Reflections on the building of more environmentally sustainable cars in France and Sweden 1

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1 Staffan Hultén, Stockholm School of Economics Institute of Research, May 2012 Reflections on the building of more environmentally sustainable cars in France and Sweden 1 Sammanfattning I denna rapport diskuteras utvecklingen av bilar med bättre bränsleekonomi och lägre utsläpp i Frankrike och Sverige. Beroende på att utvecklingen av mer miljöanpassade bilar i dessa två länder är en del av en global transformation så ägnas en stor del av rapporten åt att redogöra för utvecklingen av bilindustrin på global nivå. Arbetet med att göra bilar som har mindre påverkan på miljön och använder mindre energi har åtminstone pågått sedan 1970-talet. Den första ( ) och andra oljekrisen ( ) ökade medvetenheten bland politiker och allmänhet om att bilarnas bensinförbrukning skapade ett stort oljeberoende. Effekterna av inblandning av bly i bensinen resulterade under denna period också i att blyet togs bort ur bensinen och att katalytiska avgasrenare gradvis blev standard i USA och inom EU. USA introducerade under slutet av 1960-talet och under 1970-talet regler för avgasutsläpp som gällde både bensin och dieselbilar. I Europa skapades med start 1976 separata regelverk för bensin- och dieselbilar med betydligt strängare krav för bensinbilar. Under talet startade också de första mer omfattande försöken med att elektrifiera bilparken. Frankrike var ett av föregångsländerna och genomförde relativt storskaliga försök. Det var först i början på 1990-talet som genomtänkta, kostsamma och ambitiösa försök att elektrifiera bilen inleddes. Frankrike tog återigen omfattande initiativ för att skapa en marknad för elbilar. Fransk bilindustri ingick ett avtal med franska regeringen om att bygga och sälja elbilar. I Sverige startade också mer omfattande program att introducera elbilar från början var bl.a. Nutek och KFB involverade i detta arbete. Under tidigt 1990-tal blev Clean Air, ett svenskt entreprenörsbolag, internationellt uppmärksammat när det visade en prototyp till en hybridbil. Även Volvos hybridbil Volvo ECC väckte mycket intresse talets försök att elektrifiera bilparken i Frankrike och Sverige nådde emellertid inte speciellt långt med enbart 7000 elbilar i Frankrike och färre än ett tusen elfordon i Sverige. Nu inträdde en fas i båda länderna som faktiskt sträckte sig ända fram till Under denna period tog de ledande biltillverkarna fram nya prototyper. Volvo gjorde bl.a. en avancerad elbil. Det största utvecklingsarbetet riktade sig under inledningen av 2000-talet mot att utveckla förbränningsmotorn. Arbetet följde två utvecklingsvägar: anpassa bensinmotorer till etanoldrift och ersätta bensinmotorer med dieselmotorer. Sverige blev under de senaste tio åren ledande inom etanoltekniken och Frankrike förstärkte sin position inom dieselmotorer. PSAs (Peugeot- Citroën) 1.6 liters dieselmotor används av nästan alla biltillverkare som vill tillverka en dieselbil med låg dieselförbrukning och låga utsläpp. Eventuellt kommer bilindustrin i Frankrike och Sverige nu att gå in i en ny fas. PSA har lanserat världens första dieselhybridbil och marknadsför Peugeot ion som är en liten elbil. Renault tillverkar Kangoo ett litet nyttofordon med som antingen kan fås med elmotor eller förbränningsmotor och kommer lansera elbilen Renault ZOE under Frankrike har också på nytt signalerat att landet vill nå elbilar inom fem år. Denna gång skall marknaden byggas upp av beställningar från staten, statliga och privata företag och kommuner och regioner. 1 Report written for Bisek 1

