Regulations Regarding Emissions and Fuel Consumption

until 2030 (Mohr, Kaas, Gao, Wee, & Möller, 2016). However, this forecast should be viewed with great caution. The outright hype regarding autonomous driving has slowed down in recent months. Reasons for this are, for instance, problems in technology development, lack of talent in companies, intellectual property and security (Wood, 2018).

According to the report of McKinsey & Company (2016), EVs will become viable and competitive. Nonetheless, the speed of their adaption will certainly be dependent on local factors (Mohr, Kaas, Gao, Wee, & Möller, 2016). A few years ago, EVs were considered utopian due to factors such as high battery costs, sparse charging possibilities, and mistrusting consumer behavior. However, these factors changed, and stricter emission regulations are creating a strong momentum for a penetration of the market (Mohr, Kaas, Gao, Wee, & Möller, 2016). The share of electrified vehicles could range from 10-50% in 2030. Many incentives from governments and cities are already trying to push sales with beneficial perks with the aim of achieving cleaner and less noisy environments. Nevertheless, the forecasted numbers are very vague and not only depend on consumers, but also on the products offered by the OEMs as well as particular regulations of the different markets. An adaptation on country sides and rural areas will certainly take longer time compared to urban areas. Especially, due to the fact that higher ranges are necessary. In these areas, an intermediary phase with hybrid engines (which still include conventional combustion engines) could be used, before complete electrification can take place (Mohr, Kaas, Gao, Wee, & Möller, 2016).

In order not to go beyond the scope of this work, the focus in the following chapters is on e-mobility rather than other trends such as connectivity, shared mobility and autonomous driving. This is also due to the research question of this paper.

7.2 Government Role & Regulations – Incentives and Pressure for the

the situation. In addition, the focus will be on light vehicles, i.e. passenger cars and vans.

Figure 9 below shows the trends of the CO2 emissions values in key countries adjusted to the former New European Driving Cycle (NEDC) standards. Until 2017, the NEDC was responsible for the type testing of emissions and fuel consumption by the European Union and indicates CO2 emissions in grams per kilometer. Furthermore, NEDC distinguishes itself from other tests that are common in other regions such as Japan or the United States (e.g. JC08, or the CAFE standards respectively) (Kühlwein, German, & Bandivadekar, 2014).

Each test uses different methods and environments, so the results may vary.

However, the UN ECE (United Nations Economic Commission for Europe) has decided that the NEDC will be replaced by the Worldwide Harmonized Light Vehicles Test Procedure (WLTP) from September 2017, which is supposed to provide more accurate values for emissions and fuel consumption (Kühlwein, German, & Bandivadekar, 2014).

Figure 9: Passenger Car CO2 Emissions and Fuel Consumption, normalized to NEDC (April 2018) Source: (Kühlwein, German, & Bandivadekar, 2014)

This change is also intended to give customers a more neutral overview and more realistic figures when buying a new vehicle. Since complete WLTP-based data is not yet available, Figure 9 shows the value converted to the NEDC standards, in particular for a global comparison. The most noticeable from the figure is that the global trend is clearly positive. Total emissions are clearly falling. Next to the country name, we obtain the enacted goal of each nation and year when it is due. In the following text, we will mainly look at three countries and regions in detail in order not to go beyond the scope of this paper.

Already in 2013, Japan reached its target of 122 g/km of CO2 emissions set for 2020.

This successful evolution is mainly a result of the Japanese government and Toyota, currently the most important car producer in Japan. In 2009, the CO2 emissions declined sharply as the Japanese government introduced tax incentives and subsidy programs for the purchase of environmentally friendly vehicles, mainly hybrid vehicles (Japan Automobile Manufacturers Association, 2018). These incentives, combined with Toyota's strong hybrid offering, enabled the country to take early action and reach its goal quickly. This is also the main reason for the 7.52% growth rate in automobile sales in Table 5, which not only helped Japan to cope with the consequences of the financial crisis, but also helped to reduce emissions.

