The Future of the Car: Are we there yet?The We Mean Business coalition
The transformation of the auto sector towards zero-carbon, electric mobility is accelerating – that was the central message from the gathering of industry executives, analysts and NGOs at this month’s FT Future of the Car Summit in London.
There is growing awareness of the urgent need to achieve industry-wide decarbonisation from a sector that accounts for 23% of global energy-related CO2 emissions and is the fastest-growing contributor to climate change, according to the IEA. However, there was also a clear acknowledgement of the many factors still slowing the rapid transition to electrification.
Here are some of the key takeaways heard at the main event, and at a special roundtable discussion hosted by the We Mean Business coalition to delve into some of the central issues.
The race is on
With so many of the world’s largest automakers represented at the summit, the comparison between electrification strategies was a recurring theme, especially thanks to the latest announcement from the maker of Mercedes cars.
In the lead up to the event, Daimler – one of the world’s leading producers of premium cars and commercial vehicles – announced its bold commitment to make its entire passenger car fleet carbon neutral by the close of 2039.
Paul Simpson, CEO of CDP, took the opportunity to publicly challenge all automakers to match or better the commitment from Daimler and create a race to the top.
“The car as we know it today – driven by the internal combustion engine – doesn’t have a future and the future of the industry will be zero emissions,” Simpson said.
“The auto sector is going through a fundamental transformation and that has already begun. The science is clear, we’re only going in one direction – it’s not about if but when,” he added.
Meanwhile, the consequences for underestimating the speed of the transition could prove detrimental to incumbent auto makers, according to Freeman Shen, CEO and founder of WM Motor, one of China’s largest EV startups.
Shen said: “If you don’t have a (mass market EV) product on the line now you will struggle to survive”.
Demand is shifting gear
At the event there was a widespread acknowledgement that demand is increasingly shifting towards electric-drive vehicles – both from the general car-buying public and from corporate customers.
Growing corporate demand was highlighted by the EV100 initiative at the summit – a global business initiative designed to fast-track the uptake of electric vehicles and infrastructure, launched by The Climate Group. To date, 39 companies have joined EV100, including the world’s leading auto leasing company LeasePlan and the global logistics company Deutsche Post DHL Group.
Meanwhile, there was repeated reference to the exponential growth rates in Chinese EV sales, especially from automakers with a key stake in the growing market. In 2018, China’s sales of new-energy vehicles surged 62% to 1.26 million, suggesting the world’s biggest auto market could be on track for EV domination in little over ten years.
Policy needs to step up
The role of policy makers in driving the shift to widespread electrification was front and centre during many of the discussions.
For example, Volkswagen’s Thomas Ulbrich publicly called for increased policy action to drive broad acceptance of e-mobility. These include subsidies for public and commercial parking zones, clear and simple rules for tenants and property owners and long-term subsidies for the ongoing EV rollout, Ulbrich said.
Meanwhile, Maximillian Szwaj from Aston Martin commented that the UK government is missing opportunities with the transition of the auto sector by moving too slowly. He said we need to invest in the right skills and a better crossover between innovation and industry.
Globally, the policy landscape is increasingly backing the rapid rollout of EVs as a vital tool for reducing urban pollution, spurred by a wave of litigation and increasing citizen demands for healthy air.
Several European countries have already embraced EVs as a core solution to these problems, as well as a key driver of growth. The UK, France, Norway and Sweden have all committed to phasing out petrol and diesel-powered light passenger vehicles completely by the end of the 2030s.
India has a stated aim to have every vehicle sold in the country powered by electricity by 2030 and China has increasing sales quotas for EVs – starting at 10% for 2019. In the EU, new limits on carbon dioxide emissions will take effect from 2021, and increase in 2025 and 2030.
Recycling and reuse is an issue
While there is growing consensus among the industry of the shift towards electric vehicles (EVs), there is also increasing awareness of the need to ensure the full lifecycle emissions of cars is being reduced to net-zero.
This shift has been highlighted by Daimler’s recent commitment, which strives for carbon-neutral vehicle production, using its Factory 56 in Sindelfingen, Germany, or its engine factory in Jawor, Poland, as good examples.
Similarly, VW’s commitment also covers the production of the vehicles as the company set long-term ambitions to make the entire company CO2-neutral by 2050, including its factories, offices and cars.
Meanwhile, at the We Mean Business coalition’s round table on the sidelines of the event, there were calls for the industry to develop a clear plan for the reuse and adaptation of the existing car fleet.
For automakers looking to ensure their entire emissions are being reduced in-line with the goals of the Paris Agreement, they can commit to setting a science-based target and have that target validated by the Science Based Targets initiative.
The summit provided a timely reminder that the transition to EVs is accelerating and bring both business opportunities and emission-reduction potential. But business leaders and policy makers need to work together to overcome some of the roadblocks in the way.