2 Slutligen så har Volvo presenterat produktionsfärdiga prototyper av en laddningsbar dieselhybridbil (första i världen) och en laddningsbar bensinbilshybrid. Jämfört med konkurrenterna så har de franska och svenska biltillverkarna valt att ta ordentligt betalt för sina elektrifierade bilar. Volvos bensinhybridbil kommer kosta väsentligt mer än den första laddhybriden Chevrolet Volt men med prestanda som är väsentligt bättre. Volvo har också indikerat att företaget kommer ta mer betalt ( ) för hybridmodellen än vad GM gör för sina laddningsbara hybrider (cirka ). PSA följer samma linje och tar rejält mycket mer betalt (> ) för sin hybriddiesel än standardmodellen med något sämre prestanda. Renault gör på samma sätt och tar mycket mer betalt för sin ZOE modell än vad motsvarande Clio skulle kosta. Här handlar det om ett påslag på flera tusen. Därtill måste köparen av ZOE betala hyra för batteriet, beloppet 79 i månaden har nämnts. Den här högprisstrategin syns också i den förväntade försäljningen. PSA hoppas sälja mer än dieselhybrider per år. Volvo har nämnt hybridbilar per år och modell. Renault har som mål att sälja Kangoo med elmotor i år, men ligger långt under planerna efter några månader. Konkurrenterna har valt andra strategier. Även de omtalade och prisbelönta Nissan Blue och Chevrolet Volt följer en högprislinje och har hittills inte nått några stora försäljningsframgångar. Den marknadsledande elbilen Nissan Blue säljs inklusive batteri och kostar då kr före subventioner i Sverige. Chevrolet Volt kostar efter statlig subvention USD mer än bensinmodellen Chevrolet Cruze. För vissa hybridbilar är prispåslaget inte större än att det går att spara in merkostnaden för hybridmodellen jämfört med motsvarande bensinbilsmodell. Enligt uppgifter så har merkostnaden för att köpa en Toyota Prius jämfört med en Toyota Camry i USA tjänats in efter drygt ett år med dagens bensinpriser. Försäljningsmässigt så har hittills enbart Toyota Prius nått en massmarknad. Varannan hybridbil som säljs i USA är en Prius och Prius leder försäljningsstatistiken i Japan sedan flera år tillbaka. Frågan är hur marknaden för elektrifierade bilar kommer utvecklas? Det finns flera anledningar till optimism. Det viktigaste är förmodligen att allt fler biltillverkare lanserar hybridbilar och elbilar. Försäljningen av elektrifierade bilar växer år för år i Europa. Toyota har med Prius etablerat en dominerande design för hybridbilar som andra biltillverkare följer i mindre eller högre grad. Detta gör att en del dyrbart experimenterande med alternativa konfigurationer kan undvikas eller göras mindre omfattande. En del stora biltillverkare, t.ex. Honda och Mercedes- Benz, planerar att tillverka bilar med bränsleceller men den kommersiella lanseringen har vid flera tillfällen skjutits framåt i tiden. Marknaden för litiumbatterier som tidigare har drivits av elektronikindustrin gör att biltillverkare kan vända sig till många alternativa leverantörer med frågan om de kan utveckla ett batteri. Detta underlättar både teknikutveckling och ger kostnadspress. Det finns också flera skäl för pessimism. Den amerikanska marknaden för hybridbilar har stagnerat och försäljningen har minskat från år 2007 till drygt ifjol. Nyproduktlanseringar störs bl.a. av löften om nya och bättre modeller. Knappt hade Chevrolet lanserat sin Voltmodell i slutet av 2010 förrän företaget signalerade att inom några år skulle bilen få ett bättre batteri. Det var precis den här typen av tekniksignaler nickelbatterier skulle ersättas med litiumbatterier som bidrog till att sänka den franska elbilssatsningen på 1990-talet. Det är också negativt att alltför många biltillverkare sätter ett så pass högt pris på de elektrifierade bilarna att det är omöjligt att motivera ett köp på ekonomiska grunder även om staten subventionerar bilinköpet. Därtill begränsas marknadsutrymmet av att bilar med förbränningsmotorer ger likvärdig eller rentav bättre bränsleekonomi än hybridbilar. 2

3 Förslag till forskningsprojekt Utifrån min rapport skulle jag vilja föreslå följande forskningsprojekt: 1. Skapa en databas om bränsleåtgång under olika typer av testcykler för att problematisera den minskade bränsleåtgången enligt EUs körcykel. Enligt en amerikansk utredning finns det en tendens att diskrepansen ökar i bränsleåtgång mellan de standardiserade (EU och nationella) körcyklerna och uppgifter från tyska privatbilister. Det vore intressant att undersöka för det första om denna uppgift är korrekt och för det andra om avvikelserna mellan standardiserad körcykel och testkörning varierar från fordonstyp till fordonstyp eller om alla fordonstyper har en liknande avvikelse. I databasen kunde man lägga in variabler (motorstyrka, fordonets höjd och vikt och motortyp) som skulle kunna förklara skillnaderna mellan faktisk körning alternativt tester i biltidningar och standardiserade körcykler. En sådan här databas kunde med fördel göras länderneutral genom jämförelse av uppgifter från t.ex. Norge, Sverige, Tyskland, Frankrike och något mer EU-land. 2. Undersöka vad som påverkar individer att skaffa mer miljöanpassade bilar. I denna undersökning skulle man kunna utgå från fem heterodoxa förklaringsmodeller som uppkom i litteraturen på 1990-talet då många länder försökte stimulera efterfrågan på el- och hybridfordon den ortodoxa förklaringsmodellen är givetvis ekonomiska styrmedel. De fem modellerna var: a) skapandet av marknadsnischer, b) etablerandet av en fordonskategori (van, minivan, sportbil, kombi etc.) för miljöanpassade fordon så att denna marknad kan bearbetas som ett segment av bilindustrin och offentliga myndigheter. c) förbränningsmotorn har en fördel beroende på teknologisk inlåsning (technological lock-in) vilken försenat den tekniska utvecklingen av alternativa fordon som elbilar. d) skapa marknader utifrån helt nya behov där den nya disruptiva teknologin (elbilar) angriper den dominerande teknologin genom att ha en relativ fördel som tidigare inte ansågs viktig i marknadens ögon. Utifrån denna fördel kan den nya teknologin i framtiden komma att bli marknadsledande. e) social konstruktion av marknader. Enligt denna teori passerar nya teknologier genom flera faser innan de tillhandahåller lösningar på problem för flera olika kritiska aktörskategorier. Även denna modell tar fasta på att ett transportmedels användning präglar människors värderingar av transportmedlet. Denna modell användes för att förklara hur the standard bicycle vann i konkurrensen med den höghjuliga the ordinary bicycle på talet i Europa. The standard bicycle (som dagens cykel lånar sin design ifrån) lyckades vinna mot the ordinary bicycle först när ett antal transformationer i samhället förändrade synen på cykeln. En första transformation var att cykeln betraktades mer som ett nyttofordon och mindre som ett tävlingsfordon för unga män. En andra transformation var att den lägre standardcykeln öppnade cykelåkande för många fler grupper av människor kvinnor, barn och äldre. Kvinnors adoption av cykeln förstärktes av att det blev accepterat att kvinnor kunde ha långbyxor när de cyklade. Om vi följer denna modell har elektrifierade fordon redan passerat genom flera kritiska passager utan att den dominerande bilden av bilåkande och bilen har förändrats. Alla dessa förklaringsmodeller ger insikter om den framtida adoptionen av miljöanpassade fordon. Miljöbilscertifieringen har onekligen bidragit till att miljöanpassade bilar har blivit ett eget segment som är uppbyggt enligt helt nya kriterier CO2-utsläpp istället för storlek, antal sittplatser eller liknande. Nya användningsmönster som ett sätt att skapa en marknadsnisch används fortfarande i t.ex. Paris satsning på hyrelbilar etc. I en enkätundersökning skulle man studera vilka argument utifrån teorierna ovan ekonomiska styrmedel, nytt sätt att se på bilen, nya användningsområden för bilen, nya ägandeformer för bilar 3

