Fiat, Renault, VW scams will hasten rise of electric car

Emissions rigging scams are the “beginning of the end” of the diesel car, opening the door for electric vehicles

(Photo: Stuart Seeger/Flickr)

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New emissions rigging probes have been announced on both sides of the Atlantic, hitting the already listing diesel car with more potentially devastating scandals.

If the accusations are true, car companies have yet again shown utter disregard for human health. But their crimes could be future generations’ gain. The fallout from VW’s “dieselgate” more than a year ago shows that calamity for diesel can only speed the charge of electric cars.

“There has been a real sea change in attitude by the car industry, in favour of electric vehicles and recognising that this is the beginning of the end of diesel in passenger cars,” said Greg Archer, director of clean vehicles at Transport & Environment, on Friday.

The emissions rigging scandal has been calamitous for VW. This week news broke that six of its executive face criminal charges in the US and the company has agreed to pay a US$4.3bn fine. That brings its total costs to $20bn since the US Environmental Protection Agency (EPA) first charged VW with fitting its cars with a defeat device to beat emissions tests in September 2015.

On Thursday, the EPA announced that Fiat Chrysler faced a similar probe and markets immediately wiped US$2.3bn from the company’s value.

“That Fiat issue in the US will not be limited to the US – those vehicles and that engine are being used in Europe as well,” said Archer.

Similar damage to Renault’s stock occurred on Friday when French investigators announced they would be looking into suspect emissions levels in its cars.

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The effect of the VW scandal has not apparently hit sales for diesel cars. But the political developments have been significant, with the EU pushing through new testing regulations that will make it more expensive to buy a diesel car. Due to a long-running subsidy scheme, the EU has a far higher proportion of diesel cars than anywhere else.

Paris, Madrid, Athens and Mexico City have all announced they will ban diesel cars from 2025. In France, drivers who scrap a diesel car and buy an electric one are given €10,000. London mayor Sadiq Khan has announced a scheme that will charge drivers of older diesel cars £10 for entering the city centre.

This type of political signal emerged from the public outrage at VW’s duplicity and it devalues diesel cars in the eyes of the consumer.

“Everyone sees which way it is going,” said Archer. “Eighteen months ago, the industry was really big on diesel. A load of UK companies were advertising ‘clean diesel’ on telly. I don’t think you’ll see that sort of campaign again. There’s been a shift in priorities of perception that the dieselgate scandal has brought about.”

Source: KPMG

Source: KPMG

In an attempt to rebuild its post-scandal image, VW decided that only electric cars could wash it clean. The company announced in November that it planned to be a world leader in the market, building one million electric vehicles every year by 2025.

Regulatory moves, coupled with increasing competitiveness of hybrid and electric vehicles has created a “perfect storm” that will see diesel cars’ market share fall off a cliff this decade, investment bank UBS predicted in December.

“In the aftermath of the Volkswagen diesel issue, politicians and regulators have become highly sensitive and increasingly populist about diesel emissions,” said the UBS report. “Even if some plans appear overly ambitious, the direction of travel is obvious and likely irreversible.”

The report said the global share of diesel cars would fall from 13.5% to just 4% by 2025. In Europe, the heartland of diesel, the decline would be even steeper – from 50% to 10%.

In a recent global survey of 1,000 auto executives by KMPG, more than half of those surveyed agreed that diesel was “dead”. At the same time, they named battery electric vehicles as the number one trend in the auto industry.

The VW scandal coincided with big falls in the price of battery technology, from $1,000 per kilowatt-hour in 2010 to $350 in 2015. This year, said Archer, the price had dropped further to a point where electric vehicles were competitive with conventional engines.

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Meanwhile batteries are being introduced that can cope with long range trips. Fast charging networks are planned along highways to allow electric vehicle drivers to make really long journeys.

This has big consequences for one of the toughest climate policy areas – reducing oil use in transport. International climate targets mean that the petrol cars should cease to be built by 2035, according to Climate Action Tracker.

Bloomberg New Energy Finance predicts electric vehicles could account for 35% of car sales, cutting oil use by 13 million barrels by 2040.

Screen Shot 2017-01-13 at 13.53.25

European carmakers, so long in thrall to diesel subsidies, are scrambling to adjust.

In November, German vice-chancellor Sigmar Gabriel attacked China’s electric vehicle targets for being too ambitious, revealing his auto industry could not keep up with demand in the Chinese market.

None of this is to say that diesel’s loss is all electricity’s gain. Traditional petrol powerchains still lead the market. Petrol cars and hybrids still have higher consumer ratings than fully electric vehicles and KPMG found that automakers planned to invest heavily in all forms of engine technology in the coming years.

The question also remains whether people who give up their diesel will actually buy a new car. Driverless and car-sharing schemes have already begun to redefine transport in cities.

Finally, as John Vidal has noted in the Observer, the collapse of diesel in the west poses serious problems in Africa, which is already a dumping ground for the rich world’s unwanted polluting clunkers. Millions of diesel cars flowing into the already blighted intersections of Nairobi and Lagos presents an enormous public health risk.

No-one has credibly assessed the number of people who lost their lives or suffered exacerbated illness as a result of VW’s scam. But the prospect of diesel’s carbon emissions being eradicated along with its nitrous oxides is a positive turn from a grievous corporate crime.

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