Message from the Secretary General - September 2016

While market acceptance of alternative-fuel vehicles is rising, we should not forget that they still only represent a very small share of vehicle sales in Europe. It thus remains vital that all relevant players, including policy makers, continue to strive to remove the barriers that hamper the wider market uptake of alternative-fuel vehicles for the time being.

Last year, more than half a million alternative fuel vehicles were registered in the EU. That’s up 20% compared to 2014, but the fact remains that 95.8% of customers in Europe did not choose for an alternative powertrain last year. In fact, when I looked at the latest alternative-fuel vehicle registrations that were published earlier this month, I noticed that overall growth of registrations has come close to stagnation. Registrations only grew by 0.6% compared to the second quarter of 2015.

Upon closer inspection, it looks like demand for electrically-chargeable vehicles (ECVs) is growing at the slowest pace since we started collecting these figures. The number of ECV registrations, which include both battery and plug-in electric vehicles, only grew by 7.1% in the second quarter of 2016. To put things into perspective, ECV registrations increased by 117.9% at the beginning of 2015, stayed strong throughout the year (+53% in Q2 and +62.2% in Q3) and peaked in the fourth quarter, posting impressive growth figures of more than 160%. Although slightly less dramatic, demand for hybrid electric vehicles also seems to be losing pace: last quarter’s 22.6% increase clearly falls behind the positive trend seen in the second half of 2015 and at the beginning of this year – when average gains of more than 30% were posted.

At the same time, we see that Europe’s automobile manufacturers have already invested heavily in alternative powertrains. Most of them now have several types of such vehicles in their portfolio, and will continue to make major investments. The absence of an imminent market breakthrough might tempt some to argue that electric vehicles remain a business without a business case. However, I do still believe that electric vehicles, as well as a range of other alternative powertrains, have the potential to make a crucial contribution to further decarbonising road transport and improving air quality. According to stakeholders like EURELECTRIC, electrically-chargeable vehicles could deliver CO2 emissions reductions of as much as 15% by 2030, with 2015 as a baseline. 

For the time being however, ACEA forecasts a rather marginal market share for all electrically-chargeable vehicles (that is both electric and hybrid ones) of up to 8% by 2025. So unless consumer acceptance of alternative-fuel vehicles can be accelerated, the automobile industry’s investments in the full spectrum of alternative-fuel vehicles (electric, hybrid, fuel cell and natural gas) will not come to full fruition. 

Promoting greater market uptake of alternative powertrains is therefore key to ensuring further reductions in CO2 emissions. But to do so quickly, industry and policy makers need to work closer together to foster consumer demand. That means that governments across Europe will need to increase their support, both in terms of helping to build the necessary charging infrastructure and in influencing consumer choices, for example by harmonising customer incentives across the EU. 

Reliable and uniform charging infrastructure should be made widely available across Europe for the whole spectrum of alternative powertrains by swiftly implementing the Directive on Alternative Fuel Infrastructure. This will require the full support of national governments and the European institutions, as well as the support of utility providers, infrastructure companies, the energy sector and standardisation bodies. Moreover, it is also important to encourage the development of low carbon-intensive fuels via the Renewable Energy Directive. Providing access and choice to citizens to more alternative fuels, will help in building greater consumer confidence. In parallel, the automotive industry needs the commitment of governments to invest in the right infrastructure so that manufacturers can increase their investments in alternative- powertrain vehicles.

Besides the clear need for infrastructure to match these new types of vehicles, policy makers also need to foster innovation and recognise the need for vehicle manufacturers to have a free hand when it comes to developing state-of-the-art solutions. Bearing in mind that innovation is market driven, the industry needs the flexibility to drive it forward, with policies and regulations that encourage it. When it comes to the full range of alternative powertrains, the principle of technological neutrality must be kept, as there is no one-size-fits-all solution covering all possible consumer choices and business needs.

This is particularly clear when comparing cars, vans and trucks; solutions for small city cars for instance do not work for heavy-duty trucks. Knowing that technological developments are by definition not completely predictable, European automobile manufacturers believe that no technology options should be discarded at this point, and that no ‘winners’ be prematurely selected. Policy related to new systems and alternative powertrains should therefore be results-oriented to ensure the uptake of the cleanest and safest vehicles.

In the meantime, it remains important that we also continue to further improve traditional technologies, such as the internal combustion engine, as we will need to leverage all options available to further reduce CO2 emissions in the foreseeable future.

Erik Jonnaert
Secretary General of ACEA

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