4 etc. som har motiverat bilköpare att välja miljöbil. Denna frågeställning kan sedan fördjupas med att studera om köpare av olika typer av miljöbilar dieselbilar, hybridbilar, elbilar, biogasbilar etc. väljer att köpa en miljöbil utifrån olika typer av argument. 3. Studera den parallella utvecklingen av utsläppsstandarder och faktiska utsläpp från bilar med förbränningsmotorer. När Europa beslutade om utsläppsnivåer för bilar så gavs dieselbilar mindre stränga miljökrav än bensinbilar detta var fallet på 1970-talet långt innan vi den globala uppvärmningen var ett problem. Redan idag uppfyller många bensin- och dieselbilar de krav som kommer ställas i Euro 6. Det här reser två principiella frågor. Har bilföretagen länge legat före framtida utsläppskrav eller har de ökat sin framförhållning i förhållande till framtida avgasregler? 4. Jämföra elbilarnas och hybridbilarnas relativa position i förhållande till bilar med förbränningsmotor under de senaste tjugo åren. I en del avseenden hade elbilarna och hybridbilarna en starkare position på 1990-talet talets elbilar hade en mindre kostnadsnackdel än 2010-talets elbilar i jämförelse med en diesel- eller bensinbil. Hybridbilar sågs som den kanske mest realistiska vägen att minska bilarnas bränsleförbrukning på 1990-talet. I andra avseenden har elbilarna och hybridbilarna en bättre position idag. Prisskillnaden mellan en Toyota Prius och motsvarande bensinbil från Toyota är väsentligt mindre idag än för tio år sedan. Prestandamässigt så har elbilarna och hybridbilarna tagit igen mycket av bensin- och dieselbilarnas försprång. Dagens elbilar accelererar snabbare, har högre topphastighet och väsentligt längre körsträcka än 1990-talets elbilar. Den tredje generationens Prius använder mindre bränsle än den första generationens Prius samtidigt som den har mycket bättre prestanda. 4

5 Contents page Preface 6 Introduction 7 The modern history of alternative fuels from fantasy to realism 8 The conspiracy trap 11 Theoretical considerations 12 Paradoxes 17 Production of environmentally sustainable cars in France and Sweden 18 Conclusion 24 References 27 Annexes 28 Fuel consumption in standardized driving cycles and in tests Sales of hybrids in the US 5

6 Preface This report deals with the introduction of more environmentally sustainable fuel technologies in the automobile industry the two cases of France and Sweden. Today there is a lot of optimism concerning rapid improvements of the fuel economy of cars. There is also a lot of optimism concerning the rapid growth of electrified cars hybrid vehicles, plug-in hybrid vehicles and electric vehicles. All these positive signs cannot overshadow that no major breakthrough has taken place in car technology and that all advances so far come at a high price either in costs for the car buyer or emissions. Plug-in hybrid vehicles and electric vehicles are sold at an exorbitantly high price no one will recover the initial higher price for an electric compared with an internal combustion car. A Peugeot ion costs more than three times the price of the internal combustion model. A Chevrolet Volt costs 12,000 US more than the non hybrid model Chevrolet Cruze (discounting 7,500 USD in tax subsidies) and Volvo plans to charge an extra 20,000 for the plug-in hybrid. The substitution of gasoline cars for diesel cars lowers CO2 emissions but increases the emissions of locally harmful emissions such as particulates and NOx. In many big European cities for example Madrid and Paris these emissions repeatedly surpass the regulated maximum pollution levels with uncertain effects on the health of the population. The heart of the problem is that there is no level playing field in the automobile market. Investments in internal combustion technology still outrank investments into alternative fuels by far. On the demand side car buyers continue to be attracted by the performance of big internal combustion engines. Further, all plans to substitute internal combustion cars with other technologies are geared so far towards the future (2050) that everyone planning for the demise of the internal combustion car will be retired and have no say if the plans are not fulfilled. If there is one glimmer of hope to those that has queries about the sacrosanct status of the internal combustion car then it is the gradual invasion of all types of electric into the car that opens a gateway to change. The internal combustion car is now being invaded like a Trojan horse with all sorts of innovations aiming at increasing the mileage. Many of these constitute impetus for a change toward electric cars the start and stop system, mild hybrids, plug-in hybrids, etc. 6

7 Introduction In this paper we will study the development of more environmentally sustainable cars in France and Sweden. Both countries are actively engaged on many fronts in reducing CO2 and other emissions from cars. The French and Swedish car manufacturers develop and market more fuel efficient diesel and gasoline cars and they also market cars adapted to ethanol or natural gas. After many years of hesitation PSA, Renault and Volvo have started or plan to start production of electric cars and hybrid cars. In the last year PSA (Peugeot-Citroën) has introduced the first diesel-hybrid car to the market and started production of the electric car Peugeot ion. Renault plans to start production of a new electric car (Renault ZOE) and Volvo has presented the first plug-in diesel hybrid to be launched in In addition to this Renault sells an electrified version of its Kangoo utility vehicle. We can notice a significant drop in average CO2 emissions from new cars in both countries as well as in EU-27. However, Sweden continues to lag behind both the EU-27 average and France as regards CO2 emissions. Hypothetically there are two dominant explanations to the rapid drop in CO2 emissions. The first is an increasing willingness from car manufacturers to comply with EU regulations and supply cars with better fuel economy and second there seems to be an increasing acceptation among car buyers to forego performance for fuel economy. If the latter is true is constitutes a major shift in the preferences of the average car buyer. Historically as engine technology improved giving better fuel economy car buyers opted for bigger cars with bigger engines and more brake horsepower. In Sweden this evolution can be described in terms of the average Volvo car Volvo 544, Volvo Amazon, Volvo 240, Volvo 740, Volvo 850 and Volvo S80. Each new generation of Volvo car being slightly bigger and having a bigger internal combustion engine giving better performance. A standard Volvo PV 544 had 66 BHP. In 2008 a standard Volvo V70 had 140 BHP. This report is organized as follows. The next section describes how the automobile industry has moved from brain storming ideas to very concrete and practical improvements of the car as regards fuel economy and alternative fuels. The section after is called the conspiracy trap and relates how the lack of long term commitment from the automobile industry as late as the early 21 st century resulted in different types of conspiracy theories. After this I present some theoretical building blocks when thinking about change in the automobile industry including a discussion of 7

