Monday, December 12, 2016

Diesel faces global crash as electric cars shine

Diesel will “almost disappear” from the global car market within 10 years as it faces a “perfect storm” of competition from cheaper electric cars and tougher stances by regulators, a report by UBS has forecast.
The falling costs of electric and hybrid vehicles will strip the fuel of its once-competitive price advantage, while tighter emissions regulation and soured public sentiment towards the fuel in the wake of the Volkswagen scandal will see its global share of car sales fall from 13.5 per cent to just 4 per cent by 2025, the bank predicts.
In Europe, diesel’s traditional heartland, sales will fall from 50 per cent to just 10 per cent, it forecasts.
Sales in Europe have been falling slowly since 2012, but have accelerated in the past 12 months in the wake of the VW diesel scandal.
The decline forecast by UBS is sharper than many in the industry predict, and comes as major manufacturers grapple with the question of whether diesel cars will be viable in the future.
All carmakers are pursuing some form of electrification in order to meet tightening CO2 targets.
Diesel, which emits around a fifth less CO2 than petrol equivalents, is no longer the easy option it once was due to tightening rules over Nitrogen Oxide emissions, which are emitted by diesel engines.
As a result, almost all manufacturers plan to launch fully electric cars within five years.
Diesel cars are likely to be replaced by 48V mild-hybrid technology, which combines a small petrol engine with a large battery and offers similar fuel economy and performance to diesel while eliminating NOx emissions, the report predicts.
UBS expects sales of 48V cars to overtake diesel sales globally in 2021, and to account for a quarter of all cars sold by 2025.
In Europe, where diesel sales peaked in 2012, the fuel is taxed around €15 less per litre than petrol, adding to its popularity.
But states including France and Belgium have pledged to close this gap, while cities such as London, Madrid, Paris and Athens all have plans to ban the vehicles from their central areas.
“In the aftermath of the Volkswagen diesel issue, politicians and regulators have become highly sensitive and increasingly populist about diesel emissions,” said the report.
“Even if some plans appear overly ambitious, the direction of travel is obvious and likely irreversible.”
It added that diesel would remain dominant in trucks and large SUVs.

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