China presents a different situation. The country also reached its target at the beginning of the year 2018. Carbon dioxide emissions per unit of GDP were 46% lower than in 2005, which was one of the highest in the world along with the US and Brazil.

This was made possible by a CO2 emissions trading system in the power generation industry and subsidies for EVs, which are examined in more detail (UN Climate Change News, 2018). Nonetheless, since 2017 the Chinese government analyzed the option to ban sales of new fossil fuel cars. The plan of the largest automotive market in the world, was to force its own manufactures to develop and sell more electric cars. A ban of car sales built with combustion engines would be a very drastic step and would have enormous impact on the global automotive industry (Etherington, 2017). Although this very radical regulation has not yet been enforced, most likely due to the successful lobbying of the traditional car nations, it illustrates China's great ambitions and plans. China wants to lead the development of BEVs and sees this as a strategic opportunity to permanently gain a foothold in the automotive industry. Moreover, the country has surpassed the United States as the world’s largest oil importer in 2017. Therefore, a transportation based on electricity would improve the country’s energy security (Busch, 2018). Nevertheless, regulations for fossil fuel cars are still less strict than in Europe. It remains important for China to first strengthen its industry before strict regulations are enacted. The aforementioned plans serve more as incentives for the industry to focus on e-mobility.

The most remarkable aspect of EU here is that the target of 67 g/km is not only the lowest, but also what the EU has planned until 2030. From this, one can argue that the Japanese government is far more future-oriented than other governments.

Moreover, the Council of the European Union agreed earlier this year on stricter CO2

standards. These related new regulations are designed to ensure that, by 2030, new passenger cars will emit on average 37.5% less and new vans 31% less CO2 on average in comparison to 2021 (Pausch-Homblé, 2019). Nevertheless, the overall reduction of CO2 emissions from cars compared with 2021 is exactly the middle between the targets originally set. While the EU Commission, on the one hand, did not initially target more than 30% and later in the negations a 35% reduction, the EU Parliament,

this regulation will definitely have a lasting effect on Europe's automotive industry.

According to Greg Archer, Transport and Environment (T&E) clean-vehicles director, this new law means that around 2030, a third of new vehicles will be either hydrogen or electric-powered (Stearns, 2018). T&E is a European non-governmental organization working on future sustainable transportation.

Due to the strong federal orientation of the United States, a unified statement on the United States in connection with regulations regarding emissions and fuel consumption is rather difficult to summarize and would go beyond the scope of this thesis. Therefore, the regulations in the United States are not dealt with in more detail here.

Stricter regulations such as the new WLTP standard and the emissions targets set by governments around the world, present conventional automobile manufacturers with many new challenges. The existence of general gasoline engines for OEMs is steadily declining and engine electrification is becoming inevitable.

But what are the implications of these regulations? In this context, we can look into the German market as an example.

As of September 1, 2017, approvals for new passenger car types in Europe can only be granted if the results of valid CO2 measurements according to the new WLTP are available (VDA (Verband der Automobilindustrie), 2018). Nevertheless, this had only a very minor impact if looking at the figures. In 2018, 3.435.778 new passenger cars were registered in Germany. This was a slight decline of -0,2% compared with the previous year. As in 2017, the number of new registrations of diesel-powered passenger cars continued to fall (-16,9%) and the proportion fell by 6,5% to 32,3%.

The number of new registrations of gasoline-powered passenger cars rose to over 2,14 million. This corresponds to a share of 62,4%. BEVs/PHEVs achieved a growth rate of +43,9% and hybrid vehicles +53,8 percent. Nevertheless, with a share of 1,0%

(BEV & PHEV) and 3,8% (HEV) of the total volume of new registrations, respectively, both opportunities for driving are still not very present on the roads (Kraftfahrt-Bundesamt, 2019). However, policy makers and new regulations are capable of complicating the situation for the OEMs – and most probably manufacturers have to get used to this situation.