8 the present state of the most advanced fuel saving car models. Based on this background the case study on producing more environmentally sustainable cars in France and Sweden is presented. The modern history of alternative fuels from fantasy to realism Alternative fuels and motors have been around in the discussion of the future of the automobile at least since the late 1950s. 2 In the 1960s the everyday improvements of the internal combustion engine and the car was contrasted with futuristic visions of novel car designs that would dramatically change our view of the car. In a special issue of Science et Vie from 1959 it was envisioned that through some major technological breakthroughs the car of 1980 could fly (study by Pisecki and experiments with flying jeeps in the US Army) alternatively would a car without wheels advance approximately 60 cm above ground or in special instances go as high as 20 to 30 meters. On major motorways it was predicted that cars will be driven automatically (references were made to projects at General Motors and RCA) with the aid of electric cables or a type of paint that guide the cars. Absent from the discussion of the car of 1980 was environmental concerns or energy efficiency. In a first step regarded as highly probable gas turbines would replace internal combustion engines. Later electric motors would replace internal combustion engines because they could better use the energy of the future fuel cells, cells of free radicals or nuclear energy. As imagined: Nuclear energy can probably be employed without danger and without using too heavy protection. 3 De Soto envisaged using fuel cells (already developed and used by the American army and the space program). Ford planned a car with a nuclear reactor (Ford Nucleon) giving an autonomy of 8000 km (Science et Vie, 1959). In Scientific American s 150 th anniversary issue from September 1995 great hopes continued to linger for intelligent vehicles and driverless vehicles (the key reference was the European Prometheus program). It was forecasted that for the next several decades almost all automobiles will continue to be powered by internal combustion engines. With the help of extreme fuel efficiency cars could travel 25 kilometers on a liter of gasoline in mixed driving conditions according to the German DIN test procedure. 2 In the early days of the automobile up to the year 1910 electric, internal combustion and steam cars competed for the market in the US. This historical fact has been discussed in numerous articles and books see for example 3 My translation from the French: L energie atomique pourra probablement être employee sans danger et sans nécessiter des moyens de protection trop pesants. 8

9 Two years later in a special edition on the future of transportation the great hopes for automatic driving prevailed this time it was a four day trial of the National Automated Highway System Consortium that was seen as a promise for the future. Hands-free driving has become a realistic prospect because the electronic devices required for such automation magnetometers, video cameras, radar, lasers and computers are now sufficiently inexpensive. Interestingly in this issue the journal mocked the idea of an atomic car: Just drop a small reactor in the back and drive her out of the showroom. Also the flying car was in retrospect found to be unrealistic. Imagine the air-traffic nightmares that would result from thousands of unscheduled takeoffs and landings on highways. In the same issue of Scientific American the possibility of building and marketing hybrid cars were discussed in an article by the hybrid pioneer Viktor Wouk. He noted that the US government had spent nearly 750 million USD in developing a HEV (hybrid electric vehicle) from 1994 with the improbable goal of protection ready prototype in One reason for the problems in the US was that the goal was to produce a car that could run 34 kilometers on a liter of gasoline (80 miles per gallon). In contrast to the developments in the US the European and Japanese car manufacturers relied more on existing or modestly improved technology. Using such an approach Wouk argued that it would be possible to build and mass market a HEV that get at least 21 kilometers out of liter of fuel or 50 miles per gallon. Incidentally this is the more or less the performance of Toyota Prius in city driving. It is important to stress that as late as 2000 the market for alternative fuels continued to be a mix of fantasy and realism. Mercedes Benz stated for example in the late 1990s that the firm intended to produce a marketable fuel cell A-klasse car in This would have been a dramatic shortening of the time to market a fuel cell car as previously it was believed that they could be ready for mass production in In 2011 Mercedes Benz again moved the date forward of its fuel cell car to The obvious reason why statements and actions that in retrospect seem to be realistic and statements and actions that were not is that the market for alternative fuel vehicles had seen one failure after the other. There existed no promising technological trajectory to unite around. All programs to introduce electric cars with the support of government subsidies in Europe were failing. The GM had sold less than 500 EV1, bought by Greens with plenty of 4 Hultén and Källsner, p. 214 and Simon p. 228 in Cowan and Hultén (2000). 9

