This Week’s Top 10: Did EV sales forecast become overstated? United Nations issues air travel emissions rules

by Jon LeSage, editor and publisher, Green Auto Market

Here’s my take on the 10 most significant and interesting occurrences during the past week…….

  1. Global EV outlookDigging into EV sales forecast: Manheim’s annual Used Car Market Report made a surprising forecast last week: By 2025, electric vehicles (EVs) are expected to make up 25% of global auto sales, and 30 million new EV units will be produced that year. How accurate could this be, with global EV sales reaching about 520,000 units last year, global new vehicle sales hitting around 89 million in 2015, and 2025 coming up in nine years? Manheim thinks that incentives will play a big part, including government programs such as federal tax incentives and state rebates (with California, Washington, and Colorado currently offering the most robust incentives). Population migration to cities will be another driver with cities becoming denser, which is likely to drive adoption of cleaner vehicles and carsharing, both of which will benefit EV sales. Curious about this forecast, I dug into the footnotes. For the 25% of global sales forecast, Manheim cited the “Cars 2025” study by Goldman Sachs. One important distinction is that Goldman Sachs included hybrid vehicles in that sales forecast numbers: “Regulations on fuel economy and CO2 emissions are forcing carmakers to make engines more efficient. By 2025, 25% of cars sold will have electric engines, up from 5% today. But most of those will be hybrids, and 95% of cars will still rely on fossil fuels for at least part of their power.” The most telling statement from the Manheim report is how many EVs are being leased now versus purchased – 75% of EVs are being leased versus 28% of traditional cars sold in the U.S. This glut of off-lease EVs will create a real challenge for remarketers in managing the inventory and strengthening their resale values.
  2. Air travel emissions rules: The United Nations has drafted the first-ever carbon emissions rules for airplanes which still need to be finalized. Proposed rules from the International Civil Aviation Organization (ICAO) would apply to all new airplanes delivered after 2028. Planes delivered after that date would need to have a 4% reduction in emissions of carbon dioxide and other substances compared to 2015 airplanes that were delivered to buyers. The new rules would also set limits for airplanes already in production that would be delivered after 2023, with emissions reductions of 0 to 11%, depending on a plane’s size. Reducing emissions has been a priority for a few stakeholders in aviation. Several major airlines have already adopted test programs using jet biofuels.
  3. Volt system going to other OEMs?: The second-generation plug-in hybrid system built into the 2016 Chevrolet Volt is being shared in other General Motors’ products (2016 Chevrolet Malibu Hybrid, 2017 Cadillac CT6 Plug-in Hybrid, and the Opel Ampera-E in Europe). GM is likely ready to sell the alternative powertrain system to other carmakers as well. Dan Nicholson, GM’s global powertrain chief, recently made comments about partnering with other OEMs in this era of higher fuel-economy rules and multiple advanced technologies. To meet stringent national standards in fuel economy and emissions, some smaller Asian automakers (Mazda and Subaru among them) are expected to go with the next-gen Toyota plug-in hybrid system. In this competitive market with global alliances, GM is preparing to work with other OEMs.
  4. Million miles traveled in fuel cell cars: Hyundai Tucson Fuel Cell drivers have accumulated more than 1,000,000 miles on the roads and highways of Southern California since introduction of the hydrogen-powered car in June 2014. The first mass-market produced fuel cell vehicles has been sold to nearly 100 owners so far. Hyundai reported that approximately 385 tons of CO2 emissions that would have been emitted from vehicles of similar size were displaced during those million miles. Toyota and Honda fuel cell vehicles have been grabbing a lot of media attention recently, but Tucson Fuel Cell crossover models have been on the roads for a year and a half.
  5. SEMA challenges EPA rules: The Specialty Equipment Market Association, which represents aftermarket parts companies and puts on the popular SEMA Show, is taking on U.S. Environmental Protection Agency rules on converted aftermarket vehicles. SEMA is challenging language that would be added to current auto emissions rules that ban tampering with or disabling emissions control systems on passenger cars and engines, including vehicles intended solely for racing. The EPA says the new language merely clarifies a prohibition that has long been agency policy. It will be part of a heavy-duty vehicle emissions rule that EPA will issue in July, which includes a separate exemption for “nonroad” vehicles, such as all-terrain vehicles, snowmobiles, and dirt bikes. SEMA has warned that the rule would expose racers and some aftermarket companies that serve them to penalties and reverse decades of agency policy on the issue.
  6. Clean Power Plan put on hold: The Obama administration’s Clean Power Plan has been put in limbo by the Supreme Court. The climate change policy affecting energy utilities has been placed on temporary halt while an appeals court considers a legal challenge to the rule aimed at regulating coal-burning power plant emissions. Since the U.S. Environmental Protection Agency published the rule in late October, more than 20 energy companies, other businesses and industry organizations, along with 27 states, have filed lawsuits to overturn it.
  7. RNG sales climb: Clean Energy Fuels Corp. announced that sales of Redeem, its renewable natural gas (RNG) vehicle fuel, more than doubled in 2015 to 50 million gasoline gallon equivalents (GGEs) from 20 million GGEs in 2014. Redeem sales have expanded from Clean Energy public-access stations in California, to become the contracted fuel choice of customers like UPS, Republic Services, the City of Santa Monica’s Big Blue Bus, the University of California San Diego and others. Sales also have recently expanded into Oregon and Texas.
  8. Operating AFV maintenance and fueling sites: On March 3, ACT Expo will host another webinar with this one featuring guidelines on setting up maintenance and fueling facilities for alternative fuel vehicles. William Davis, director of the National Alternative Fuels Training Consortium (NAFTC), will help provide information about the necessary fueling and maintenance facility modifications for alternative fuel vehicles, including natural gas, hydrogen, propane, biofuels, and electric drive vehicles. Davis has been with the NAFTC for 16 years, and oversees daily operations of the NAFTC and its member educational institutions.
  9. Kia takes on Prius: Kia is increasing competition with the Toyota Prius lineup with additions to its green cars. At the Chicago Auto Show, Kia unveiled the 2017 Optima Hybrid and Optima PHEV plug-in hybrid that can travel 27 miles on electricity alone. Kia also introduced the Niro, the company’s first dedicated hybrid nameplate. It’s part of a $10 billion plan through 2020 Kia introduced last fall. It will increase its fleetwide fuel efficiency by 25%, helping the company to satisfy stricter environmental regulations around the world.
  10. Daimler diesel cars: Daimler seems to be finding opportunity opening up in the diesel car space as Volkswagen struggles through its disaster. Daimler will be spending 6 billion euros ($2.94 billion) by 2019 on developing next-generation diesel engines to help the automaker to meet new pollution-measuring standards. Daimler will introduce selective catalytic reduction (SCR) on its smaller Mercedes-Benz front-wheel-drive compact cars by 2019; that will replace current nitrous oxide trap exhaust systems, the company said.

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