential, costs and framework conditions shown in the study. All the more so if a manufacturer follows solely the established, tried-and-tested path of evolutionary refinement of its product portfolio. In my view, it is absolutely essential for automotive manufacturers to supplement evolutionary refinement of the product portfolio with a revolutionary development path, not just because of CO2 limits. Most manufacturers have of course recognised this and have launched programmes of varying scopes to address the matter, though as an outsider I only have limited insight into their effectiveness. As measured by the visible results in the form of products, business models and corporate structures, I would like to encourage the automotive industry to adopt an even more revolutionary tack and investigate the necessary processes and methods hand in hand with academic partners.