10 green. 5 The list of start-up firms failing in the market was growing by the year and market penetration for electric vehicles including hybrid vehicles stayed well below 1 per cent. A couple of events changed the course of the alternative fuel car market. First the diluted environmental CARB and other regulations in California gave sufficient incentives to car producers to supply low emissions vehicles and for consumers to buy the cars. Second, Toyota and Honda continued to market and sell new hybrid cars despite sluggish sales for many years. It took Toyota Prius five years to reach a sales figure of 50,000 in the US market. In contrast the French car manufacturers Renault and PSA gave up on the electric vehicle after only a few years in the late 1990s, despite a framework agreement between the French state, EDF, Renault and PSA to reach 100,000 electric vehicles in Third, the EU started to impose stricter regulations going from voluntary agreements to legislation as regards CO2 emissions from cars. 7 In 2009, the European Parliament passed new car CO2 legislation that sets an emissions cap of 130 g/km averaged over all new vehicles produced by each manufacturer by Reaching this goal will be phased in over three years; by 2012, 65% of each manufacturer s newly registered cars must comply, 75% by 2013 and 80% by 2014 and 100% by Manufacturers that exceed targets from 2012 onwards will have to pay a penalty for each car registered, which amounts to 5 for the first g/km of over the limit, 15 for the second g/km, 25 for the third, and 95 for each subsequent gram. 8 These events have created a viable market for low emission (CO2) vehicles. The internal combustion engine continues to dominate with better mileage from both gasoline and diesel cars and the launch of numerous hybrid cars and the arrival of the first diesel hybrids and plug-in hybrids. This week gasoline, diesel, gasoline hybrids and diesel hybrids seems to be at a stalemate. Ford has launched a new Ford Focus with a 1 liter gasoline engine and a fuel consumption of 4.2 liters for 100 km. This is more or less on par with the best diesel cars (3.8 liters for 100 km) and hybrid diesel or gasoline cars ( liters for 100 km) in the medium car segment. 9 The next step to decrease fuel consumption for the internal combustion engine is the plug-in car which can offer an average fuel consumption of liters for the first 100 km. But 5 Wouk, (1997) p Larbaoui, p. 154 in Cowan and Hultén (2000). 7 An and Sauer (2004) 8 I:\Car Emissions & Euro 5 emission standards Next Green Car.mht 9 Ademe (2011) p

11 with a plug-in hybrid the internal combustion engine will lose its dominance. The electric motor will drive the car more kilometers per year than the internal combustion engine. 10 Cars will be effectively electrified batteries, electric motor and power from the grid and the only transition that remains is in the head of the drivers. The conspiracy trap Few technologies have been so scrutinized as the internal combustion technology for cars. Repeatedly conspiracies have been envisaged all along the evolution of the internal combustion car. Incidentally this was one of the issues when retracing the early days of the automobile: was the electric vehicle locked out through conscious actions by the car industry or was it simply less adapted to the needs of the market. 11 One of the latest and most powerful conspiracy theories is the film: Who killed the electric vehicle? that relates the history and extinction of the GM EV1. Another reason for questioning the car industry s interest in new low or zero emission technologies is that all important start-ups in the electric and hybrid vehicle markets have failed or been integrated into major car producing firms. The Swedish firm Clean Air failed even before production started due to lack of funding and logistical support from the Swedish car producers. Smart was intended to be a hybrid car in the 1990s but the parent company Mercedes Benz opted for a gasoline car. The Norwegian Th!nk project aiming at building an electric car in the 1990s became part of Ford and disappeared a few years later. 12 Third, many forecasts of the future market for electric vehicles have been much too optimistic creating a backlash when sales are disappointing and projects abandoned. In the 1970s the most pessimistic forecast for the electric vehicle in 1995 was 0.3 per cent. In reality electric vehicles didn t even reach that market share. 13 Lastly, as already mentioned, historically the car industry has been quick in converting technological innovations in the engine design into more horsepower and bigger cars. The ultimate expression of this is the marketing of utility vehicles such as SUVs, pick-ups and Vans 10 In November 2011 General Motors reported that with more than 10 million cumulative miles driven by Volt owners, their data shows that around two-thirds of miles driven were in electric mode. 11 See for example Foreman-Peck in Cowan and Hultén (2000) who argues that the internal combustion engine won because it was better adapted to the needs of car drivers, and Mom (.) who finds proof that the electric vehicle (cars, taxis, buses) in many instances lost despite demonstrating advantages over internal combustion vehicles. 12 Maruo in Cowan and Hultén (2000). 13 The most optimistic forecast suggested 100 per cent, see Cowan and Hultén p. 10 in Cowan and Hultén (2000). 11

12 toward the passenger car market. In stark contrast to this tendency the French car manufacturer Renault showed in 1987 that a prototype vehicle called Vesta, seating four passengers, could run on 2.8 liters of gasoline over 100 kilometers 14 and consume as little as 1.94 liters at an average speed of 101 km/h from Bordeaux to Paris. In those days the most fuel efficient French car was Renault 5 TL with a fuel consumption of 6 liters over 100 km. 15 Theoretical considerations I mentioned earlier that historically as internal combustion technology advanced car buyers opted for more powerful and bigger cars. This was true both on a brand level recall the example of Volvo and on a car model level. With each new generation of for example VW Golf or Peugeot the cars and the engines have grown slightly bigger. The general idea has been that consumers get attracted not only to a brand but also to a model. As they grow older and build a family they like to stick with the model but need more space. Hence it is necessary to increase the size of the car model when a new generation of the model hits the market. Maybe it is a sign that Peugeot has signaled that the next Peugeot 208 will actually be shorter and smaller than the 207 model. Roy discussed this feature of the car market in an article from the 1980s using the concept of trajectory. By giving examples from different car manufacturers and models he showed that as technology progressed smaller cars with great fuel economy were fitted with bigger engines with a similar fuel economy. If we go back to the special issue of Science & Vie from 1959 and look at the fuel consumption figures we can note the following figures. The family car Opel Rekord with an engine of 51 BHP and a top speed of 120 km/h consumed 9 liters over 100 km. The famous 2CV from Citroën consumed 5-6 liter per 100 km, but then the car had an engine of liter, 12.5 BHP and a top speed of 85 km/h. Last Saab 93B had a two stroke engine giving 38 BHP, a top speed of 120 km/h and a fuel consumption of 7 liters per 100 km. Compare these figures with the top performance Renault of the mid 1980s Renault 5 TL with a fuel consumption of 6 liters per 100 km or the new Polo TSI with 90 BHP that uses 5.1 liters gasoline per 100 km. Another feature of the translation of better fuel economy into more power is the impact of structural changes in demand. The discussion above describes business as usual; consumers budgets for cars are fairly stable and demand changes gradually. However, in case of an external 14 At a mix of an urban driving cycle, 90 km/h and 120 km/h. 15 R&D 1997 p

13 shock or major regulatory change average fuel consumption of cars can dramatically shift. See figure 1 below. Fuel consumption relative BHP Second oil crisis SUV and truck wave EU regulation in 2010 Time Figure 1. Shifts in demand structure and fuel consumption Note: From 1980 to 1990 the average American car moved from 19.1 to 22.3 mpg. From 1990 to 2000 fuel consumption increased to 20.5 mpg. Average emissions from new cars in EU-15 fell with 21 per cent from 1995 to This happened during the second oil crisis in the US in the 1980s when the CAFE (Corporate Average Fuel Economy) regulation became much stricter moving from a demand of 20 mpg in 1980 to 27.5 mpg in The American consumers also wanted better fuel economy and demanded more imported compact and medium sized cars and fewer American gasoline guzzlers. The effect in the market place was significant. Honda Civic eventually became the top selling car in the US. As a reaction to the CAFE regulation and the increasing sales of imported European and Japanese luxury cars the American car manufacturers developed a new segment the SUV car and enhanced the neighboring segments for Vans and pick-ups. All these car models were and are exempt from the relatively strict CAFE regulation as they are regarded as utility vehicles. In 2002 the CAFE standard for automobiles was 27.5 mpg and 20.7 mpg for light trucks. Interpretations of this shift in taste in the American car market are plentiful, some simplistic saying that safety concerns drive car buyers to buy bigger cars, some more sophisticated arguing that these cars represented a more authentic American trend than the European import of aerodynamic cars Cowan, Hultén et al (2002) 13

14 Again the effect in the market place was impressive. In 2000 the SUV became the most popular car for males and in 2001 for females. A second key feature in the evolution of the internal combustion car is the substitution effect going from gasoline to diesel. The diesel engine has a clear theoretical efficiency advantage but the gasoline engine operates in a different way at equal engine size that nearly wipes out the performance benefits of the diesel engine. To prove this the example of comparing VW Golf GTI and VW Golf GTD is often used. The 2012 Golf GTD with a 2 liter diesel engine giving 170 BHP, accelerates km/h in 8.1 seconds and has a top speed of 222 km/h. The fuel consumption in an EU driving cycle is 5.3 liters over 100 km and CO2 emissions are 139 g/km. The equivalent to this car is the Golf TSI 160 GT with a 1.4 liter gasoline engine giving 160 BHP. This model accelerates km/h in 8.0 seconds and has a top speed of 220 km/h. The fuel consumption in an EU driving cycle is 6.3 liters over 100 km and CO2 emissions are 143 g/km. 17 The relative merits of diesel was discussed by Kågeson (2005) he noted that: Diesel cars would be a good partial solution to the CO2 problem if CO2 emitted from diesel fuel was taxed on a par with CO2 from petrol-fuelled engines and if diesel engines did not give rise to excess emissions of nitrogen oxides and particles. However, when the average fuel taxation in the EU-15 is recalculated into Euro per kg of CO2, it becomes clear that a kg emitted from petrol is taxed around 65 per cent more than a kg from diesel Where particulate matter is concerned, new diesel engines still emit at least 10 times as much per vehicle kilometer, unless they are equipped with a particle filter. In addition, diesel cars are allowed to emit three times as much NOx as petrol cars. 18 With the implementation of Euro VI in 2015 diesel cars will be allowed to emit 33 per cent more NOx than a gasoline car. 19 A third issue concerns the return on investments in terms of better fuel economy and lower emissions. Without having access to relevant data from all car companies it seems probable that R&D investments in electric vehicles, plug-in hybrids and hybrids give much higher returns in producing fuel efficient cars than investments geared towards improving the fuel economy of 17 VW Cirkaprislista mars 2012 and Sjätte generationen Golf en körglad upplevelse. 18 Kågeson (2005) 19 The US effectively blocked the development of a market for diesel cars by imposing the same emission standards for diesel cars as for gasoline cars. (Cowan, Hultén et al, 2002) 14

15 internal combustion cars. But, due to weak market acceptance for the electrified cars the effects on CO2 emissions are probably higher for R&D investments increasing the mileage of internal combustion cars. In theoretical terms the internal combustion engine has advanced very far and for very long on its learning curve. Each new improvement will be costly to find and to implement. This does not mean that the invention as such must be costly to implement, but to find that invention the industry employs thousands of researchers working on different aspects of improving the internal combustion engine. One of the most telling examples of this exploratory research is the development costs for cars used in Formula 1 and other car races. Another factor driving R&D costs is the recurrent changes of platforms and the increasing number of models. In comparison hybrid cars, electric cars and fuel cell cars have just started to develop and improvements are less costly to implement because average production runs are shorter. In addition to this these alternative cars can borrow technological improvements from the internal combustion car. Kågeson (2005) listed en extensive number of possibilities to enhance the fuel efficiency of internal combustion cars. Of the 17 possible improvements listed below, most advances seem (when viewing information from car manufacturers on fuel efficient cars) to have been in five areas: improved fuel injectors, six speed manual transmission, stop and go systems, reduced mass and reduced air drag and rolling resistance. 1) High-powered ignition systems that ensure complete combustion of the fuel available 2) Improved fuel injectors 3) Computer controlled engine management 4) Improved compression at low engine loads 5) Engine friction reduction 6) Variable valve timing 7) Variable geometry turbocharger 8) Cooled Exhaust Gas Recirculation (EGR) 9) Six-speed manual transmission 10) Electric-motor-driven power steering 11) Stop-go systems 12) Cylinder deactivation 13) Continuously-variable transmission (CVT) to improve gearing efficiency 15

16 14) Mild hybrid 15) Reduced mass 16) Reduced mechanical friction 17) Reduced air drag and rolling resistance Advances in fuel technology and car design apparently give higher returns in fuel economy than was imagined in 2005 and envisaged by Ricardo (2003). 20 He thought that 12 volt alternator, start and stop, 6 gear manual gearbox and a smaller engine (moving from 1.9 liter to 1.8 liter) would give 4.6 per cent lower emissions reducing CO2 emissions to 145 g/km. 42 volt belt hybrid, automated dualclutch gearbox, 1.6 liter engine would give a 23 per cent improvement moving CO2 emissions to 117 g/km. With 42 v mild hybrid, NiMH battery, regenerative breaking, 1.2 liter, we would get 100 g/km in CO2 emissions. In 2012 a hypothetical car with parallel hybrid, advanced engine (1.0 liter), Li-ion batteries, light weight materials could reduce CO2 emissions to 83 g/km in In reality it took only a few of the changes listed above to reduce CO2 emissions close to 83 g/km. VW Polo Blue motion with a diesel engine of 1.2 liter and 75 BHP emits 89 g/km and uses only a fraction of the listed improvements (start and stop, 6 gear manual gearbox, smaller engine, and reduced air drag and rolling resistance). 21 Also the recently launched Ford Focus with a 1 liter gasoline engine delivers low CO2 emissions (97g/km) with few of the improvements listed above and the engine delivers much more BHP than Ricardo postulated. The hybrid cars Toyota Prius and Chevrolet Volt with 89 g/km also come close to the 83 g/km target without incorporating all the changes above. Here the big difference is a bigger engine size providing better performance. According to El País if Peugeot had put its diesel hybrid system into a Peugeot 207 the car would have consumed less than 3 l/100 km. 22 In table 1 the performance increases in fuel economy are presented for hybrid, diesel and gasoline cars from the launch of the first Prius in Diesel continues to give better fuel economy than gasoline cars measured as standardized driving cycles. But the gasoline cars are rapidly closing the gap. 20 As discussed by Kågeson (2005) 21 VW Lupo, which is smaller than VW Polo, had a fuel consumption of less 3 l/100 km already in I:\Prueba del Peugeot 3008 HYbrid 4, primer híbrido diésel del mundo Coche Eléctrico Blogs EL PAÍS.mht 16

17 Table 1. Fuel performance improvements for hybrid, diesel and gasoline cars Car type Hybrid Toyota Prius l/100 km Diesel 110 BHP VW Polo l/100 km Gasoline 100 BHP VW Golf l/100 km Toyota Prius l/100 km VW Polo 1.4 TDI 4.6 l/100 km VW Polo 6 l/100 km Toyota Prius l/100 km VW Polo Blue motion 3.3 l/100 km VW Polo l/100 km Chevrolet Volt 2.5 l/100 km (el) 6.4 l /100 km (gas) 3.9 l/100 km (mix) VW Polo 1.2 TDI Blue motion 3.4 l/km Ford Focus 4.2 l/100 km Paradoxes Admittedly new car models emit fewer emissions than older car models. An article in El País (2 July 2011) on the resistance of internal combustion cars claimed that a car from the 1970s polluted as much as 100 cars produced in At the same time pollution levels of NOx and particulates are on the increase in many major European cities including Stockholm. 24 One way of explaining is to claim that the 20 per cent of the cars that are older produce 80 per cent of the emissions. But this is not a new phenomenon the car park has always consisted of cars that are older or newer. Another explanation could be that the dieselization of the car fleet is advancing faster than the scrapping of old cars gasoline or diesel producing an increase of NOx and particulates. A third possibility could be that diesel trucks and buses contaminate more than passenger cars, have a longer life than passenger cars and are allowed to pollute more. This possible effect should not be too important because emissions of particulates and NOx have decreased with 94 and 84 per cent in trucks since 1990 (Bil Sweden) Another paradox is the fact that after twenty years of significant improvements of the fuel economy of cars we can see no significant reductions in fuel consumption on a global level. In 2003 the total consumption of gasoline was 5,546,000 m3 and the diesel consumption was 3,241,000 m3 giving a total fuel consumption of 8,787,000 m3. In 2011 the total consumption of gasoline was 4,259,000 m3 and the diesel consumption was 4,809,000 m3 giving a total fuel 23 Samma uppgift lämnas av Bil Sweden i ett faktablad 24 Le Monde (2012) 17

18 consumption of 9,068,000 m3. 25 To these figures should be added that renewable energy sources have increased their share of the fuel consumption in road traffic from 1.5 to 7 per cent from 2003 to All these figures indicate that CO2 emissions should be on the increase but that is not the ca.se. According to Energimyndigheten (2012) is only a minor fraction of the increase of diesel consumption used by passenger cars, an increase from 573,000 m3 in 2003 to 1,048,000 m3 in 2010 representing approximately 40 per cent of the increase in diesel fuel consumption in these years. Apparently is diesel fuel being increasingly used everywhere in Sweden not only in road traffic. To calculate the total fuel consumption of the road traffic and the share of passenger cars another Swedish state agency (Trafikanalys) use data over the Swedish car park combined with assumptions on how much the average car is driven annually. The input to fuel consumption calculations comes from the EU drive cycles that the car manufacturers present. The average Swedish car, old and new, consumed 7.7 liters per 100 km in 2011, 0.1 liter less than in The fuel consumption of an average new car has decreased 37 per cent from 1990 to This lower fuel consumption has of course a tremendous impact on CO2 emissions and total fuel consumption. Regardless of the improvements in fuel efficiency the emissions of CO2 were nine per cent higher in Sweden 2011 than in The standard explanation is that we drive cars longer distances, have more cars and there are much more trucks on the roads. 27 Another possibility could be that new cars are adapted to the EU driving cycle which will result in exaggerated performance improvements. In the US EPA has changed its driving cycle in 2008 to better resemble actual driving. Kågeson (2005) suggested that the Commission should contemplate a cycle with more accelerations and de-accelerations and maybe also include emissions caused by A/C. Appendix 2 contains a list of results from actual test drives made by motor journalists compared with the EU drive cycle. In 2001 the test drives made by the journalists resulted in per cent higher fuel consumption than the standardized driving cycle. In the tests conducted in 2011 and 2012 cars used in tests had from 0 to 110 per cent higher fuel 25 Energimyndigheten (2012) p Trafikverket (2012b) 27 Trafikverket (2012a) and Trafikverket (2012b) 18

19 consumption than the EU driving cycle. 28 In the majority of cases the cars in 2011 and 2012 consumed per cent more fuel than in the EU driving cycle. The Swedish motor journal Teknikens Värld claims that it has criticized car producers for cycle beating. Therefore the journal has developed its own driving cycle, the so called Swedish cycle. In a report from The International Council of Clean Transportation (ICCT) in 2012 it was found that the gap between the type-approval and real-world test drives, covering user entries and 1200 car models had increased from 8 per cent in 2001 to 21 per cent in The increase has been particularly strong since 2007 when EU took a decision on mandatory regulatory measures. According to this data there was no kink in the CO2 emission reductions in 2007 but a steady average per cent annual reduction from Production of environmentally sustainable cars in France and in Sweden This section discusses how the Swedish and French automobile industries have responded to the demands for more environmentally sustainable cars. This is as noted above not a new issue. Already in the mid 1970s France launched programs to introduce cars that had a less negative impact on the environment. Since this date there existed a continued interest in developing a more environmentally sustainable car. This interest has had some remarkable highs and lows. If there is one recurrent feature of all programs then it is the conviction that the car industry needs at least 30 years to move from internal combustion engines to electric motors. At the start of the 21 st century both countries had two major car producers that manufactured cars that to a high extent were designed for the national market. In practical terms this meant that the French car manufacturers Renault and PSA (Peugeot-Citroën group) supplied a large number of small and medium sized cars for example Renault Twingo, Clio, and Megane and Peugeot 107, 206, 207 and 308 models and relatively few larger cars. In particular Renault had major problems developing and marketing a sedan model for the upper echelon of the market. Both French car manufacturers had strong positions in the market for utility vehicles Renault Kangoo, Citroën Berlingo and Peugeot Partner and Renault was and continues to be a leader in the minivan segment with the Scenic models and the bigger Espace model. The Swedish car producers were 28 Interestingly both extreme values come from a Citroën diesel car. A Citroën with a 163 BHP diesel engine had an average 6.9 liter fuel consumption over 100 km both in test and according to the EU drive cycle. The new Citroën diesel hybrid car has a fuel consumption of 3.8 liters according to the EU drive cycle but consumed 8.2 liters in a test in El País in Mock et al (2012) 19

20 at this time owned by the American car companies General Motors (Saab) and Ford (Volvo). 30 Both Saab and Volvo operated with a high degree of autonomy but increasingly shared components with other brands of the parent company. Both companies produced medium sized (Saab 900 and Volvo S40 and S60) and bigger cars (Saab 9000 and Volvo V70 and S80). The orientation towards bigger cars with bigger engines became even more pronounced for Volvo in the first years of the 21 st century when it commenced production of the SUV Volvo XC90. Development of electric vehicles and hybrid vehicles in France In the early 1990s the French government and French industry decided to join forces and build an electric vehicle industry in France. The goal was to get 100,000 electric vehicles on the roads in the year A lot of actors were involved in this program: the state owned electricity monopolist EDF, the car manufacturers PSA and Renault. Smaller producers of electric vehicles were also active in the French market but they were overtaken by PSA and Renault in The most important of these smaller produces was Seer Volta that used its presence in the battery industry to build different electric vehicle models. The French network advanced on many fronts at the same time. Cities and regions invested in electric vehicles that were either used by local authorities or rented or leased to private households. The state and EDF subsidized the purchase of electric vehicles. The total subsidy could amount to 15,000 FRF for a private car. This covered most or more than the price difference between an electric car and the internal combustion model. An electric Peugeot 106 without batteries cost 76,000 FRF and the internal combustion model was priced at 69,000 FRF. In the case of Renault Clio the price difference was 19,600 FRF. 31 A network of charging stations was built and EDF in collaboration with organizations interested in the development of electric vehicles designed a charge box for charging electric vehicles during the night. The French government funded research into electric and hybrid vehicles through the Predit program with a total budget of 7.3 billion FRF from 1996 to However, this program funded research in all transportation technologies and research projects directly oriented towards the development of electrified cars didn t dominate the program. The first Predit program running 30 In the early 1990s there existed far reaching plans to merger Volvo s car and truck operations with Renault s car and truck companies. After opposition from part the shareholders in Volvo and important employee groups the plans were abandoned. A few years later after a severe down-turn in the Swedish economy the car production at Volvo was sold to Ford. More or less at the same time the car production at Saab was integrated in General Motors. 31 Larbaoui p. 156 in Cowan and Hultén (2000). 20

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